Weak Production and Strong Brazil Real Push Coffee Prices Up

Coffee futures rose on Wednesday, extending gains to the third-straight session and looked set to close higher for the seventh trading day in the last nine day.

The commodity was supported by report from Brazilian coffee exporter Terra Forte that showed arabica production down 13% on a yearly basis to 38.18 million 60-kg bags. The first crop report for 2017-18 also saw robusta production down 5% year on year, to 9.88 million bags.

In addition, the Brazil real strengthened versus the U.S. dollar, which tends to send prices of the agricultural commodity in real terms lower. This prompted Brazilian exporters to sell less to the foreign market. Furthermore, Brazilian farmers are also unwilling to sell their coffee stocks as they earn lower profits due to their expenses being mostly in reals.

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