Arabica coffee futures have dipped below $2.5 per pound, pulling back from a 13-year high reached on August 28th. This decline can be largely attributed to a weaker Brazilian real, yet prices remain historically high due to tight market fundamentals. Adverse weather conditions continue to pose threats to coffee crops in Brazil, which is responsible for approximately one-third of the world's coffee supply.
Recent rorts from Cooxupé, Brazil's largest coffee cooperative, indicate that coffee trees are under considerable stress. Several key growing regions have experienced minimal to no rainfall over the past 120 days. Concerns are increasing that ongoing dryness may trigger premature flowering of coffee trees, which could significantly reduce yields for the 2024/25 coffee crop.
Since the beginning of 2024, coffee prices have surged by 85.46 USd/Lbs, marking an increase of 45.39% according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Analysts project that coffee will trade at 253.89 USd/Lbs by the end of this quarter, with future estimates suggesting a price of 277.26 USd/Lbs in the next 12 months.