London falls with rain in Vietnam and sends arabica coffee down in NY

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The more frequent and widespread rain expected for the beginning of May in Vietnam is accelerating sell orders, in a typical move to dismantle protection against unfavorable weather conditions. Although the predicted daily moisture will remain light to moderate, the accumulated volume will be sufficient to promote new blossoming and the development of dryland crops. The fact is that, even with the persistent need for more significant and frequent rain, the confirmation of precipitation in the coming few weeks brings relief to concerns over the climate and helps to reduce pessimism surrounding Vietnam’s next crop, which naturally affects prices, which were excessively high.

As a result, the July/24 position accumulated heavy losses and is already trading below the level of USD 3,700 per ton in London. As a result, robusta has already registered a decline of more than 14% since its peak reached on April 25. The confirmation of rain in May, together with the increase in the supply of robusta with the harvest progress in Indonesia and Brazil, should continue to impact prices and influence the attitude of traders on ICE Europe.

The decline in robusta also ended up affecting arabica in NY. The July/24 position fell to 206 cents. Thus, arabica has already fallen 16% since reaching 245 cents at the peak of trading on April 18. The losses at the end of April had a negative impact on the average price reached by the second position of coffee on the New York Stock Exchange, which resumed operations below the 2022 level. It is important to remember that during the month of April, some specific price indications for arabica even surpassed the April 2022 average, when the market was still strongly influenced by the frost that occurred in Brazil in 2021. The decline in price indications in early May is once again bringing arabica in NY closer to the reference for the same period last year. However, even with the sharp low, the commodity continues to be highly valued on the international market, maintaining a considerable advantage compared to the same period of the previous year and well above the five-year average, which is around 151 cents in NY. This indicates that coffee continues to be in a very favorable region for sellers.