(Bloomberg) -- Arabica coffee prices retreated, paring gains seen earlier in the week as a forecast for light rains in top producer Brazil reduced fears of crop damages.
The most-active futures contract dropped as low as $1.50 per pound on Friday, putting it on track for a weekly loss of more than 5%. The decrease also followed recent strengthening of the US dollar, as commodities priced in the greenback became more expensive to foreign buyers.
Key coffee producing areas in Brazil should see some volumes of rain by the end of September, Rural Clima meteorologist Marco Antonio dos Santos said Friday. That is beneficial for coffee trees after those areas faced days of extreme heat and dryness.
Fears related to Brazil’s weather were one of the main elements behind a recent spike in prices, but investors have since calmed down, StoneX analyst Fernando Maximiliano said. He added models are pointing to rains reaching producing areas by next Wednesday.
“Fears have eased, but we’ll need to keep monitoring as heat is still a concern,” he said.
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