Coffee prices remain high following Brazil weather

Brazil’s volatile weather conditions are driving high coffee prices, with Rabobank predicting that the upcoming harvest will decrease by 10 – 20 per cent. Rabobank says that drought in Brazil will drop the production potential of the 2014 – 2015 crop year by 28 – 30 million 60 kilogram bags. According to the report, speculators are continuing to drive price swings with the Arabica vs. Robusta differential widening to US $1.14 per pound during April. Arabica prices are up 11 per cent in April, while Robusta prices trail, up 4.9 per cent, the largest gap in 14 months. While the recent rainfall has enhanced the position of next year’s crop, concerns are now growing over excessive rain, which would drive quantity and quality down. Warmer than normal conditions across much of Asia could accelerate the harvests of Vietnam and Indonesia, which could lead to a lower yield later in the season.