Robusta Coffee Hits Fresh Record as Dry Weather Risks Next Crop

(Bloomberg) — Robusta coffee climbed to a fresh high in London as a heat wave threatens production in top exporter Vietnam, adding to concerns over tight global supplies of the beans used in instant drinks. 

The most-active contract advanced as much as 4.8% to $3,838 per metric ton in London, a record in data going back to 2008. Futures are up more than 30% this year.

“Weather conditions are not encouraging,” said traders at London-based importer DRWakefield. “There are still concerns over a possible water shortage for irrigation, which may hurt the output of the next season.” 

The tightness in robusta markets is also fueling prices for the premium arabica coffee. Arabica futures in New York gained as much as 3% and surpassed the $2-per-pound mark for the first time since December.

Brokers in top grower Brazil recently reported high demand for lower quality arabica beans that can be used by roasters as a replacement for robusta in blends. While there’s a favorable outlook for the upcoming Brazilian arabica crop, availability is typically lower this time of year as a new harvest will only kick off in May.

The latest rally can also be attributed to panic buying by roasters who “have let their coverage run low due to the elevated price environment in expectation of prices to ease,” Ilya Byzov, an analyst at coffee trader Sucafina, said Tuesday in a report.

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