In Brazil, after weeks of drought and uncertainty surrounding the presidential election caused coffee prices to rise, the commodity finally saw its rally come to an end on Monday thanks to some much needed rainfall.
Bloomberg reported that Arabica coffee for December delivery fell 1.3 percent today to $1.8905 a pound on ICE Futures U.S. in New York after dropping 9.1 percent last week.
Crops suffered over the last few weeks from the lengthy droughts in Brazil's main coffee growing region, Minas Gerais. Due to the adverse affect on the coffee supply the lack of rains had, prices surged this year – up 71 percent over last year, more than any of the other 22 commodities that Bloomberg's Commodity Index tracks. The rains have helped the parched crops and put an end to the rally that coffee has been experienced
"Prices were reflecting a continuation of the drought. If it is to end, that would be a new scenario. If the rains continue, it will certainly undercut the rally," Paul Christopher, the St. Louis-based chief international strategist at Wells Fargo Advisors, which oversees $1.4 trillion, said Oct. 22 to Bloomberg.
Additionally, the re-election of president Dilma Rousseff could weaken the Brazilian real further, making local coffee prices – denominated in the Brazilian currency – rise. The rest of the world, then, will likely see prices fall even further, according to Agrimoney.
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