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COFFEE PRICES RISE IN NEW YORK ON BELOW AVERAGE RAINFALL IN BRAZIL AND CURRENCY SUPPORT

  • Writer: TGC
    TGC
  • Jan 6
  • 1 min read

ARABICA COFFEE FUTURES TRADED IN NEW YORK MOVED HIGHER ON TUESDAY, SUPPORTED BY WEATHER RELATED CONCERNS IN BRAZIL’S MAIN GROWING AREAS. THE MARKET REACTED TO SIGNS THAT RAINFALL HAS BEEN BELOW HISTORICAL AVERAGES, PARTICULARLY IN MINAS GERAIS, A KEY REGION FOR ARABICA PRODUCTION.


WEATHER REPORTS INDICATE THAT RAIN ACCUMULATION IN EARLY JANUARY FELL WELL SHORT OF NORMAL LEVELS FOR THE PERIOD. THIS HAS RAISED MARKET ATTENTION REGARDING CROP DEVELOPMENT AT A SENSITIVE STAGE OF THE PRODUCTION CYCLE, LEADING TRADERS TO PRICE IN POTENTIAL SUPPLY RISKS IN FUTURES CONTRACTS.


IN ADDITION TO CLIMATIC FACTORS, CURRENCY MOVEMENTS HAVE ALSO PROVIDED SUPPORT. THE APPRECIATION OF THE BRAZILIAN REAL REDUCES THE INCENTIVE FOR EXPORT SALES IN THE SHORT TERM, LIMITING SELLING PRESSURE AND HELPING TO SUSTAIN PRICES ON THE NEW YORK EXCHANGE.


OVERALL, MARKET PARTICIPANTS REMAIN FOCUSED ON WEATHER CONDITIONS IN BRAZIL AND ON EXCHANGE RATE DYNAMICS, BOTH OF WHICH ARE EXPECTED TO CONTINUE SHAPING ARABICA COFFEE PRICE ACTION IN THE NEAR TERM.

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