MILAN – Arabica coffee futures in New York skyrocketed Wednesday from six-month lows reached on Tuesday. The most active contract for July delivery jumped almost 8 percent over the session to close at 219.90 cents. July ICE Robusta coffee futures in London closed $69 up at $2,078. Yesterday’s rally was driven by an increased risk of frost in Brazil.
The US National Oceanic and Atmospheric Administration (NOAA) issued a forecast yesterday saying that temperatures in southern Brazil, an area that includes many of the country’s coffee-growing regions, might be hit by frost by May 16. Temperatures are likely to remain below normal through May 19.
Dealers said the market had become technically oversold after falling by more than 10% during the last month. Lower crop prospects in Colombia also provided support.
The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the current October 2021 to September 2022 coffee year may potentially fall by 13.80% from earlier estimates of 14.50 million bags.
This would be a 10% decline from the previous coffee year.
The drop in production is attributable to the persistent excessive rainfall that has been experienced during the cherry development phase as Colombia continues to be impacted by intensive rainfall brought about by a second consecutive year of La Niña weather conditions.
Likewise, exports may also fall to between 11.50 and 12.00 million, compared to 13 million bags exported during the previous coffee year.
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