Arabica coffee edges higher as severe rains in Brazil dents prospects

Arabica coffee futures edged higher on Friday,boosted partly by declining exchange stocks.

March arabica coffee was up 0.15% to $2.3205 per lb.

Dealers said the outlook for this year’s crop in top producer Brazil remained a central focus with drought and frosts in 2021 denting prospects and concern that recent rains had been excessive in some areas.

Severe rains have flooded coffee fields and other crops in central eastern areas in Brazil, the latest in a climate roller-coaster for the nation’s agricultural regions.

Falling exchange stocks remained a supportive factor.

Certified ICE arabica coffee stocks were at 1.52 million bags as of Jan. 6, down from 1.60 million a month earlier.

“At this rate, it’s not inconceivable to see 1 million or less by summer ,this should in turn lead to a more inverted market which will also encourage funds to continue to position from the long side,” Cardiff Coffee Trading said in a report.

A drop in exchange stocks reduces the amount of coffee which can be tendered and can lead to nearby months trading at significant premiums to more distant positions.

March robusta coffee rose 0.5% to $2,318 a tonne, edging up towards a 10-year high of $2,384 set in late December.