Arabica coffee prices surge to highest level since 1977
Global supply constraints and adverse weather conditions in key producing regions push Arabica coffee futures to multi-decade highs.
Arabica Coffee prices hit levels last traded in 1977
The commodities trading market has seen Arabica coffee futures extend their upward trajectory, surging by over 3% on Wednesday to reach levels not witnessed since 1977.
Since the beginning of the year, Arabica coffee prices climbed by over 70%. The extraordinary rally has primarily been driven by severe weather conditions in Brazil, the world's largest coffee producer, where drought has significantly impacted crop yields over the last four years. Additional supply pressures stem from Vietnam's growing regions which faced both drought and excessive rainfall during critical harvest periods.
Together with cocoa prices, which have nearly tripled over the past couple of years due to excessive rains and blight hitting supply in main producing countries Ivory Coast and Ghana, consumer pockets are expected to be hit.
Weekly Arabica coffee and cocoa comparison line chart
Major industry players are already implementing measures to cope with elevated costs. World-leading coffee manufacturer Nestle has announced plans to adjust pack sizes and increase retail prices to maintain profitability amid soaring input costs.
The persistent nature of these supply constraints underscores the fragile dynamics of agricultural commodities, suggesting further price volatility may lie ahead.
Arabica coffee technical analysis
From a technical perspective, the April 1977 all-time high at 339.90 represents the next significant upside target for front month Arabica coffee futures prices. A push above this level could potentially see coffee futures extend their advance towards the psychological 350 region.
Quarterly Arabica coffee front month futures candlestick chart
Near-term support lies at the 1997 peak at 308.90, below which the psychologically important 300 mark comes into focus. Further down, additional support can be found at the September 2011 high of 290.85.
The current strong uptrend remains intact while trading above these support levels, though traders should be mindful of potential profit-taking, especially after Thanksgiving, given the magnitude of recent gains and the proximity of the April 1977 all-time high.
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