Arabica Coffee Futures Jump on Expected Brazilian Government Measures
Michael Chen
Senior Web Developer
Arabica coffee rallied Friday after Brazil's Agriculture Ministry said it would announce measures to combat low prices as early as Monday.
Those measures could include buying coffee from producers. The announcement fanned futures after prices tumbled to a four-year low during the previous session.
But, "we don't know what's coming," said Gustavo Moretti, a trader in Santos, Brazil, for Ecom Agroindustrial Corp., one of the world's biggest coffee traders. "We would like to have something healthy for pricing and producers, but so far, it's nothing concrete."
Arabica coffee for September delivery closed at $1.1825 a pound Friday, up 2.3% on the day.
The bounce was helped by an intraday recovery in the Brazilian real, which slid to a fresh, more than four-year low against the dollar in early trade. A stronger real discourages growers and exporters from selling their crop abroad, since they receive fewer reais for their product sold in U.S. dollars.
Mr. Moretti said that demand for coffee overall has been lackluster, which he blames on seasonal vacations in Europe, the world's biggest per capita coffee consumer.
Roasters "aren't rushing to buy" either, even at these levels, he said.
Source: online.wsj.com/article/BT-CO-20130802-711778.html
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