Coffee futures cemented their place above 200 cents a pound,
as fears intensified over the damage to Brazil's production, this year and
next, from drought which is increasingly affecting Central America too.
Arabica coffee futures for December stood 3.7% higher at 208.50
cents a pound in New York at 08:00 local time (13:00 UK time), amongst its
highest levels in four months, returning strongly from a long US weekend.
The increase was helped in part by a firm performance on
Monday by London robusta coffee futures, which were lifted by data showing a
32% tumble in exports from Sumatra, the top growing region in Indonesia.
Indonesia is the third-ranked producer of robusta beans.
Robusta coffee futures for November nudged a further 0.9%
higher on Tuesday to $2,100 a tonne.
Arabica coffee also received support from a continued slew
of downbeat news from Latin America, where Brazilian harvest results remain downbeat,
with research institute Cepea cautioning that production losses in some areas "might
Parana, a mid-ranked coffee growing state, where harvesting
is nearly complete, will end up with crop of 514,400 bags, down 69% year on
year, according to state farm officials.
And "growers are concerned" about next year too, Cepea said,
citing longer-term damage to trees from this year's drought, and premature formation
of the blossoms which will produce the 2015 crop, but which can abort without
"If weather remains dry, these blossoms should be damaged,"
the institute said.
Rains stay away
According to consultancy Somar, some 10-15% of coffee farms
showed early flowering in the main coffee producing states of São Paulo and Minas
Gerais, thanks to unusual rains in July, which is a month typically dry in the
"The fixation of these blooms depends on regular and
consistent rains, to ensure the 2015 crop is not affected even more, after the
damage already caused by drought," the Conselho Nacional do Café producers'
In fact, farmers hoping for follow-up rains have been "frustrated",
the CNC said.
'Situation of food
Meanwhile, in Central America too, "climatic conditions are also
unfavourable to agriculture," CNC said.
"Prolonged drought linked to El Niño has reached Guatemala,
Costa Rica, El Salvador, Honduras and Nicaragua, creating a situation of food
insecurity in a region already reeling from coffee leaf rust."
The region, an important producer of specialty coffees, has suffered
heavy losses to the coffee rust fungus, roya, which causes defoliation and
potentially tree death.
Guatemala last week declared a state of emergency in 16 of
the country's 22 provinces, citing drought, while the United Nations World Food
Programme has warned that more than 2m Central Americans are struggling for