July Arabica coffee traded on Tuesday closed up 1.45 cents/pound while Robusta coffee closed down $163, at $3,378/ton. However, during the session, there was also a time when this market hit a terrible low of $280/ton.
Robusta coffee prices traded in one direction in a very bad situation for the bullish side, because it opened, creating a hole that could not be filled during the session (gap down – that is, the opening level). lower than the lowest price of the previous day). The trading session only decreased without seeing a recovery, even if it was slightly positive throughout the session.
Unlike the Robusta market, Arabica coffee also opened sharply lower, also creating a gap, falling to the lowest level in 6 weeks. However, this market recovered at the end of the session and filled the gap. created at the beginning of the session. Regarding this alone, we can see that Arabica prices are performing better than Robusta, which is said to be due to the strong selling of Robusta products from panicked stockists due to price drops in recent days.
However, technically, we need to be cautious about the hole that the Robusta product has created on the chart. It is likely that the London market will return to fill that hole like the New York market did, in the coming years. next session.
Arabica coffee prices recovered from a five-week low and then closed slightly higher as weather forecasts pushed back the possibility of rain in Brazil until late next week. Drought conditions in Brazil could reduce coffee production in the final stage of ripening and push up coffee prices.
Brazil’s Minas Gerais region received zero or zero percent of its historical average over the past week, the second week in a row the region received no rainfall, Somar Meteorologia reported Monday. any rain.
Coffee prices took a negative hit last Friday when the International Coffee Organization (ICO) reported that global March coffee exports increased +8.1% year-on-year to 12.99 million bags. and global coffee exports from October last year to March this year increased by 10.4% over the same period to 69.16 million bags.
The latest COT position report from the New York market shows that short-term Managed Money Funds have slightly increased their margin for long positions, the amount Data shows their net long position increased by 0.23% as of April 30, 2024
Over the long term, this market’s Index Fund traders have slightly reduced their net long positions to 3.53%.
According to the reporting deadline, normally by May 7, 2024 we will receive new data on the position of components in the market from April 30, 2024 to May 7, 2024. , through which we can know what their actions are. However, up to now that data has not been updated, but we can see that most large speculators have only lightly sold their buying positions in recent times.
According to the US Department of Agriculture in a report, India’s coffee crop from October 2024 to September 2025 is expected to decrease by about 1.49% compared to the previous year with a total production of 5,970,000 bags. This figure is formed from the output of 1,420,000 bags of Arabica coffee and 4,550,000 bags of Robusta coffee.
The report also predicts that green coffee exports from India, mainly Robusta, will reach about 4,200,000 bags in the 2024/2025 crop year. Export volume decreased by about 1.18% compared to the previous year.
Weather conditions in Vietnam have improved over the past week, the Central Highlands of Vietnam have had increased rainfall in the first week of May, which is much needed at this time after an uncomfortably dry April. often.
However, one can observe that weather forecasters are still predicting below average rainfall in May, which will be closely watched by coffee market operators and will affect affect market prices. Normally, the rainy season in Vietnam will start in April and last until around October every year.
In Brazil, heavy rains have led to widespread flooding in the southernmost state of Rio Grande do Sul. However, the area, quite far from coffee-growing regions, remains a humanitarian disaster as floods have destroyed roads and bridges in several cities, causing landslides and leaving a path of destruction. Weather conditions are expected to continue to be difficult as rain continues to fall across the region over the next week.
The Robusta coffee market in London was closed earlier this week as the UK celebrated a Bank Holiday, causing the Robusta coffee market to receive even more domestic selling pressure as the market dropped sharply before the holiday.
Stocks of certified graded Arabica coffee held on the New York market are said to have decreased by 2,220 bags yesterday, placing the stock at 686,958 bags.
The current general situation in the coffee market is the pressure coming from liquidating buying positions of funds when they are holding a fairly large volume of buying positions. It cannot be ruled out that there will be short recoveries when these funds temporarily stop liquidation, however, if there is no further support from basic information to support the market, coffee prices will tend to decline. gradually declines until Brazil’s official harvest date around the beginning of July every year.
The US Federal Reserve left interest rates unchanged at its meeting on Wednesday.
Officials hinted that the bank would not raise interest rates this year.
The US dollar index and gold prices fell slightly after the Federal Reserve’s interest rate decision. The Dollar Index moved from last month’s high of 106.50 to 105.70. But it’s still about 5% higher than this year’s low.
This is good news for coffee prices, which are currently falling miserably, and decided not to raise interest rates, or at least keep interest rates unchanged (the bank decided to keep interest rates at 5.25%. to 5.50% as widely predicted) will keep the USD from appreciating and help the commodity market become more stable. The coffee market will get worse if the FED decides to raise interest rates now.
The Fed indicated that they probably will not raise interest rates this year because there are signs that the US economy is weakening.
Kinh Vu (giacaphe.com)
