Robusta coffee prices continue to fall, Arabica slightly adjusted, factors putting pressure on the market?

The US Department of Agriculture (USDA) forecasts world coffee production in the 2023-24 crop year to rise by 4.3 million 60-kg bags to 174.3 million, with higher output in Brazil and Vietnam expected to offset a decline in Indonesia. But with global consumption expected to hit a record 170.2 million bags, tight supplies are likely to put pressure on coffee prices.

World coffee prices have slightly adjusted on both futures exchanges as markets have more fundamental information to support. The decline of the USD due to the possibility of positive US economic growth indicators may give the US Federal Reserve (Fed) a basis to further raise monetary policy interest rates at the upcoming meeting.

Brazil’s harvest season has been blessed with good weather news. Cooxupé, the world’s largest coffee cooperative, reported that its members have harvested more than 40% of this year’s crop, with progress faster than in previous years thanks to dry, favorable weather that ensures the quality of beans this year will be high. However, Brazil has just revised down its Conilon robusta production by 1.5% compared to its previous forecast and by 9.5% compared to last year, to 16.7 million bags.

The information about the continuous decrease in inventories contributed to the decline in Robusta coffee prices. The ICE – London inventory report on July 13 decreased by another 80 tons, after a sharp decrease of 2,500 tons on July 12, causing the inventory to continuously decrease to 54,270 tons (about 904,500 bags, 60 kg bags), down 12.65% compared to a week earlier. However, observers commented that the above data did not seem to have much impact on trading on the floor because current coffee traders often choose to buy and sell on the floor or off the floor mainly.

Meanwhile, the increase in the Real exchange rate has caused Brazilians to reduce coffee exports, supporting the increase in Arabica coffee prices.

Domestic coffee prices today, July 14, continued to decrease by 100 - 200 VND/kg in some key purchasing localities. (Source: YouTube)

At the end of the trading session on July 13, the price of robusta coffee on the ICE Futures Europe London continued to decrease slightly. The price of robusta coffee futures for September 2023 delivery decreased by 9 USD, trading at 2,525 USD/ton. The price of November delivery decreased by 0 USD, trading at 2,400 USD/ton. The average trading volume was low.

Arabica coffee prices on the ICE Futures US New York exchange for September 2023 delivery increased slightly by 0.6 cents, trading at 157.6 cents/lb. Meanwhile, the December 2023 delivery increased by 0.6 cents, trading at 157.05 cents/lb. Trading volume was high on average.

Domestic coffee prices today, July 14, continued to decrease by 100 - 200 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	23,475	0
DAK LAK	65,100	- 200
LAM DONG	64,600	- 100
GIA LAI	64,900	- 200
DAK NONG	65,300	- 100

Unit: VND/kg.

(Source: Giacaphe.com)

The US dollar continued to fall to its lowest level in more than a year in the last trading session, after the release of US Consumer Price Index (CPI) data, supporting the possibility that the Fed may only raise interest rates once more this year. Most markets expect the Fed to increase interest rates by 0.25% in July.

Technical analysis on the robusta floor, technical indicators are showing that the downward momentum is still there. It is expected that in the short term, robusta coffee prices will fluctuate and accumulate within the range of 2500 - 2585.

Robusta prices need to rise above 2564 and maintain above this level to find an opportunity to recover. On the contrary, it is necessary to pay attention to the support zone of 2500 - 2505, if this price zone is lost, Robusta coffee prices may establish a downtrend.

For the Arabica market, technical indicators all give neutral signals with an unclear price trend. It is expected that in the short term, prices may fluctuate and accumulate within the range of 155.5 - 160. Arabica coffee needs to surpass the MA10 line at 160 and maintain above this level to have a chance to increase and recover. However, if Arabica coffee loses the support price zone near 155.5 - 156, a downtrend may be established.

Source