World coffee prices returned to mixed trends on the London and New York derivatives exchanges. Robusta coffee prices increased, while Arabica prices decreased slightly. Pressure from the rising US dollar kept commodity prices, including coffee, under control.
Meanwhile, according to the USDA's Foreign Agricultural Service (FAS), Vietnam's coffee output in the 2023/24 crop year will increase by 5% to 31.3 million bags. This information puts downward pressure on robusta coffee prices.
Arabica coffee prices were supported by tighter supplies. The South American giant has increased its coffee-growing area by 1.9%, bringing total production this year up 14.7% to 54.74 million bags in the same “biennial” cycle for high yields, according to Conab’s second crop survey report. The news contributed to pressure on arabica prices.
 |
| Domestic coffee prices today, May 27, increased by 300 VND/kg in some key purchasing localities. (Source: YouTube) |
At the end of this weekend's trading session (May 26) on the international floor, the price of robusta coffee on the ICE Futures Europe London floor turned to increase. The price of robusta coffee futures for July 2023 delivery increased by 21 USD, trading at 2,574 USD/ton. The price of September delivery increased by 20 USD, trading at 2,528 USD/ton. Trading volume was below average.
Arabica coffee prices on the ICE Futures US New York exchange continued to fall. The July 2023 delivery contract fell 1.1 cents, trading at 181.6 cents/lb. Meanwhile, the September 2023 delivery contract fell 1.1 cents, to 179.55 cents/lb. Trading volume increased sharply.
Domestic coffee prices today, May 27, increased by 300 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
The greenback continued to rally on better-than-expected US economic data. The dollar rose for a fourth straight session and hit a two-month high, as new US data pointed to a resilient economy even after the Fed’s rate hikes.
Specifically, the US first quarter GDP came in better than expected, increasing 1.3% compared to the expectation of 1.1%. In addition, the number of weekly unemployment claims was much lower than market expectations.
Meanwhile, concerns about a possible US debt default have also supported the dollar, as talks continue in Washington to raise the $31.4 trillion debt ceiling.
According to technical analysis for the robusta market, technical indicators are showing that the bearish momentum is still there. The market has left the overbought zone at 60.56%. In the short term, robusta coffee prices are expected to fluctuate and accumulate within the range of 2530 - 2575. The price range of 2495 - 2500 is the near support zone of robusta prices. If robusta loses this price range, it may establish a downtrend.
Meanwhile, the technical indicators for Arabica coffee, the sharp correction in the previous session has brought Arabica prices below the MA lines and are close to the MA100 line at 182. Technical indicators are showing that the downward momentum is still there. In the short term, Arabica coffee prices are expected to fluctuate and accumulate within the range of 180 - 185. Arabica coffee needs to touch and maintain above 185 to have a chance to recover. On the contrary, if it loses the base of 180, it may trigger strong selling pressure.
Coffee prices are hitting record highs, but not everyone in the coffee market is benefiting from the rally.
In the 2022-2023 crop year (from October 1, 2022 to September 31, 2023), many domestic coffee exporting enterprises cannot buy goods because of "capital hunger" when banks tighten credit and interest rates are too high. Therefore, many domestic coffee exporting enterprises have to stay out, leaving the playing field for big companies with strong capital, especially FDI enterprises.
According to data from the General Department of Customs, the volume of coffee exports by FDI enterprises has continuously grown over the months of the 2022-2023 crop year, especially concentrated in February and March.
Source
Comment (0)