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Coffee Falls Most in Two Months But Remains Above $4 a Pound - BLOOMBERG
(Bloomberg) -- Coffee futures fell by the most in two months after earlier marking a fresh all-time high, with supply concerns still the dominant theme in the market.
The most-active arabica contract in New York jumped as much as 2.1% to reach a record of $4.2995 a pound on Tuesday, before heading lower by as much as 4.8%. That’s the biggest dip since Dec. 2. Still, prices remain above $4 a pound, a milestone the premium bean reached last week.
Prices for the variety have doubled in the past year, with the market driven higher by worries over shortfalls from top producer Brazil and concerns over the quality of next season’s harvest. But “the possibility of sharp pullback remains given the volatility of the market,” Sucden Financial broker Harry Howard said in a note.
Adverse weather continues to pose a threat to Brazilian crops, with its biggest arabica coffee growing region receiving below-normal rainfall last week. Limited rains and low soil moisture, unfavorable for cherry growth, are expected to persist over the next week, according to forecaster Maxar Technologies Inc.
New buyer interest above $4 “should be reduced somewhat as long as there are no bullish inputs,” but that’s unlikely given concerns over US tariffs, according to a Tuesday note from Sucafina SA.
Still, a recent uptick in arabica inventories in exchange-monitored warehouses may provide some relief to the market.
