Robusta coffee swings as supply fears keep volatility high

Coffee beans being roasted. Photo: Linh Pham/Bloomberg

Coffee beans being roasted. Photo: Linh Pham/Bloomberg

Published Jun 11, 2024


Robusta coffee fluctuated below a recent high in London, as worries over global supplies keep volatility elevated.

Futures have rallied this year – hitting the highest in data going back to 2008 – as production in key grower Vietnam suffered due to drought. The ongoing drought there has worsened the supply outlook, assessing the overall damage to the 2024 to 2025 crop remains challenging, according to Daria Efanova, head of research at Sucden Financial.

“While we expect the near term to remain bumpy, our longer-term forecast remains moderately bullish,” Efanova said in a report. “The weather is the overriding factor in our crop analysis.”

Most-active futures hit a fresh high last week. They dropped as much as 2.7% on Monday before rebounding, helping to keep a 60-day measure of price swings near the highest since at least 2008.

With concerns about tight supplies lingering, money managers increased their net-bullish robusta bets to a five-week high as of June 4, exchange data show.

Arabica coffee has also seen volatility increase due to weather-related supply concerns, coupled with rising speculative demand due to a fallout from a crunch in the cocoa market, Efanova added.