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Coffee markets retreat on improved weather prospects in the Brazilian coffee belt

Brazil's arabica coffee producing areas are recovering from a long dry spell, described by forecasters as the worst in over forty years, which has already contributed to a significant reduction in the potential of the 2025/26 crop

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MILAN – Improving weather conditions in Brazil contributed to price declines in both coffee markets yesterday, Tuesday 15 October, after strong gains earlier in the week. In New York, the contract for December delivery lost 535 points to close at 256.70 cents (-2%). In London, the contract for January delivery closed at $4,778 (-1.2%), just above the daily low.

The downward correction in coffee markets was driven by improved weather prospects in the Brazilian coffee belt, where the rain should induce the flowering of the new crop.

Brazil’s arabica coffee producing areas are now recovering from a long dry spell, described by forecasters as the worst in over forty years, which has already contributed to a significant reduction in the potential of the 2025/26 crop.

Also on the weather front, Bloomberg predicts wetter-than-normal conditions in Vietnam and the Philippines through November as a result of the emergence of the La Niña phenomenon.

It is feared that further rainfall could undermine Vietnam’s recovery efforts following the passage of Typhoon Yagi in September, which caused $1.6bn of damage in the Indochinese country.

Early assessments suggest thousands of hectares of coffee plantations were affected, with significant losses to both the current harvest and future production potential, as damaged trees will take years to recover.

Vietnam’s coffee exports for 2023/24 are estimated at 25 million bags, down 10% year-on-year. Forecasts for 2024/25 suggest a drop in production of between 5% and 15%.

The European Union’s move to delay rules that would ban the import of crops linked to deforestation is creating upheaval for big traders’ long-set plans to meet the new demand, reports Bloomberg.

Coffee traders have been paying 3 to 5 cents above futures in New York to meet the EU rules. The traders now believe appetite for those contracts is likely to decline, which ultimately would cause the premium to fall significantly or even disappear until next year.

For existing contracts, though, premiums should remain in place, Dave Behrends, head of trading at Sucafina, said in a social media post quoted by Boomberg. He also expects roasters will continue to request full EUDR data from suppliers so they can run trials, says the same source.

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