Coffee prices fluctuate abnormally, what do experts think about the market?

Green dominated all domestic and international coffee exchanges last week. Coffee prices traded at a one-month high, despite the gradual improvement in supply and the lack of fundamental data. Analysts are being cautious in explaining the unusual surge in the coffee market.

In the whole week, Robusta coffee prices increased 4 sessions and decreased 1 session, all of which increased sharply. Robusta coffee futures for November delivery increased by 149 USD (6.19%) to 2,556 USD/ton and futures for January 2024 delivery increased by 93 USD (4.02%) to 2,404 USD/ton. Trading volume was above average .

Arabica coffee prices had 2 sessions of increase and 2 sessions of decrease, with strong increases. The price of Arabica coffee futures for December delivery increased by 10.50 cents (7.06%) to 159.15 cents/lb and the price of January 2024 delivery increased by 9.95 cents (6.47%) to 159.75 cents/lb. Trading volume was quite high above average.

The expiration of options contracts on commodity exchanges has supported coffee prices to move to a short-term bullish trend. Meanwhile, the ICE inventory report on both exchanges is still at a very low level, combined with a slight decrease in the DXY index, which has encouraged funds and speculators to return to the markets to increase buying after having aggressively liquidated their net positions in the previous two weeks.

Robusta coffee inventories certified and monitored by the London exchange, as of September 15, increased by 3,450 tons, or 9.78% compared to the previous week, to 38,730 tons (about 645,500 bags, 60 kg bags), a very significant increase, mainly due to new crop robusta coffee from Brazil being brought to the exchange to participate in the auction.

Giá cà phê hôm nay 17/11: (Nguồn: Coffeeam)

Domestic coffee prices increased sharply by VND1,000/kg in some key purchasing localities during the last session of the week (September 16). (Source: Coffeeam)

At the end of the trading session last weekend (September 15), coffee prices on international exchanges increased sharply. Robusta coffee prices on the ICE Futures Europe London exchange for November 2023 delivery increased by 61 USD, trading at 2,556 USD/ton. January 2024 delivery increased by 36 USD, trading at 2,404 USD/ton. Average trading volume is high.

The price of Arabica coffee on the ICE Futures US New York exchange for December 2023 delivery increased sharply by 5.15 cents, trading at 159.15 cents/lb. Meanwhile, the price of March 2024 delivery increased by 4.85 cents, trading at 159.75 cents/lb. Trading volume increased sharply.

Domestic coffee prices increased sharply by VND1,000/kg in some key purchasing localities during the last session of the week (September 16).

Average price	Change
USD/VND exchange rate	24,055	+ 10
DAK LAK	67, 600	+ 1,000
LAM DONG	66,900	+ 1,000
GIA LAI	67,400	+ 1,000
DAK NONG	67,900	+ 1,000

Unit: VND/kg.

(Source: Giacaphe.com)

On the macro front, the somewhat stagnant US inflation report and speculation that the Fed will temporarily stop raising interest rates are factors that encourage funds and speculators to return to the market to buy after having liquidated heavily in the previous two consecutive weeks. Therefore, funds and speculators buying strongly on more positive financial factors and concerns about supply shortages may be the two main reasons for the brilliant increase in coffee prices this week.

According to experts, high coffee prices may not last long. Currently, Brazil and Indonesia, the world's two leading coffee exporting countries, have supplies from the new crop and are actively boosting exports. At the same time, Vietnam will start harvesting the new crop in the fourth quarter of 2023, contributing to adding a large amount of coffee to the market.

The Association of Coffee Exporters (Cecafé) in Brazil reported that coffee bean exports in August increased by more than 33.17% compared to the same period last year, reaching a total of 3.35 million bags, including 2.65 million bags of Arabica coffee, up 11.20% and 698,856 bags of Conilon Robusta coffee, a sharp increase of 442% compared to the same period.

The market saw Vietnam's coffee exports in the first eight months of 2023 decrease by 5.37% compared to the same period last year, even though the cumulative exports in the first 11 months of the current coffee crop year 2022/2023 increased by 3.87% compared to the same period last year, contributing to affirming that the supply from the leading producer has been exhausted, while Vietnam will only have new crop goods by the end of December.

Vietnam’s upcoming coffee crop is expected to fall more than 7% to 1.67 million tonnes, the lowest in four years, according to a Bloomberg survey, prompting traders to return to the London futures market to increase buying.

Source