World coffee and sugar prices soar due to drought in Brazil

World coffee and sugar prices surged 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 the worst droughts in its 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 skyrocketed due to drought in Brazil. Illustrative photo

Coffee dealers and industry experts said Brazil’s crop could still recover if rains continue, but the overall crop outlook remains precarious. Benchmark Arabica coffee futures on the ICE Futures Exchange hit a fresh 13-year high of $2.7380 a lb and were up 0.9% at $2.7150 by 1123 GMT. Raw sugar futures hit a fresh seven-month high of 23.71 cents a lb earlier and were up 1% at 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, 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 a nearly half-century high last week, were up 1.4% at $5,223 a tonne at 1123 GMT, while white sugar futures were up 0.6% at $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