Arabica Coffee Futures Rebound on Brazil Output Concerns

Coffee traders and roasters closely watch global futures markets—not just for investment signals, but because price swings directly affect the cost of green beans and, eventually, your cup. On June 6, 2014, one key market delivered a surprise: after days of decline, arabica coffee futures turned upward, driven by fresh concerns over Brazil’s crop.

Arabica coffee futures gained 1.7% on June 6, 2014, closing at $1.7210 per pound after trading as low as $1.6915 earlier in the session. That 2.95-cent rise came despite earlier weakness, fueled by short-covering and stop-loss buying tied to Brazil’s lower production outlook.

Why Did Arabica Futures Reverse Course?

The Intercontinental Exchange (ICE) July arabica coffee contract opened under pressure but reversed course to settle at $1.7210 per pound, up 2.95 cents (1.7%). This move followed earlier losses and marked a shift after the Brazilian National Coffee Council (CNC) maintained its 2014/15 brazilian coffee production estimate between 4.01 million and 4.33 million 60kg bags—the lower end of analyst expectations. The market had feared worse, but the CNC’s conservative forecast suggested ongoing concerns about the impact of drought damage on arabica-growing regions in Brazil during January and February 2014.

What Happened with Other Coffee Futures?

While arabica rallied, London’s LIFFE September robusta coffee contract also closed higher, gaining $7 (0.4%) to $1,922 per ton. In contrast, ICE’s July cocoa contract saw a late-session sell-off. After peaking at $3,106 per ton—the highest since August 2011—July cocoa futures dropped $13 (0.4%) to $3,079 per ton, with volume more than double the average. The September cocoa contract on LIFFE fell £4 (0.2%) to £1,941 per ton. Sugar markets, meanwhile, staged a late recovery: ICE July raw sugar added 0.09 cent (0.5%) to 16.92 cents per pound, having hit a four-week low of 16.77 cents earlier, while LIFFE August white sugar rose $10 (0.02%) to $460.20 per ton after touching $457.

What Do These Moves Mean for Coffee Markets?

The rebound in arabica futures reflects trader sensitivity to supply-side signals—especially from Brazil, the world’s largest producer of arabica coffee. The CNC’s decision to hold its production estimate steady at the lower range reassured the market that the damage caused by earlier dryness might be more severe than initially assumed. That uncertainty, coupled with technical factors like short-covering and the July cocoa option expiry, drove the day’s moves. While cocoa and sugar had their own session dynamics, the key takeaway for arabica buyers and traders is that supply concerns in Brazil continue to underpin price support despite earlier downward pressure.

Frequently Asked Questions

Why did arabica coffee futures go up on June 6, 2014?

Arabica coffee futures rose because traders reacted to the Brazilian National Coffee Council maintaining its 2014/15 production estimate at 4.01–4.33 million 60kg bags, the lower end of market forecasts, signaling continued concern over drought impact on Brazil’s arabica crop.

How much did July arabica coffee futures rise on June 6?

July arabica coffee futures gained 2.95 cents (1.7%) to close at $1.7210 per pound on the ICE exchange.

What happened to cocoa futures on the same day?

ICE July cocoa futures fell $13 (0.4%) to $3,079 per ton after hitting a 33-month high of $3,106, while LIFFE September cocoa futures dropped £4 (0.2%) to £1,941 per ton.

Did sugar futures also reverse course that day?

Yes, ICE July raw sugar futures rose 0.09 cent (0.5%) to 16.92 cents per pound after earlier falling to a four-week low of 16.77 cents, and LIFFE August white sugar gained $10 (0.02%) to $460.20 per ton.

Why were traders watching the Brazilian coffee estimate so closely?

Brazil is the world’s largest arabica producer, and any sign of lower output due to drought—especially in January and February 2014—can significantly affect global supply and futures prices.

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