Arabica coffee futures jumped again, taking gains for the
week to 8% - and rebuilding their premium to robusta beans - amid "worrisome" forecasts
for further dryness in major Brazilian growing areas.
New York-traded arabica coffee futures for December, the
best-traded contract, closed up 2.7% at 141.40 cents a pound, the highest
finish in a month.
The gains came amid fresh concerns over dryness in central Brazil,
worries which have spurred gains in soybeans futures too, for which the country's
sowings window is opening, and which have gained further traction with the increased
chance of a La Nina, which has a history of curbing rains in parts of the
Official US meteorologists on Thursday, after assessment of
latest indicators, that "there is an increasing chance, about 55-60%, of La
Niña during the Northern Hemisphere fall and winter 2017-18".
A month ago, it had rated the chance of a La Nina during the
winter at 25-30%.
"Weather forecasts are worrisome, indicating a continuation
of dry weather, sun and warm temperatures for most of the coffee belt," said Silas
Brasileiro, executive president of Brazil's CNC producers' group.
He flagged a forecast from Somar Meteorologia of dryness ahead in central coffee
areas, bar "only light rain" for coastal parts, such as the Zona da Mata region
of Minas Gerais, the top arabica-growing state.
Concerns were particularly acute in São Paulo and Paraná
states, where "crops had an early bloom, as early as August", favoured by rains
"unusual" in coming so early.
"However, without the continuation of rainfall, there is
possibility of no success of these flowers," with dryness risking the blossoms
aborting, rather than setting to form cherries for the 2018 harvest.
Further rounds of flowering are possible, however.
'Perfect crop off the
The comments echo those last week from Cooxupe, the world's
largest coffee cooperative, which cautioned last week over dryness in
particular in southern Minas Gerais.
And they raise a question over expectations of Brazil
achieving a record 60m-bag harvest next year, as many analysts had expected.
"It would seem that the perfect crop is already off the
table," said Judith Ganes-Chase, at J Ganes Consulting, flagging a "noted
In the upper Mogiana region, in Sao Paulo state, "trees have
defoliated that should be flush with green leaves and getting ready to blossom",
she said, if flagging that "troubles in one region could be offset by better
Arabica vs robusta
Indeed, conditions are deemed better in the Brazilian
robusta-growing areas centred on Espirito Santo, although research institute Cepea
has cautioned that reservoirs have only been partially refilled from the
The gap in expectations between arabica and robusta has been
reflected in prices both in futures and Brazilian cash markets, with London's
November robusta contract easing by $1 to 1$1,992 a tonne.
As of Thursday, the latest data available, Brazilian arabica
coffee was worth $462.28 per 60 kilogramme bag, according to Cepea, which
pegged the domestic robusta price at $397.28 per bag, amongst the lowest levels
That left the arabica premium at R$65.03 per bag, up 14.2%
month on month. Arabica beans, typically viewed as being of better quality, historically hold a premium over robusta beans.