Robusta coffee trims losses after loosing to 5-week low

Coffee prices Monday recovered from early losses and closed moderately higher on a slump in the dollar index to a 1-month low.  Coffee prices Monday initially moved lower on concern that the lingering U.S. and European bank turmoil will push the global economy into recession and curb demand for commodities, including coffee.  

Reduced concern about flooding in Brazil’s coffee fields is bearish for coffee prices as the drier conditions should allow farmers in Minas Gerais, Brazil’s largest arabica growing region, back into coffee fields to apply fertilizers and pesticides.  

Somar Meteorologia reported today that Brazil’s Minas Gerais region received 11 mm of rain in the week ended March 19 or 24% of the historical average.  Minas Gerais accounts for about 30% of Brazil’s arabica crop.

A rebound in ICE inventories is bearish for robusta prices after ICE robusta coffee inventories last Friday rose to a 3-1/4 month high at 7,596 lots.