Coffee prices saw significant declines on Tuesday, with May arabica coffee (KCK25) falling by -8.90 (-2.31%) and May ICE robusta coffee (RMK25) dropping by -143 (-2.58%).
The sharp drop in coffee prices was driven by concerns over consumer spending, following a significant decline in the US consumer confidence index. The index dropped by -7.0 points in February, reaching an 8-month low of 98.3. Arabica coffee prices, in particular, hit a 3-week low as long liquidation pressures continued after the rally from late January to early February.
Arabica prices were further pressured by a rebound in ICE-monitored arabica inventories, which rose to 803,066 bags on Tuesday, up from last Tuesday’s 9-month low of 758,514 bags.
Meanwhile, ICE-monitored robusta coffee inventories reached a 5-month high of 4,603 lots on January 31 but then fell to a 2-month low of 4,297 lots by February 18. On Tuesday, robusta inventories were slightly above that 2-month low, standing at 4,312 lots.
In Brazil, where arabica coffee is predominantly grown, below-average rainfall in the Minas Gerais region supported coffee prices. Somar Meteorologia reported that the area received just 11.4 mm of rain last week, 24% of the usual amount, which could impact future coffee harvests.
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