It has been an interesting first half of the year in coffee trading spheres. A leaf rust epidemic has blighted the industry for farmers in Central America, while a bumper Arabica crop from Brazil has helped to offset the losses.
However, recent news of a potential looming frost in Brazil saw futures for the commodity enjoy a surge, as buyers remained hesitant.
"It looks like only the minor growing areas are going to experience any real cold, but we will still see speculative buying until tomorrow [July 23rd], when people are more confident the major growing regions are safe," Sterling Smith, a futures specialist at Citigroup in Chicago, told Bloomberg just four days ago.
Nevertheless, no sooner had coffee futures enjoyed a surge than it was reported on July 24th that prices tumbled once more on news that growing areas in the world's largest coffee producing country had escaped a freeze – and consequent damage to its plantations.
Alex Parry, a broker at ABN Amro Markets, affirmed to Bloomberg that confirmation was still forthcoming, but that it was expected there had been little if any damage due to the weather.
With the price of Arabica for September delivery having risen around 0.3 per cent on July 22nd on the ICE Future US, it fell again two days later by 1.4 per cent.
Concerning the trade elsewhere in South America, earlier this month the Financial Times reported how Colombia has been making a commendable recovery from the la roya epidemic, with growers benefitting from a replanting programme.
In total, the country has spent around $1.5 billion (£981.6 million) helping the industry to recover by providing new trees for replanting, fungicides and fertilisers, and training for the growers.
"It has been very difficult, but this is the first year that production will rise," Andres Valencia, chief commercial officer from the Colombian Coffee Growers Federation, told the news provider.
A recovery in the production of Arabica from other South and Central American regions may well further weigh on its price, which has hovered around four-year lows over the last few weeks.