Attention to weather market with blossoming in Brazil
The weather market gains momentum, albeit still without affecting international prices. On the one hand, growers raise the tone about climate fears. Cooxupé’s Climate and Coffee Forum warned of the risk of a fall in the potential production of the next Brazilian crop. The water deficit and temperatures well above the average must hinder the crops.
Foreign traders, on the other hand, keep betting on rain and a second great blossoming in Brazil. Rain must return at the end of the week, but is still irregular and insufficient. It is only from the second half of October that moisture must improve significantly. Besides, the confirmation of La Nina in the first quarter of 2021 may affect the rainfall during the graining period. The climate has been irregular during a potentially small arabica crop in Brazil in 2021, given the production stress caused by this year’s record production.
The fact that funds still hold a too net long portfolio (which makes them less vulnerable) mitigates the climate effect on prices. Even so, Brazil’s 2021 crop remains risky and the weather remains on the radar. The arrival of rain creates a negative bias on the price curve, especially if the blossoming is also good. Now, if the moisture falls below expectations, there will be room for a new price raise.