World coffee prices fell sharply at the beginning of the week on both the London and New York derivatives exchanges due to the high USD.
Meanwhile, domestic coffee prices turned up after many sessions of slight decrease last week.
Coffee prices are considered to have peaked and are unlikely to increase in the medium term. However, in the short term, the market still has many supporting factors. Last week, domestic coffee prices continued to increase despite the decline in London.
The key development last week was the exodus of speculative capital from commodity markets in general to seek safe havens, such as the USDX index and long-term US Treasury bonds.
Commenting on the market this week, experts said that supply is still tight as Vietnam enters the long Lunar New Year holiday. Robusta coffee prices will still be supported in the short term due to supply tension. In addition, geopolitical tensions in the Red Sea region are still negatively affecting coffee transportation from Southeast Asia to Europe; combined with inventories at a 15-year low, will continue to support Robusta coffee prices in the short term.
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| Coffee prices today, June 21: Robusta unlikely to increase, ICO maintains forecast of deficit of about 3.1 million bags, Vietnamese coffee 'wins big'. (Source: praguemonitor) |
At the end of the first trading session of the week (February 5), the price of robusta coffee on the ICE Futures Europe London continued to decrease, the delivery term for March 2024 decreased by 49 USD, trading at 3,188 USD/ton. The delivery term for May 2024 decreased by 48 USD, trading at 3,068 USD/ton. Average trading volume.
Arabica coffee prices on the ICE Futures US New York floor also decreased, with the March 2024 delivery period decreasing by 2.45 cents, trading at 189.50 cents/lb. Meanwhile, the May 2024 delivery period decreased by 2.3 cents, trading at 186.70 cents/lb. Trading volume was high on average.
Domestic coffee prices on February 5 increased by 400 - 500 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
The US dollar rose to a near three-month high against a basket of currencies on Tuesday as traders pared expectations for more aggressive interest rate cuts by the Federal Reserve this year following fresh economic data.
Coffee production in 2023-24 is expected to rebound, mainly due to Arabica. Robusta production is forecast to decline. At the same time, consumption is at a record 169.5 million bags. World coffee inventories are expected to fall to a 12-year low of 26.5 million bags.
According to a recent report by the US Department of Agriculture (USDA), global coffee output in the 2023-2024 crop year is forecast to reach 171.4 million bags (60 kg/bag), an increase of 4.2% or 6.9 million bags compared to the previous crop year.
Increased output in key arabica coffee producing countries such as Brazil, Colombia and Ethiopia is expected to offset a decline in Indonesia, one of the main robusta producers in Southeast Asia.
With this forecast, global Arabica coffee production in 2023-24 is expected to increase by 9.4 million bags to 97.3 million bags. In contrast, Robusta is expected to decline for the second consecutive year to 74.1 million bags compared to 76.6 million bags in the previous season and the lowest level in the last four seasons.
In addition, global coffee exports are expected to increase by 8.4 million bags compared to the previous crop year to 119.9 million bags, mainly due to increased shipments from Brazil.
Meanwhile, global coffee consumption is forecast at a record 169.5 million bags in 2023-24. Ending stocks are expected to continue to tighten and fall to just 26.5 million bags, a 12-year low.
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