On Thursday, September arabica coffee (KCU26) closed at $300.40, down $8.70 (-2.81%), while September ICE robusta coffee (RMU26) rose by $12 (+0.32%). The decline in arabica prices followed profit-taking ahead of the holiday weekend, while concerns regarding Brazil’s coffee crop and weather patterns lend support to both coffee varieties.
Heavy rains in Minas Gerais, Brazil’s largest coffee-growing region, measured 31.3 mm last week, or 1,956% of the historical average, disrupting the harvest and potentially impacting crop quality. ICE arabica coffee inventories hit a 2.25-year low of 375,079 bags as of Wednesday, while robusta inventories increased to a 2.75-month high of 4,053 lots on Monday.
The US National Oceanic and Atmospheric Administration (NOAA) indicates a 67% chance of a “Super El Niño” this year, projected to affect global coffee production, especially in Brazil and Southeast Asia. The Japan Meteorological Agency has confirmed El Niño conditions have begun, which could lead to significant weather fluctuations later this year.
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