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Investing.com -- Brazil coffee prices are stabilizing at lower levels following a period of higher prices driven by speculative trading, according to Nestle (NSE:NEST)’s Brazil CEO Marcelo Melchior.
"The market trend is for a reduction in the price of raw materials, but we have to see if there will be any frost," Melchior said on Wednesday, referring to potential negative impacts to coffee crops from cold weather.
Severe frosts in 2021 caused significant losses for Brazilian coffee growers, though such weather events have become less frequent in recent years. In more recent growing seasons, Brazilian producers have faced drought conditions instead.
Melchior explained that speculative activity had influenced recent price movements. "There were a lot of people who entered the market to buy futures ... these funds have already exited or are exiting the market, and now only those interested in the raw material remain," he said.
Currently, there are no forecasts for frosts that might damage this year’s Brazilian coffee crop. Additionally, coffee crops in Vietnam, another major producer, are performing well. Both factors are contributing to the falling prices, according to Melchior.
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