Coffee futures was pushed toward a bear market as the recent rains eased drought damage in Brazil, the globe’s top grower and exporter.
Producers are facing less crop damages than expected after drought hit Brazil and reduced the impact of the worst dry spell in 50 years, according to the country’s Agriculture Minister Neri Geller. However, small blends in farms in Costa Rica, El Salvador and other Latin American countries are expected to be affected by a fungus that is spreading.
Coffee futures dropped by 23% from a two-year high in April. This year’s output is expected to harvest approximately 50.5 million bags of the commodity, according to Mercon Group, while the US Department of Agriculture estimated 49.5 million bags of coffee will be harvested in May.
The prices of coffee increased in April, J.M Smucker said on Tuesday and announced that its coffee prices increased by an average 9%.
Bigger production forecasts “suggest that the damage was not as significant as expected,” Boyd Cruel, a senior analyst at Vision Financial Markets, said yesterday “We are also in the middle of the harvest, and conditions remain ideal, with no disruptions.”
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Arabica Coffee for July delivery slid 0.5% lower to $1.703 a pound on New York’s ICE Futures US, after Tuesday’s prices marked a 20% fall from this year’s settlement of $2.148 on April 24.
Stockpiles of unroasted beans in the US, the biggest consumer and importer of the commodity, gained 7.6% in April from the previous year, Green Coffee Association said on May 15th.
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