Coffee futures on the ICE slipped on Thursday after earlier climbing to multi-week highs amid growing concern about a developing weather pattern characterized by some as a "super El Niño." Traders pared back some gains as the session progressed, leaving the contracts below their earlier peaks.
Arabica futures led the retreat, down 1.6% to $2.6735 per pound at 1527 GMT. Earlier in the session the contract hit $2.7810, marking its highest price since mid-May.
Robusta prices were higher on the day overall, rising 0.4% to $3,636 per metric ton after briefly touching $3,680, their strongest level since early March. The market reaction reflected concern about how the El Niño pattern typically affects robusta-producing regions.
The El Niño pattern is seen as a particular challenge for robusta supply because it generally brings higher temperatures and reduced rainfall to Vietnam and Indonesia. Those two countries together supply about 50% of the world’s robusta coffee, a concentration that magnifies the potential market impact of weather disruptions in the region.
For arabica, the immediate effect of El Niño tends to be excess rainfall in Brazil, the world’s top arabica producer. Such wet conditions can slow the harvest, but prices are expected to rise materially only if the rainfall causes significant damage to crop quality or leads to fungal disease that impairs beans.
Outside the coffee complex, sugar futures also moved lower on Thursday, following weaker oil prices. The sugar market’s short-term direction reflected the influence of energy-market dynamics on demand and pricing expectations.
Market participants noted that weather developments remain the primary uncertainty for coffee supply in the coming weeks, with production risks concentrated in robusta-growing Southeast Asia and potential quality risks for brazilian arabica if excess moisture is severe enough to cause crop damage or disease.