World coffee and sugar prices soar due to drought in Brazil

World coffee and sugar prices soared to new highs on September 26 as investors remained focused on drought-stricken Brazil, the top grower of both commodities, with weather forecasts pointing to continued dryness.

Brazil is experiencing one of its worst droughts in history. Agricultural fires have broken out in some sugar-producing regions as a result of the drought, while Arabica coffee is even more affected as the crop is in the crucial flowering stage. While some weather models predict rain will eventually reach Brazil, analysts at LSEG say it is unlikely to arrive until mid- to late October, if at all.

World coffee and sugar prices have soared due to drought in Brazil. Illustrative photo

Coffee dealers and industry experts say Brazil’s crop could still recover if rains continue, but the overall crop situation remains precarious. Benchmark Arabica coffee futures on ICE hit a new 13-year high of $2.7380 a lb and rose 0.9% to $2.7150 at 11:23 GMT. Raw sugar futures hit a seven-month high of 23.71 cents a lb earlier and then rose 1% to 23.66 cents. Expectations that Brazil is entering one of its longest crop gaps in decades have disrupted a months-long short squeeze on the New York sugar market by speculators.

In Vietnam, the top producer of robusta coffee, domestic prices fell this week ahead of a new harvest. Increased output from Vietnam could help ease upward pressure on arabica prices, as the two are somewhat interchangeable.

However, Vietnam suffered from adverse weather earlier this year and there are widespread expectations that the upcoming harvest will reflect this. Robusta coffee futures, which hit their highest in nearly half a century last week, rose 1.4% to $5,223 a tonne at 11:23 GMT, while white sugar futures rose 0.6% to $600.40 a tonne. In other soft commodities, December New York cocoa rose 3.7% to $8,250 a tonne, while March London cocoa rose 1.7% to 4,609 pounds a tonne.

Source: https://congthuong.vn/gia-ca-phe-va-gia-duong-the-gioi-tang-vot-do-han-han-o-brazil-348749.html