Although coffee prices during the weekend trading session decreased because the weakening of the Brazilian Real caused a situation of selling and liquidating buying positions, however, summarizing the week, coffee is still considered to have increased very strongly when the Arabica market March 25 closed the week at 318.05 cents/pound compared to last week’s 302.10 cents. Robusta coffee prices also increased equally, closing this week at $5,409/ton compared to last week at $4,985.
If the price of coffee on the market last year can be easily seen to be due to the leadership of Robusta when the countries producing this product fell into a state of crop failure due to drought and weather difficulties under the influence of the current climate. El Nino phenomenon, then this year, at the beginning of Vietnam’s crop season, we may see it led by Arabica coffee, as this coffee variety hits its highest level in the past 47 years.
The problem is still believed to be due to adverse weather in Brazil and Vietnam, the world’s two largest coffee growing countries, but now people are starting to see the consequences, threatening global coffee output. According to Sucden Financial, rising prices also caused some Brazilian coffee exporters to remove their precautionary orders and buy futures contracts to compensate for short-sold positions, causing the market to push up coffee prices even more. even higher.
The impact of dry El Nino weather earlier this year could lead to long-term damage to coffee crops in South and Central America. Rainfall in Brazil has been consistently below average since April, damaging coffee plants during the flowering stage and dampening prospects for Brazil’s 2025/26 arabica coffee crop.
Except for the coffee price, which just dropped to $150 in Friday’s trading session, due to the impact of the weaker Real (1 US dollar is exchanged for 6,014 Brazilian reals) causing the psychology of selling and liquidating positions. Technically, Robusta price calculated on a January 2025 basis is currently still fighting with the 5534-5579 frame. If it exceeds and maintains the closing level in this frame, it is truly unknown where the price will go. However, if it falls far beyond the $5,149 mark, the Robusta market is likely to fall further as it happened in the beginning of the month. 11 recently.
The amount of certified Arabica coffee held on the New York exchange remained unchanged after the market closed for the Thanksgiving holiday, recording this inventory at 903,548 bags.
It can be said that the most notable event last week was that Arabica coffee prices reached their highest level since 1977, a time when the market increased very strongly after Brazil was affected by a devastating frost. 1975 caused large losses in output.
To date, the market has again found price support in growing pessimism about the potential of the next arabica crop in Brazil, a weak result of the flowering process. The usual profuse blooming seen each October has not developed properly, with many reports of flower drop. This occurs due to the effects of prolonged periods of water shortage and higher than average temperatures. The states of Minas Gerais, especially in the southern regions, and the Cerrado, next to São Paulo, were the most affected, reaching levels of severe moisture deficiency not seen since the 1981 drought. Drama This release directly impacts production potential and has resulted in a downward revision of crop estimates. Although specific figures remain uncertain, negative perceptions of production have increased, which has influenced market sentiment and justified the increase in Arabica prices.
In addition, delays in robusta coffee exports from Vietnam, where the crop was quite poor, also contributed to the upward trend. While demand for coffee is increasing, winter in the Northern Hemisphere further accentuates price increases.
However, it cannot be denied that the price escalation also has a strong technical component. Cocoa prices increased very high as if they were encouraging the spirit of the Coffee team. The break of the psychological level of 300 cents added momentum to the gains and the market broke through new resistance levels, maintaining the bullish trend.
With the Thanksgiving holiday in the US this past Thursday and no fundamental news, the environment favors continued upside as seen by the mark of four consecutive weeks of gains in both markets.
Kinh Vu (giacaphe.com)
