Arabica-coffee futures rose to a more than five-week high on Wednesday as forecasts for cold, wet weather in top producer Brazil’s growing regions and a stronger currency there discouraged selling.
Arabica coffee for delivery in September on ICE Futures U.S. settled at $1.2795 a pound, up 1.6% on the day, the highest active-month settlement since June 10.
«It looks like we put a low in,» said Jack Scoville, a vice president at Price Futures Group, a Chicago brokerage. «It kind of feels like we’ve run out of selling for the moment.»
Last month, arabica coffee prices came within a month of a four-year low, as Brazil began harvesting what its government expects to be a record crop for the off-year cycle.
Brazil’s currency had strengthened against the U.S. dollar. A stronger local currency is a deterrent to exporters to sell their crop abroad since they would receive fewer reais back for a crop sold in dollars.
The real was trading at 2.2252 against the U.S. dollar, up from the open of 2.2539, according to CQG. That also helped sugar prices, which ended 0.5% higher at 16.08 cents a pound. Brazil is the world’s biggest sugar exporter by volume.
For coffee, however, another factor helped lift prices: Vietnam. A sharp drop in Vietnamese exports of robusta coffee, a more bitter variety of bean often used in instant coffee, also lifted arabica prices, Mr. Scoville said, pointing to potentially increased demand for arabica.
June robusta exports from Vietnam, the world’s biggest grower of that variety, fell 37.5% on the year to 88,387 metric tons.
Source: online.wsj.com/article/BT-CO-20130717-709701.html
Arabica Coffee Gains on Cooler Brazil Forecast
