(Bloomberg) -- Arabica coffee dropped by the most since late May, snapping a rally that had brought prices to a two-year high.
Futures sank as much as 4.9% in New York to $2.4395 a pound, erasing three sessions of gains. Prices had jumped to an intraday high of $2.5945 a pound on Tuesday on dry weather in Brazil. The rally earlier this week had brought futures briefly into overbought territory on the relative strength index, a technical sign that prices may have jumped too far, too fast.
Top grower Brazil, however, remains in a severe drought at a key time for the development of the 2025-2026 crop. Dry weather is expected to continue over Brazil’s coffee-growing areas this week, with temperatures rising rapidly, Climatempo meteorologist Nadiara Pereira said in a report Thursday.
In other softs, cocoa futures fell as much as 2.4% in New York, slumping for a third day on forecasts of rain in West Africa. Western Ivory Coast saw moderate to heavy showers on Wednesday, with some light, isolated showers elsewhere, according to a Maxar weather forecast.
“Ivory Coast growers expect harvest to begin next month, and the amount of rain the crop receives will determine the amount and duration of the harvest,” said Mark Bowman, senior global market analyst at ADM Investor Services.
Still, cocoa futures are up more than 80% this year, primarily driven by fears around dry weather, disease and a lack of fertilizers curbing output in the main growing region. Ghana’s industry regulator recently cut the country’s crop harvest target for 2024-25 by 20% on weather concerns.
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