(Bloomberg) -- Arabica coffee futures were headed for their biggest weekly gain in more than a month in New York as fears over supplies in top producer Brazil supported prices.
The contract is up about 5% this week after farmers in Brazil reported some isolated cases of frost last weekend. Prices climbed 28% this year on the back of low global inventories and concerns with production in Vietnam, the largest supplier of the cheaper robusta variety.
“The Brazil frost scare earlier this week did not materialize in any significant manner, but it was a strong reminder of the low stock market situation,” said Rabobank analyst Carlos Mera.
A disappointing crop in major producers, as well as the looming implementation of the European Union’s anti-deforestation legislation, are also bullish factors for the commodity, Mera said.
Read: Coffee Spread Jumps as Supply Risks From Forest Law Come to Fore
With most of this year’s harvest in Brazil already completed, traders will now watch for weather during the period of flowering over the next two months. That’s seen as an initial indication on production for the upcoming season, and farmers fear there could be damaging premature flowering after some regions faced dry weather and heat earlier this year.
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