Arabica coffee momentum slows after seven-year high

• Updated

US Arabica coffee spot falls by 1.3% despite further Brazilian weather warnings

Arabica coffee futures reversed course slightly on Tuesday, having surged to the highest point since October 2014 at the start of the week.

Further frosts threaten Brazilian crops

Brazil, the world’s largest producer of the coffee crop favoured by chains such as Starbucks and Nestlé, has experienced poor weather conditions throughout 2021, hit first by a sustained drought and then by two substantial frosts. 

The coffee plant, which takes three years to start producing beans, is susceptible to extreme cold. The Brazilian government’s food supply agency has warned that last week’s frost affected around 11% of the nation’s total arabica crop area. 

ICE Coffee C futures rose by 9% on Monday after a new polar air mass was forecast to move over the already blighted areas towards the end of this week. After rising by more than 20% in a week, the commodity surged to a seven-year high of $2.1520 per pound. 

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Both futures and spot Arabica dip

Although poor weather in the nation that accounts for 40% of total global production has played a part, higher shipping costs and broader post-COVID inflation have also been factors in the price rise. 

Despite forecasters warning that Minas Gerais, Brazil’s main coffee-growing region, could experience further frosts beyond this week, traders have not entirely run for the hills. 

By mid-afternoon in London, futures for September delivery stood 1.5% lower, having fallen by as much as 2.6%. US Coffee Arabica spot traded down 1.3% at $2.0445 per pound. 

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