Coffee prices have soared, and arabica reached its highest level since 1977 for the continuous contract on the New York Stock Exchange. The market finds fundamental support in the growing pessimism regarding the potential of the next arabica crop in Brazil, a consequence of the weak outcome of the blossoming. The showy blossoming observed in October did not develop properly, with many reports of flower drop. This occurred due to the lack of plant energy, harmed by the long period of drought and above-average temperatures, which extended from April to October. The states of Minas Gerais, especially in its South and Cerrado regions, besides São Paulo, were the most affected, reaching critical levels of moisture that had not been seen since the drought of 1981. This scenario directly impacts the production potential and has led to a downward revision of crop estimates. Although the outlook is still uncertain, the negative perception about production has increased, which has affected the market and justifies the arabica price gains.
In addition, the delay in the arrival of robusta coffee from Vietnam, whose crop is already quite weakened, has also contributed to the uptrend. Active demand, driven by the cold season in the Northern Hemisphere, further accentuates the appreciation of prices. However, it is undeniable that the price escalation also has a strong technical component. The increase in cocoa prices is also affecting the coffee market. The breakout of the psychological level of 300 cents gave additional momentum to gains, and the market has overcome new resistances, maintaining the bullish movement.
With the Thanksgiving holiday in the United States this Thursday and the absence of fundamental news, the environment favors the continuation of gains. As a result, coffee reached new highs, and the 1st continuous position on the New York Stock Exchange reached its highest level since 1977, when the market was still reflecting the effects of the devastating 1975 frost in Brazil, which caused major production losses and sent prices up.