Arabica coffee futures on ICE firmed on Tuesday. However the market continues to stay volatile as a result of uncertainty regarding how much the ongoing drought in Brazil will damage crops. December arabica coffee traded higher by 2.7 cents or 1.5 percent at $1.8395 per pound while Liffe robusta coffee for November delivery traded lower $13 or 0.6 percent at $2,005 a ton, in moderate volume of 3,260 lots, reports Reuters.
According to analysts, the recent decline in coffee prices was due in part by weakening currencies in Brazil and in Colombia. As the currencies weaken, producers and exporters have an incentive to sell their coffee abroad because commodities sold in U.S. dollars would get them more reais or pesos, according to The Wall Street Journal.
The constant fluctuation in the market within recent weeks has been due to the difficulty in determining the extent at which the drought will affect next year's crop.
Kash Kamal, a research analyst with Sucden Financial Sugar, said, "Activity this morning has seen prices open above $1.82 but moves either side are struggling for traction," according to Reuters.
Meanwhile, cocoa for December dropped 0.5 percent to $3,063 a ton while November orange-juice concentrate was up 0.1 percent to close at $1.4895 a pound, reports the Wall Street Journal.
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