Rainfall in Brazil improve prospects for coffee crop

Unlike the raw sugar price, coffee prices are responding negatively to the rainfall in the key growing regions of Brazil. Harvesting of this year's coffee crop will soon be finished, so attention is shifting increasingly to next year's crop, which has already begun to blossom early. If conditions were too dry, the blossoms could fall off. 

The current rainfall, plus the rain forecast for the near future, is helping to maintain the blossoms and allow the berries to develop well. This gives hope of a good crop in 2016 and reduces the focus on the problems the rain could cause for the harvest currently underway, says Commerzbank. The fact that the Brazilian real has also been weaker again in recent days helped drive the Arabica coffee price down by nearly 3% yesterday. 

Robusta coffee also fell by 3%. For months now, the Robusta price has failed to resist the downswing suffered by Arabica coffee despite the fact that Vietnamese coffee suppliers are withholding supply because of the low prices. According to the General Statistics Office of Vietnam, aggregate exports from January to September are apparently a good 30% down year-on-year, and just shy of 23% down since the start of the season in October 2014. 

The General Statistics Office's estimate of the country's coffee exports in September is considerably higher than that published by the government a few days ago, notes Commerzbank. The figure for August was also upwardly corrected.