Coffee prices reached a 47-year high on Friday before settling lower, driven by tightening supplies and concerns over next year’s crop in Brazil, the world’s largest coffee producer. The market is reacting to this year’s drought, which has significantly impacted production.
Key Highlights:
Price Movements:
Arabica coffee futures on the ICE exchange fell by 1.5%, settling at $3.1805 per lb after peaking at $3.3545, the highest price since 1977.
Prices for arabica coffee have surged approximately 71% this year, positioning it among the top-performing commodities alongside cocoa.
Market Dynamics:
Brazilian farmers are reportedly delaying deliveries of this year’s crop, hoping for even higher prices, leading to short-term supply tightness. This has resulted in significant financial losses for traders expecting timely deliveries.
Commerzbank noted that the coffee price trend mirrors that of cocoa earlier this year, driven by poor harvests in key producing regions.
Robusta Coffee Prices:
The price of robusta coffee, commonly used in instant coffee, also hit a 47-year high on Friday, with futures peaking at $5,694 per metric ton before settling down 2.7% at $5,377.
Cocoa Market Update:
New York cocoa futures increased by 3.9%, settling at $9,425 a ton after reaching a five-month high of $9,520. Cocoa prices have previously soared to a record high of $11,722 a ton in April due to supply constraints from poor crops in Ivory Coast and Ghana.
Sugar Prices Decline:
In contrast, sugar prices fell, with March raw sugar ending down 2.8% at 21.08 cents per lb, while March white sugar lost 1.5% to settle at $547.70 a ton.