In the world of commodities, coffee prices are on the rise, and it’s all because of the weather conditions in Brazil. Recent reports indicate that below-normal rainfall in Brazil, the largest producer of arabica coffee, is impacting coffee crop yields and subsequently supporting prices in the market.

Brazil, known for its extensive coffee cultivation especially in regions like Minas Gerais, has experienced significantly reduced rainfall compared to historical averages. This shortage of rain has raised concerns about the coffee harvest, leading to a surge in coffee prices. The dry weather conditions in Brazil have been a cause for worry since last April, with reports suggesting that the country is facing its driest spell since 1981.

Additionally, shrinking coffee inventories have added to the upward pressure on prices. Reports show a decline in ICE-monitored robusta coffee inventories to a 2-month low, signaling a tightening supply situation. Moreover, a higher percentage of Brazil’s coffee harvest has already been sold compared to previous years, indicating a limited availability of supply in the market.

The impact of weather-related challenges extends beyond Brazil. Vietnam, another key player in the coffee market, has also faced a decline in coffee production due to drought conditions. This drop in production has further contributed to the bullish trend in coffee prices globally.

While the market is responding to these supply concerns, it remains to be seen how the situation will evolve in the coming months. With weather uncertainties persisting in major coffee-producing regions, traders and consumers alike are closely monitoring the developments in the coffee market.