El Nino Fears Weigh on Coffee

Arabica coffee futures traded around $1.9 per lb, not far from the six-month high of $2.05 reached on April 18th, amid heightened crop concerns after a report said the El Nino weather pattern was already happening, posing risks to global production.

Experts said that top producers in Central and South America, who have been affected by excessive rainfall during the last three years of La Niña, are now experiencing more normal weather conditions.

However, the upcoming harvest could be affected if temperatures remain excessively high during the flowering phase of the 2024/25 season, around September, causing the trees to lose a significant number of flowers.

Meanwhile, recent data showed ICE-monitored arabica coffee inventories have steadily declined over the past four months and fell to a 6-1/2 month low of 552,221 bags.

On a bearish note, the latest annual report from the USDA’s FAS projected that Brazil’s 2023/24 arabica coffee production would climb +12% y/y to 44.7 mln bags.


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