Global surplus and Middle East tension elevate risk aversion and increase volatility in the coffee market, impacting prices in Brazil as well.
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Projections of a global surplus, with recovery of production in Brazil and in Southeast Asia, and the strong geopolitical instability in the Middle East, which raised risk aversion in international markets, led funds and traders to adjust their positions in the coffee market in NY and London. The report highlighted that the provisional ceasefire agreement between the US, Israel, and Iran, for negotiations of a "definitive agreement," appears to be fragile. "Reports of violations of the agreement between the three countries are circulating. According to analysts, the disruption in energy supply due to the war in the Middle East is fueling inflation and slowing the global economy, even if negotiators manage to reopen the Strait of Hormuz," it detailed. In Brazil, the dollar fell by 2.9% last week and closed at its lowest level in two years, contributing to the drop in coffee prices in the Brazilian physical market. Today, arabica contracts in NY and robusta in London fluctuated ...