Coffee futures saw a lot of movement in April. Arabica and Robusta prices reached multi-year highs bringing some excitement back to the softs market. Arabica futures in New York touched around $2.45 per pound, reaching the highest level this market has seen in two years. This boost occurred mainly due to low inventory levels globally. Robusta's supply issues due to the drought-like conditions in Vietnam - the world's largest producer also helped prices move higher.
The drought in this region greatly impacted yields. This potential supply and demand issue has led to record-high prices for Robusta at $4,575 per metric ton this month.
Surging coffee prices in both Arabica and Robusta was also put on centerstage by market speculation and the current state of the global commodity markets. Coffee's current demand and the crop's weather related supply issues has also pressed the market to stay volatile. Nearterm weather in Vietnam looks to be improving in the coming weeks so investors are anticipating that prices have peaked. This coming pattern should help production numbers stabilize.
Bottomline, many commodity markets, especially within the softs, rely heavily on weather conditions in key growing regions for market direction. We see this in cocoa, orange juice and sugar - coffee is no different.
Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.
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