Coffee Holds Rebound With Focus on Impact of Brazil Dryness
Arabica climbed on Monday, paring last week’s decline
Rainfall was below normal in parts of Brazil last week
By Manisha Jha
Arabica coffee held its rebound as traders kept an eye on dry weather threatening crops in top grower Brazil.
Futures jumped in November as heat and dryness in the country threatenedsupply prospects, before slumping last week. Brazil’s biggest arabica area saw weekly rainfall drop below-normal in the past week, according to Somar Meteorologia data.
“If we see erratic rains continuing through to January, it will confirm the damage to Brazilian crops and the damage could even be more than expected,” Geordie Wilkes, head of research at Sucden Financial Ltd., said in a webinar Tuesday. “Recent rains have helped, but it’s too early to say how much of that has managed to offset the damage done earlier. As of now, crop damage hasn’t been priced in well.”
Weather concerns in Brazil come amid lower production estimates for Colombia and after recent hurricanes hit Central America, just as demand is expected to rebound due to coronavirus vaccines. Colombian coffee output slid 4% in November, the coffee growers’ federation said.
Arabica coffee for March delivery added 0.1% to $1.192 a pound in New York, after gaining 1.3% on Monday. Prices dropped 5.4% last week. Robusta coffee was little changed in London.
In other soft commodities, cocoa and sugar futures fell.
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