The price of coffee has surged to its highest levels for months because of exceptionally dry weather in Brazil that could crimp harvests in the country, the world's biggest producer and exporter. The price of Arabica quality coffee, accounting for three quarters of Brazilian production, rose on Tuesday to 137.95 US cents a pound in New York, the highest level since last May. That represents a price leap of 23.0 per cent in a week, and of 36.0 per cent since a seven-year low point in November when the price was 100.95 US cents. The price of Robusta, considered to be a poorer quality than Arabica, rose to the highest level for six months at $US1,905 ($A2,183) per tonne in London.The head of soft commodities research at Ecobank in London, Edward George, told AFP the price rally had been driven by "one of the hottest and driest summers in living memory in Brazil, where some parts of the country have experienced the lowest rainfall since the 1940s".
George warned the weather would damage the growth of coffee cherries, and also stunt the growth of trees ahead of next season's crop. "Until there is a notable change in the weather outlook, the price rally is set to continue," he said. The state of Minas Gerais, where most of the coffee plantations are located, has been particularly hard hit by the dry weather just as crops are at a critical point in their growth before the April harvest. Economists at Commerzbank said the coffee market was in turmoil. "There is no other way to describe the nearly 20-per cent surge in Arabica prices within five days of trading - including yesterday's almost nine-per cent gain, which was the highest for more than nine years."
Source - http://finance.ninemsn.com.au/
