Below-average rainfall in coffee-growing Vietnam, Indonesia and Central America could lower crop yield expectations. Warm weather could reduce the risk of frost in Brazil, the largest coffee producer in the world, and could diminish crop output as well. [El Niño Commodity ETF Rally?]
In the coffee market, there are not yet pressing supply concerns, but some market observers see the potential for dwindling supplies going forward. Coupled with a weaker dollar, that could prompt higher prices.
First we have started to see some concerns from traders that dry weather conditions in the Coffee growing regions of Brazil and Columbia may force analysts to revise lower their production estimates for the 2016/17 season. Low Coffee prices the last few years could produce lingering effects on future production as producers are forced, for economic reasons, to defer or curtail maintenance on the trees to save money,” adds Options Express.
iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN
