Coffee futures (arabica) have reached 14-month highs this week with the help of an unexpected ally – the Brazilian Real – despite the production outlook of the robusta variety. Coffee futures are up 310 points today currently trading at $1.5075 per pound at the New York Intercontinental Exchange.
With the combination of dryness in the coffee growing regions in Brazil & Vietnam, and the Brazilian Real reaching its strongest level against the US Dollar, the last month and a half has cause arabica coffee futures to rise 20% versus an 8.7% gain in robusta variety futures. Last month alone, a composite index maintained by the Int’l Coffee Organization showed arabica coffee gaining 7.2% which is three times the gain compared to robusta coffee.
“It is currently a tale of two different coffee (futures) varieties traded ‘across the pond’ from one another,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the coffee futures market. Levy added, “Both coffee varieties have their problems right now, but the prolonged drought in the arabica growing regions are outweighing the production shortages of the robusta type.”
Coffee futures trend is up with no top yet in sight. Right now coffee futures appears to be a “buy the dip” market.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.