Coffee climbs as oil rally, Brazil weather add to supply threat

On Mar 10, 2022

Coffee prices increased to a one-week high in New York on concerns that rising energy costs and cool weather in Brazil will exacerbate supply constraints.

Arabica futures increased by as much as 1.3 percent, adding to Tuesday’s nearly 4% gain. There is concern that the surge in oil prices caused by Russia’s invasion of Ukraine will increase farmer costs. Increased fertiliser prices and scarcity of nutrients threaten to reduce yields in Brazil, the world’s largest grower.

Reduced yields and supply chain bottlenecks leave little room for adverse crop weather. From May to July, temperatures in Brazil’s coffee regions may be cooler than normal, though this does not necessarily mean a repeat of last year’s devastating frost, according to World Weather Inc.

Arabica was up 0.8 percent in New York, trading at $2.3485 a pound. Robusta coffee increased by 0.9 percent in London.