Coffee prices settled sharply higher

Coffee prices wednesday settled sharply higher. A slide in the dollar index Wednesday to a 3-1/2 week low sparked short covering in coffee futures.  Coffee also has support from dry conditions in Brazil after Somar Meteorologia Monday reported that rainfall in the Minas Gerais area, which accounts for about 30% of Brazil’s arabica crop, was 10.8 mm last week, or only 38% of the historical average.

Dealers noted certified stocks of arabica coffee had begun to fall again, dipping to 1.11 million bags, as of Monday, down from 1.14 million bags late last week.

A bearish factor for robusta coffee is increased supplies from Vietnam after Vietnam’s General Statistics Office reported Monday that Vietnam’s Jan-March coffee exports jumped +19.4% y/y to 541,000 MT.

A bearish factor for arabica was last Friday’s projection from Rabobank that Brazil’s 2022/23 arabica coffee crop would climb +31.8% y/y to 41.1 mln bags.