Global coffee prices fell sharply amid pressure from options contracts expiring. Robusta coffee prices reversed course after several sessions of strong increases, while Arabica prices plummeted after the holiday-closed session at the beginning of the week.
The current market situation is inevitable after funds and speculators need to liquidate due to overbought conditions, in the market the selling pressure of the new crop from Brazil is not small and the pressure to liquidate, balance, and adjust positions before the expiration of the option contract is near.
However, coffee prices in general remain high as ICE's inventory report continues to be low, leaving the consumer market still worried about short-term supply shortages.
Bloomberg reported that the world’s largest coffee producers are delaying purchases of beans from Brazil as they use up stockpiles built up during the pandemic and wait for prices to fall, putting pressure on arabica prices.
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Domestic coffee prices today, June 21, decreased by 300 VND/kg in some key purchasing localities. (Source: praguemonitor) |
At the end of the trading session on June 20, the price of robusta coffee on the ICE Futures Europe London exchange turned down. The price of robusta coffee futures for July 2023 delivery decreased by 26 USD, trading at 2,807 USD/ton. The price of September delivery decreased by 13 USD, trading at 2,770 USD/ton. The average trading volume was high.
The New York Arabica Coffee Futures Exchange fell sharply, the price of Arabica coffee on the ICE Futures US New York closed the last session of the week for July 2023 delivery down 7.45 cents, trading at 177.45 cents/lb. Meanwhile, the September 2023 delivery down 4.65 cents, to 1176.1 cents/lb. The average trading volume is high.
Domestic coffee prices today, June 21, decreased by 300 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
The US dollar continued its upward momentum from last weekend. Investors are now closely watching the US Federal Reserve Chairman Jerome Powell's testimony before the US Congress, scheduled to take place on June 21 and 22 this week, to better understand the future path of US interest rates. Although the Fed did not raise interest rates this June, it does not mean that the Fed's interest rate hike cycle has ended. Along with the monetary interest rate adjustments of many central banks around the world, most markets predict that the Fed will raise interest rates by another 0.25% at its meeting next month.
Robusta prices were supported by tighter supplies in Vietnam and continued strong demand from roasters. The market was also concerned about production in Indonesia, which could be affected by excessive rains.
In the market, Technical indicators are showing that the bullish momentum is still there. However, RSI is deep in the overbought zone at 74.56%, so there is a possibility that there will be a downward correction during the session. It is expected that in the short term, robusta coffee prices will fluctuate and accumulate within the range of 2755 - 2800. It is necessary to pay attention to the price range of 2715 - 2720. If this price range is lost, robusta coffee can establish a downward trend again.
According to technical analysis on the Arabica market, the MACD line has crossed but the price trend is not clear. It is expected that in the short term, Arabica prices will fluctuate and accumulate within the range of 180 - 185. Arabica coffee needs to overcome and maintain above the 181 - 182 zone to gain momentum to continue increasing. On the contrary, if the 180 level is lost, a downtrend may be established.
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