Global coffee prices rose sharply on both London and New York exchanges, immediately after the reporting day of trading positions of funds and speculators. The surge in trading volume showed that speculative capital was pouring into highly liquid coffee derivatives exchanges as a temporary shelter, as USDX continued to weaken amid speculation that the US Federal Reserve (Fed) would temporarily suspend interest rate hikes at its monetary policy meeting next week (June 13-14).
Robusta coffee prices are approaching a 15-year high, as forecasts for the world's major robusta suppliers Vietnam, Indonesia and Brazil are all negatively affected by extreme weather, according to a report by BMI of financial analysis firm Fitch Solutions. The US National Weather Service also forecasts that the El Nino phenomenon later this year will cause local droughts in major robusta coffee producing countries around the Pacific Rim, while global robusta demand is increasing due to economic difficulties. Robusta coffee prices continue to increase due to reports of continuously decreasing London inventories.
Heavy rains are forecast in Brazil’s major growing regions over the next seven days, hampering the ongoing harvest and raising concerns about possible cold snaps as winter approaches. A weaker US dollar is supporting arabica coffee prices.
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| Domestic coffee prices today, June 9, increased sharply by 1,900 - 2,100 VND/kg in some key purchasing localities. (Source: Getty Images) |
At the end of the trading session on June 8, the price of robusta coffee on the ICE Futures Europe London continued to increase sharply. The price of robusta coffee futures for July 2023 delivery increased by 86 USD, trading at 2,760 USD/ton. The price of September delivery increased by 90 USD, trading at 2,726 USD/ton. Trading volume increased.
Arabica coffee prices on the ICE Futures US New York exchange continued to increase. The July 2023 delivery futures increased by 9.6 cents, trading at 195.0 cents/lb. Meanwhile, the September 2023 delivery futures increased by 8.75 cents, to 190.45 cents/lb. Trading volume increased sharply.
Domestic coffee prices today, June 9, increased sharply by 1,900 - 2,100 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
The US central bank is expected to keep interest rates unchanged at its next policy meeting, as it reviews the impact of its recent rate hikes. Data released yesterday showed the US trade deficit widened to an eight-year high in April, as goods imports rebounded while energy exports fell. The news sent the dollar lower.
ICE London-certified inventories continued to fall by 1,970 tonnes, or 2.41%, from a week earlier to 79,640 tonnes.
According to technical analysis on the robusta market, technical indicators are showing that the bullish momentum is still there. However, RSI is approaching the overbought zone at 68.43%, so there is a possibility of a downward correction.
In the short term, robusta coffee prices are expected to fluctuate and accumulate within the range of 2640 - 2690. Robusta prices need to increase above 2690 to continue conquering the psychological resistance level of 2700. On the contrary, if the support price zone of 2635 - 2640 is lost, robusta prices may establish a downward trend again.
Meanwhile, ICE New York inventories fell to a six-and-a-half-month low of 555,206 bags as of June 7. This information contributed to supporting the increase in Arabica coffee prices.
Technical indicators are showing that the bullish momentum is still there. In the short term, the price of Arabica coffee is expected to fluctuate and accumulate within the range of 183 - 187. Arabica coffee needs to surpass 187 to find momentum to explore the resistance level of 190. However, if the level of 183 is lost, a downtrend may be established.
El Niño is a periodic warming of the Pacific Ocean that has a major impact on weather around the world. If robusta harvests decline again, as they did during the 2015 El Niño cycle, we could see quality decline and prices rise. And robusta prices are already at a 15-year high due to concerns about the impending impact.
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