(Bloomberg) — Arabica coffee futures dropped in New York on speculation the crop in top producer Brazil won’t be as frost-damaged as feared.
The most-active contract fell as much as 4%, erasing the previous session’s gains. Farmers in the South American nation are bracing for another cold front this week, but so far the country’s coffee belt hasn’t suffered a major freeze.
“It feels like we’re in coin-flip territory,” said Alex Boughton, a soft-commodities broker at Sucden Financial. “From what we hear, the damage is not as bad as was initially feared, but the market is going to remain hyper-reactionary until the weekend at least.”
Frigid weather threatens to extend into coffee-producing states such as Minas Gerais and São Paulo, Marco Antonio dos Santos, a meteorologist at Rural Clima, said Monday.
Meanwhile, Brazil’s green-coffee shipments rose to 3.4 million bags in July from 2.7 million bags a year earlier, according to exporter group Cecafé. Robusta accounted for the biggest jump in exports, helping plug a shortfall from a reduction in output in Vietnam.
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