Hopes of a Fed rate cut have sent the dollar index tumbling and fueled buying in commodities. However, experts have warned of a large amount of short-selling, with the market entering overbought territory, which could lead to a correction before prices rebound.
Coffee price today 9/16/2024
World coffee prices increased sharply last week, especially robusta, surpassing the 5,000 USD threshold and continuing to increase.
Domestic coffee prices closed last week at around 123,500 - 124,000 VND/kg. Thus, domestically, prices increased by an average of 6,000 VND/kg last week.
At the end of the week, Robusta coffee futures for November delivery increased by $497/ton. Arabica coffee futures for December delivery increased by 23.45 cents/lb. Coffee prices continue to remain stable at high levels and the current increase is due to concerns about the weather, as well as the continuous decline in the USD price index since July 2024.
Hopes of a rate cut by the US Federal Reserve (Fed) have sent the dollar index tumbling and prompted buying in commodities, with the agency expected to announce a rate cut at its meeting on September 19. Markets are now turning their attention to the Federal Open Market Committee (FOMC) meeting, which is considered one of the most influential meetings of the year, with expectations for the first rate cut since 2020.
The consensus among analysts, economists , and market watchers is that a rate cut is almost certain. According to CME FedWatch, the market is currently pricing in a 73% chance of a 25 basis point cut and a 27% chance of a 50 basis point cut.
According to industry insiders, although there is currently a lot of information to predict that prices will continue to increase, about half a month ago, when the winter in Brazil was entering its final stages, if anyone had said that robusta prices would exceed 5,000 USD/ton, no one would have believed it. But now it has happened.
Coffee production in the world’s top robusta exporter, Vietnam, in 2024/25 is expected to fall sharply to a 13-year low. Meanwhile, the mainstream coffee consumer market in the Northern Hemisphere is gradually returning from the summer break, which will help boost some physical coffee trading in the coming months ahead of winter roasting in Europe and the US.
In addition, the market has a new feature, when the price difference between robusta for November delivery and arabica for December delivery, after being converted to Cent/lb, narrowed on the last trading day of the week, recording robusta at only 19.11 Cent/lb lower than arabica. Thus, robusta coffee is currently very valuable, about to catch up with the previously expensive arabica.
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| Domestic coffee prices on September 14 increased by VND2,000/kg in some key purchasing localities. (Source: Bloomberg) |
According to World & Vietnam , at the end of this week's trading session (September 13), the price of robusta coffee on the ICE Futures Europe London exchange continued to increase, with the November 2024 delivery period increasing by 190 USD, trading at 5,267 USD/ton. The January 2025 delivery period increased by 182 USD, trading at 4,998 USD/ton. The average trading volume was low.
Arabica coffee prices on the ICE Futures US New York exchange increased sharply, with the December 2024 delivery term increasing by 10.05 cents, trading at 259.45 cents/lb. Meanwhile, the March 2025 delivery term increased by 9.6 cents, trading at 256.60 cents/lb. Trading volume was high.
Coffee prices in the country on September 14 increased by VND 2,000/kg in some key purchasing localities. Unit: VND/kg
(Source: giacaphe.com) |
Currently, on both London and New York exchanges, short buying is high and in the overbought zone. Experts are concerned that the market is waiting for a rate cut from the Fed, causing a large amount of short buying, so there will be a period of price adjustment before increasing again.
According to the assessment, world coffee prices will continue to fluctuate strongly from now until the end of 2024 due to bad weather, transportation disruptions as well as a tightening legal environment in many countries. Tensions will ease in 2025 but prices in the long term will still tend to increase due to climate change and many other factors.
The sustained high prices, coupled with doubts about Brazil’s next crop, have put a damper on selling. In fact, this price scenario has given growers a bit of comfort in continuing their slow-burn strategy, which they will not change unless prices fall sharply. Meanwhile, the lack of rain in Brazil has left soil moisture very low, leaving growers worried that both coffee varieties will be too weak to flower next year’s crop amid a global coffee shortage.
In the robusta market, the amount of coffee exported from Vietnam decreased by 12.1% in the first 8 months of the year, continuing to put pressure on the price of this commodity. In Vietnam, currently, the coffee area cannot be expanded due to fierce competition with products such as durian and pepper, so people in the Central Highlands are promoting replanting to improve productivity.
Source: https://baoquocte.vn/gia-ca-phe-hom-nay-1692024-gia-ca-phe-tang-khong-diem-dung-thi-truong-dang-mua-qua-muc-du-bao-ve-mot-dot-dieu-chinh-gia-manh-286460.html
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