Key insights
- Coffee futures experienced a decline after reaching multi-week highs, driven by concerns over a potential 'super El Niño' weather pattern. While Robusta futures saw a slight increase, Arabica futures fell. The El Niño phenomenon poses risks to coffee production in key regions like Vietnam, Indonesia, and Brazil, potentially impacting global supply and prices. This event has limited direct influence on US equity markets, hence a neutral impact score.
Investing.com -- Coffee futures on ICE declined on Thursday after reaching multi-week highs earlier in the trading session amid concerns about a potentially strong weather pattern described as a "super El Niño" developing.
Arabica coffee fell 1.6% to $2.6735 per pound at 1527 GMT. Earlier in the session, the contract reached $2.7810, its highest level since mid-May.
Robusta coffee rose 0.4% to $3,636 per metric ton, after touching $3,680, its highest point since early March.
The El Niño weather pattern poses particular challenges for robusta production, as it typically brings higher temperatures and reduced rainfall to Vietnam and Indonesia. These two countries produce about 50% of the world’s robusta coffee supply.
For arabica production, the pattern initially brings excess rainfall to Brazil, the top producer. While these conditions slow down the harvest, they only push prices higher if they cause significant damage to crop quality or lead to fungal disease.
Sugar futures also declined on Thursday, following weaker oil prices.
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