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Coffee prices soar to new records above $3.60 a lb

The global arabica coffee price hit a record high of $3.60 lb per pound on Wednesday, as Brazil, the world's biggest producer, had few beans left to be sold and as concerns over Brazil's upcoming harvest continued.

Dealers reported that 70%-80% the current harvest of arabica beans from Brazil has been sold, and new trades have been slow. Brazil produces almost half of the world's arabica bean, which is a high-end type that is typically used for roasting and grinding blends.

After a severe drought in the past year, recent weather conditions have been better. According to the Brazilian food agency, the crop for the next year will still be 4.4% less than the last.

The global coffee supply remains limited. Vietnam's robusta crop is selling slowly. "The arabica from Central America and Colombia takes longer to reach the market and Brazilian farmers are not interested in selling more," broker HedgePoint said on Wednesday.

Arabica coffee futures traded on the ICE, a global contract for pricing physical coffee, reached a record-high of $3.6945 a lb. This brought the gains in the past year to nearly 15%. The contract closed at $3.6655, up 2.5%.

The price of Robusta, a cheaper variety that is used mainly to make instant coffees, increased by 0.9% to $5,609 per metric ton.

India's coffee exports, the fifth largest producer of robusta in the world, are expected decline by more than 10% between 2025 and 2035 due to reduced production and lower carry-forward stock from last season's harvest.

Dealers say that farmers in India and Vietnam - the top two producers of robusta in the world - are holding sales back in anticipation of future price increases. In Brazil, 80-90% or the current harvest is sold.

Broker Sucden stated in a recent report that Brazilian farmers also prioritize local sales over exports at dollar prices, even though they bring more money. Their financial situation has significantly improved over the last two years.

The country's buffer stock has been reduced to 500,000 bags, compared with 8 million bags in the past. This means that any further weather disruptions will have a large impact on coffee prices globally.

Sucden reports that the global coffee market has recorded a fourth consecutive deficit in this season.

Other soft commodities were also traded. Raw sugar rose 1.1% to 19.45 cents per lb, a strong rebound from the five-month low last week. White sugar gained 2.2% at $522.90 a ton. Raw sugar?

New York cocoa futures rose 3.3% to $11,745 per ton. London cocoa gained just 1.6%, to 9,138 pounds. Reporting by Maytaal Angle and Marcelo Teixeira, Editing by ShounakDasgupta Richard Chang and Leslie Adler

(source: Reuters)