Some categories of coffee appear to have improved due to this year’s unusual weather with production in some areas projected to be stronger than in previous years. However, El Niño continues to confound coffee markets. In Ethiopia, existing aid aimed at stabilizing food security is under pressure. Some reports suggest failure to address the issue could lead to famine and migration on a scale similar to that which inspired Live Aid. Harvests there are likely fall short of demand and regional instability is perhaps mere months away.
Erratic or dry weather in other producing zones, including areas of Brazil and Colombia in addition to the drought in Ethiopia, ensure commodity markets will continue to be volatile. Whether production will recover as strongly as some predict in Brazil remains to be seen. Such concerns combined with a general weakening of commodities in February may be setting the market for arabica up for a significant increase in price in the coming year.