Arabica Coffee Falls as Traders Weigh Brazil Exports and Weather

Arabica coffee dipped from the highest in more than a week, as traders weighed strong exports from Brazil and concerns about dryness there.

Futures lost as much as 1.4%, after touching the highest since Aug. 30 on Tuesday partly amid a lack of rain in top exporter Brazil. The country’s green coffee shipments rose 1.4% from a year earlier to 3.41 million bags in August, exporter group Cecafe said Tuesday.

Brazil’s shipments are robust “despite continued reports of logistics issues causing delays out of the main coffee ports,” said Tomas Araujo, a trading associate at StoneX. However, conditions there still look dry until the end of the month, he added.

Coffee has rallied this year amid dry weather in Brazil as well as drought in Vietnam — which also just faced a deadly typhoon — raising costs for roasters and consumers. Coffee has become “a climate-driven market,” Andrea Illy, chairman of Italian company Illycaffe SpA, told Bloomberg TV in an interview.

While the company can temporarily absorb lower margins, it may in the long term have to pass on higher prices to consumers — which would help producing countries to invest in climate resilience, he said.

Source: BNN Bloomberg

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