Following the attention that the global coffee S&D has been receiving, the outlook is likely to support bullish behavior in coffee futures. Pre-flowering rainfall in Brazil , the world’s largest coffee producer, was deficient last year, and the poor bloom is translating to reductions in yield expectations for the coming harvest. Some of this lost yield could have been salvaged if conditions were favorable going forward, but the outlook is for drier conditions to dominate in Minas Gerais state, where the majority of Brazil’s coffee originates. Click on the chart above to see the weekly rainfall outlook in the MG coffee region; the bars represent the WTI forecasted year-over-year change in weekly precipitation (mm) totals, and the solid line is the observed year-over-year change (note the WTI forecast was made 11 months in advance). In addition to weather induced shortages, global demand is still anticipated to increase more than 2% for the current crop year (Oct/Sep).

This entry was posted on Wednesday, January 9th, 2008 at 3:22 pm and is filed under Agriculture, Global Commodities, Global Weather, Softs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.