The markets have shown technical signs of “overbought”, trading needs to be cautious in the new week…
For the whole 2nd week of 2023, the London market had 3 consecutive gaining and 2 decreasing sessions. The price of Robusta coffee for spot delivery in March increased by all of USD 91, or 4.99%, to USD 1,916/ton and for May delivery increased by all USD 82, or 4.56%, to USD 1,879. /ton, the increases are very strong. Trading volume is very above average.
On the contrary, the New York market had 3 decreasing sessions and 2 gaining sessions in a row. The price of Arabica coffee for March delivery fell all of 6.60 cents, or 4.17%, to 151.70 cents/lb, and for May delivery fell all of 6.95 cents, or 4. ,36%, to 152.55 cents/lb, very strong declines. Trading volume is very above average.
The price of green coffee beans in the Central Highlands market increased by 1,600 – 1,700 VND, to fluctuate in the range of 41,500 – 42,100 VND/kg.
The highlight of the week was the report that the US consumer price index (CPI) in December dropped another 0.1% following the decline in the past few months, which led the market to expect the Fed to slow down the rate hike in the coming weeks. The upcoming policy sessions have prompted funds and speculators to return to the commodity markets to buy more after liquidating their net positions quite aggressively in the previous few weeks.
The coffee futures markets remain cautious on price trends at the moment, according to analysts, as reports show ICE New York-managed Arabica stocks have risen to a 6.5-month high. After having fallen to a 23-year low and weather information in Brazil with many favorable rains, the new crop of the 2023/2024 crop year will be a bountiful one. Meanwhile, Robusta coffee inventories managed by ICE London are still standing at a 4.5-year low, still showing no signs of improvement despite technicals showing that the market has entered the “overbought” zone.
It seems that Wall Street investors have gotten used to signs of slowing inflation, so US stocks reacted softer when the December CPI report was released, while the UK’s gross domestic product (GDP) was released. The UK unexpectedly increased by 0.1% in November and the outlook for December is also very positive, reducing recession fears. Meanwhile, easing by the Bank of Japan (BoJ), a move away from most of the other major central banks, helped boost the yen’s exchange rate by 2% against the dollar, its highest level since June, and bond yields. Long-term Treasury bills fell to their lowest levels since 2014 prompting market expectations of the BoJ’s further easing.
With an interest rate of 13.5%/year, the Reais – Brasil still stands firm, showing that the tightening of monetary policy is only reasonable for each market.
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Monday, January 16, the New York market is closed for Martin Luther King Celebration, closed all day without trading. London market closes 30 minutes early.
English (giacaphe.com)
