Coffee Sees Burst of Volatility as Robusta Supply Fears Persist

Coffee futures in New York and London have fluctuated due to persistent supply concerns and volatility. Robusta futures dropped as much as 2.7% in London, while Arabica futures fell as much as 2.6% in New York. The volatility has been exacerbated by ongoing dryness in top robusta exporter Vietnam, keeping a 60-day measure of price swings near the highest since at least 2008. 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. The long-term forecast remains moderately bullish, with potential heat waves and heavy rains potentially altering arabica’s and robusta’s price narrative. Money managers have piled up long positions in coffee recently, but their moves could create some downward pressure to prices in the short term. Investors are also watching the expiration of July arabica options on Wednesday, and there’s been a large open interest for some put options.

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