(Bloomberg) -- Coffee futures fluctuated in New York and London as persistent supply concerns continued to add volatility.

Robusta futures dropped as much as 2.7% in London on Monday, before wavering between gains and losses. Arabica futures fell as much as 2.6% in New York before paring declines.

Volatility has been exacerbated by ongoing dryness in top robusta exporter Vietnam, Daria Efanova, head of research at Sucden Financial, said in a Monday report. That’s keeping a 60-day measure of price swings near the highest since at least 2008.

“While we expect the near term to remain bumpy, our longer-term forecast remains moderately bullish,” Efanova said.

Arabica coffee has also seen an increase in volatility due to concerns over below-average rains in top supplier Brazil, coupled with rising speculative demand following a fallout from a crunch in the cocoa market, she added.

“A lot will hinge on weather patterns in the coming months,” Efanova said. “We remain cautious about potential heat waves and heavy rains that could significantly alter arabica’s and robusta’s price narrative.”


Money managers piled up long positions in coffee recently, but their moves from now on could create some downward pressure to prices in the short term, said Marcelo Moreira, who follows coffee markets for Archer Consulting. He noted investors are also watching the upcoming expiration of July arabica options on Wednesday, and there’s been a large open interest for some put options. 

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