(Bloomberg) -- Arabica futures traded near the lowest in three weeks as traders assess mild weather conditions during top-grower Brazil’s winter, along with risks for demand weakness.
The most-active contract held close to $2.30 a pound, while volatility has eased as Brazil’s coolest month of July is reaching an end. The market’s “frost premium” is being removed as the risk of sub-zero temperatures diminishes, traders at Sucafina SA said in a note.
Futures have dropped nearly 6% after reaching a two-year high in mid-July. Forecasts of rains in the coming months have helped alleviate supply fears, though prices remain historically high for the time of year.
Beverage companies’ earnings are also raising concerns over softening global demand. In the emerging Chinese coffee consumer market, top retailer Luckin Coffee Inc. reported a 21% drop in same-store sales in the second quarter, a reflection of fierce competition and weaker consumer sentiment, Bloomberg Intelligence analysts Angela HanLee and Rebecca Wang wrote in a Tuesday report. Analysts also expect Starbucks Corp. to see lower results due to weak demand in both the US and China.
©2024 Bloomberg L.P.
