Coffee prices spike over poor weather reports from Brazil

The International Coffee Organisation (ICO) composite indicator price jumped US$0.12 cents over night to $1.49 on 19 February. The market saw its largest rally in over a decade, with March Arabica future surging a stunning 9.1 per cent to settle at $1.53 cents per pound on 18 February. The lift in prices comes from lowered expectations for Brazil's crop following poor weather reports, including the driest conditions seen in over 70 years in Sao Paulo. Volcafe cut its forecast by 9 million bags in early January, with similar moves by forecasting agencies Sonar and Conab. Exports from Vietnam have also been lower than expected, with just 6.87 million bags sold in the first four months of the new crop cycle. This is a 32 per cent drop over last year. Chris Togias, Director of Griffiths Coffee in Australia, said that the fund buying in the past five-days has been the equivalent of the total world’s annual coffee production, as rallying prices have led to panic buying. “The increase in coffee bean prices will have an immediate effect on spot prices for beans across the board,” he said in a statement. “Especially specialty varieties, with coffee bean prices this month alone increasing by 25 per cent.”