Coffee futures gained amid worries over too much rain in Vietnam, where there is talk of a delayed harvest, and too little in Brazil, with talk of a mixed flowering season in the top arabica-growing state.
London robusta coffee futures for November closed up 1.4% at $2,028 a tonne, their highest finish in a month, and their first close since August above their 50-day moving average.
The gain came amid growing concerns over the harvest in Vietnam, the world’s biggest robusta grower, where stocks have been run down by strong exports after disappointing 2016-17 production.
"Heavy rainfall in Vietnam is causing harvest delays, with their farmers now planning on completing the harvest in two pickings instead of three that should start at the beginning of November," Hightower Report said.
"Current Vietnamese coffee stocks may be as low as 25,000 tonnes (417,000 bags), so further harvest delays could exacerbate an already very tight near-term supply situation," the ag markets commentator said.
Indeed, concerns of a short-term supply squeeze saw the November contract again outperform the next-in January 2018 lot, to take its premium at the close to $55 a tonne – up from $28 a tonne at the end of last week.
In New York, the December arabica coffee contract gained 2.1% to 126.85 cents a pound, offered support by the revival in robusta futures, but also by nagging worries over rainfall levels in parts of Minas Gerais, Brazil’s biggest arabica-growing state.
Lucio Dias, commercial director at Cooxupe, Brazil’s largest grower co-operative, said that coffee 2018 production in about one-third of the Minas Gerais, notably in the south, may fall short thanks to poor conditions.
At broker Price Futures, Jack Scoville said that Brazilian "coffee areas remain generally dry," adding that "trees remain stressed and there are concerns that flowers are being aborted", rather than setting as cherries for the 2018 harvest.
"Most areas will need to see some consistent rainfall now to keep the potential for a big crop alive as trees need to recover from stress from the production year last year and also the cold and dry winter."
In fact, weather maps show southern Minas Gerais running short on rains for the rest of this month, according to MDA weather maps, although Somar Meteorologia flagged heat as more of a threat to yields.
Saying that soil moisture levels had been largely replenished, the weather group said that "extreme heat is the pressing issue at the moment", raising the risk of flowers aborting.
After a prolonged drought that lasted until the end of September, the main coffee producing regions of Brazil had relief with the return of the rains. Although soil moisture levels can now be considered as high in important coffee producing areas, the concern at the moment is with the high temperatures.
By Mike Verdin