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Coffee Set for Longest Run of Gains in 45 Years on Supply Woes

Futures for arabica rose as much as 1.6% on Tuesday. (Tristan Fewings/Photographer: Tristan Fewings/Ge)

(Bloomberg) -- Coffee is headed for its longest winning streak since 1980, as the market grapples with persistent supply concerns in key growing regions.

Futures for the arabica variety, preferred by companies like Starbucks Corp., rose as much as 2.4% on Tuesday to another fresh record. The premium bean advanced for a 10th day and is trading just shy of $4 a pound after doubling in the past year.

Shortfalls in Brazil, the top arabica grower, continue to worry traders after record shipments earlier in the season means less supply availability now. On Monday, Brazilian exporter Comexim Ltda. said that the country’s output of both arabica and cheaper robusta beans is expected to decline in the 2025-2026 crop year.

Inventories held at exchange-monitored warehouses are now at the lowest since November. Still, a recent increase in the amount of coffee awaiting grading could provide some relief to tight supplies on the exchange. 

A decline in certified stocks would continue to fuel concern over supplies, Harry Howard, a broker at Sucden Financial, said in a note on Tuesday. 

Meanwhile, “technical indicators are still looking overheated,” Howard said. Arabica’s relative strength index remains near overbought territory, a sign that prices may have risen too far and too fast.

Crops in Brazil’s primary arabica-growing areas are also now slated to see sparser rains and more intense dry weather, following an uptick in showers last week. That could be beneficial in regions like São Paulo and southern Minas Gerais, where high moisture has created the risk of fungal disease, Climatempo meteorologist Nadiara Pereira said in a note. But crops further north, including in Espírito Santo and Bahia, may face heat stress after a string of drier weather, Pereira said.

--With assistance from Ilena Peng.

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