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Coffee prices grow because of the dry weather in Latin America

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Coffee prices grow because of the dry weather in Latin America
November 28
09:00 2019

There is a rush of coffee prices because of the decrease in production in Latin America.

Over the past few weeks, the price of “coffee” futures has risen about a quarter to $ 1.17 per pound. Just a month ago, the asset cost $ 0.93 on the ICE.

The thing is that coffee stocks in warehouses have decreased by about 80 thousand bags (60 kg of aromatic beans in each bag).The dry weather in Honduras, Brazil and Peru caused such a significant decrease.

Arabica is produced in Latin America; Honduras produces about 10% of the world’s coffee. Of course, the share is not so large, but the larger part of the coffee with the ICE certificate comes to the exchange from this particular Central American country. That is why little Honduras has such a strong impact on global asset prices.

The International Coffee Organization (ICO) has issued an outlook. According to it, next year, coffee production will decrease by 0.9% and amount to 167.4 million bags. The harvest of Arabica will fall as much as 2.7% and amount to 95.68 million tons (this is a four-year low).

But global demand for grains will increase, which is most likely to push coffee to a further price rise.

 

 

The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company
UFT Group

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