Coffee prices plummet; Fed keeps interest rates unchanged, signaling monetary policy

After a two-day meeting, the Fed decided to keep its policy interest rate unchanged in the range of 5.25 - 5.50%, while updated forecasts showed that 12 out of 19 policymakers of this agency supported another rate hike in 2023 to ensure inflation continues to slow down.

World coffee prices fell sharply on both derivatives exchanges, affected by the latest information from the world's leading supplier Brazil.

In particular, the Agricultural Supply and Forecasting Company (Conab) under the Brazilian Ministry of Agriculture announced the results of the third survey of this year's coffee crop as scheduled, with an estimated output of 54.36 million bags, an increase of 6.8% compared to the previous crop, and an increase of 13.9% compared to 2021, the same period of the most recent decline. Of which, Arabica coffee is estimated at 38.16 million bags, an increase of 6.8% and Conilon robusta coffee is estimated at 16.2 million bags, a decrease of 11% compared to the previous year.

ICE – London reported that inventories on September 20 were added by 1,650 tons, up 4.12% from the previous day, to 41,720 tons (equivalent to 695,533 bags, 60 kg bags). ICE – New York reported that inventories remained unchanged, remaining low at 448,113 bags, continuing to support coffee futures prices on both exchanges.

Giá cà phê hôm nay 8/11, (Nguồn: Rodeo West)

Domestic coffee prices today September 20 Continue to reduce by 500 VND/kg in some key purchasing localities. (Source: Rodeo West)

At the end of the trading session on September 20, coffee prices on international exchanges continued to decline. Robusta coffee prices on the ICE Futures Europe London exchange for November 2023 delivery decreased by 32 USD, trading at 2,508 USD/ton. Delivery period for January 2024 decreased by 16, trading at 2,414 USD/ton. Average trading volume.

Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery decreased by 2.75 cents, trading at 158.2 cents/lb. Meanwhile, the price for March 2024 delivery decreased by 2.8 cents, trading at 159.25 cents/lb. Average trading volume.

Domestic coffee prices today September 20 Continue to reduce 500 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	24,110	-95
DAK LAK	67,400	- 500
LAM DONG	66,800	- 500
GIA LAI	67,200	- 500
DAK NONG	67,600	- 500

Unit: VND/kg.

(Source: Giacaphe.com)

The US Federal Reserve (Fed) announced that it would not change the USD interest rate this time, which will soon attract funds and speculators back to the coffee derivatives markets...

The Fed forecasts less monetary policy easing in 2024, thanks to the strength of the economy and labor market. Fed policymakers expect the policy rate to fall to 5.1% by the end of 2024, up from the agency's last forecast of 4.6% in June 2023. The Fed also forecasts rates to then fall to 3.9% by the end of 2025 and 2.9% by the end of 2026.

The US central bank also continues to forecast inflation to fall below 3% in 2024 and return to 2% in 2026. However, the agency forecasts US economic growth to slow in 2024, to 1.5%, after adjusting the growth rate in 2023 to 2.1%.

The longer-term forecast for higher rates partly reflects the Fed’s more optimistic view of unemployment. Fed policymakers now see unemployment at 4.1% in 2024, down from the 4.5% forecast in June 2023.

Data released since the Fed's last meeting in late July 2023 have generally shown that the US labor market and consumer spending have remained stable despite rising interest rates, while core inflation has continued to decelerate.

Source