Coffee futures on the active December contract fell about 6% Tuesday to Tuesday, ending back below $3 a pound after a high earlier in the week. Sucafina had called both the top and the pullback a week earlier, and broadly got it.
Brazil’s election did the work. Lula’s second-round win over Flávio Bolsonaro was an upset, and the real weakened sharply on Monday, from 4.95 to 5.60, before retracing to 5.34 by Tuesday. For a Brazilian grower that arithmetic matters more than the dollar price: in local terms the value of their coffee rose about 13%. In a surplus crop year, a move like that brings selling almost immediately, whatever the grower makes of the politics.
That is what followed. Origin selling ground futures lower through Monday and Tuesday and back under $3 a pound. Sucafina expects a further leg down before the market finds support, with still little news on new certified inventories arriving in Europe.
Economic conditions look weaker to the Brazilian farmer after the result. The price in their own currency is what decides whether they sell, and this week it pointed to selling.
Read the full coffee market analysis here.
