July Arabica coffee traded on Monday closed up 3.50 cents/pound and Robusta coffee closed up $13/ton at $4,164/ton.
The prices of both markets fluctuated strongly during the session, like Arabica was sometimes negative 0.95 cents and sometimes positive up to 4.5 cents. Robusta coffee is no less wobbly, when this market peaked at $4,239, positive up to $88/ton and sometimes even negative, reaching minus $14. This proves that the market is currently in a period of being dominated by the volume of buying and selling positions that components are holding.
A factor that also contributed to supporting coffee prices during the session was the strengthening of the Brazilian Real, which hit its highest level in 2 weeks against the dollar, preventing export sales activities of coffee producers. Brazil.
Brazilian Conillon (Robusta) coffee remains in high demand in the international market. Conillon 13 and above are between +4 and +5 cents FOB Vitória port, above the five-year average (2019-2023) in April and about +2 cents above the London reference if converted into cents/pound.
The price indication for the new crop is +2 cents for shipments from May/June.
Robusta coffee supplies are tight globally, caused by a lower-than-expected crop in Vietnam and a lack of rain threatening the next Robusta crop, which has sparked growing concern. for Brazilian Conillon coffee. This interest makes the Robusta trade flow stronger, further reducing available supply. According to Cecafé, in March, Brazil exported 847 thousand bags of conilltr/robusta. A significant improvement compared to the same period last year, when only 107 thousand bags were shipped. Global buyer positivity for Brazilian conilon/robusta is expected to continue in the first months of the 24/25 season.
In Asia, concerns persist about dry weather and Vietnam’s next crop outlook. Additionally, delays in the start of harvest in Indonesia add to the sense of stress caused by supply constraints.
Crop failure in Vietnam next season will lead to a shortage of Robusta coffee supply for another year. The solution was to incorporate Arabica coffee into the mix, but this transition did not happen as quickly as expected. Therefore, Robusta coffee is on an increasing trend.
In Brazil, the first operations of the 24/25 crop took place slowly, bringing no supply to relieve the shortfall. The conillon/robusta harvest is progressing slowly and at less than 5% in Espírito Santo, which is the main producing state. First results showed lower-than-expected harvesting and drying progress, raising signs that Brazil’s Conillon harvest may fall short of initial expectations, with the risk of some regions producing less last year.
It is worth noting that initial sampling was limited and superficial, meaning a longer wait was needed to assess the situation more accurately. However, these early signs increase supply concerns and lead to rising prices.
Forecasts show unusual rain next week in Vietnam, more concentrated in the Northern provinces. In the Central and Southern regions, rainfall is still not enough to keep fruit in dry lands, maintaining warning signals and concerns about the risk of crop failure in Vietnam’s next crop. In Indonesia, humidity is forecast to decrease next week, but as growth slows, new coffee supplies are only expected to increase significantly in May.
Large hedge funds and fund management companies have reduced their net long positions in coffee futures on the New York market, as large speculators reduced their long positions from 76,071 lots. from April 16 to 71,914 lots on April 22, fund management companies also reduced their buying positions from 72,818 lots to 69,956 lots during the same period mentioned above. Some technical analysts believe that this development could create an adjustment in Arabica prices, from a high of 245 cents to 220 to 230 cents for the contract delivered on July 24.
The unfavorable climate scenario in Vietnam and the delay in the arrival of new coffee in Brazil combined with heavy rains causing excess humidity in Indonesia maintain the feeling that supply continues to be tight for coffee in the market. international School.
The market is still paying attention to the approaching Brazilian winter, which could see lower temperatures this year. According to an April report, the US National Oceanic and Atmospheric Administration (NOAA) updated its forecast for El Niño and La Niña phenomena, increasing the possibility of La Niña occurring between June and June. August increased to 60%.
This phenomenon could contribute to a drier period and allow polar air masses to penetrate Brazil’s coffee-growing regions, which would further inflame the “weather market” ” when winter comes to Brazil.
Kinh Vu (giacaphe.com)
