World coffee prices failed to maintain their upward momentum in the first session of the month. Both Arabica and Robusta prices fell sharply. The coffee market has been fluctuating since the beginning of the week with strong adjustments following the US dollar, when the US Federal Reserve (Fed) did not raise interest rates for the second consecutive policy meeting (ending on November 1).
Domestic coffee prices fell sharply along with world exchanges, losing the 58,000 VND/kg mark, trading at 57,000 - 57,800 VND/kg.
The US dollar has rebounded strongly, supported by the Fed’s hawkish stance, amid a more resilient and stable US economy. This has led to a decline in the Brazilian currency, helping farmers in this country sell more to earn foreign currency.
Meanwhile, weather information in the main growing regions in the Central Highlands of Vietnam and Brazil is causing the market to constantly change direction. Good rains in the main coffee growing regions in southern Brazil, dry weather in the Central Highlands of Vietnam favorable for the harvest are the reasons for funds and speculators to increase net selling on both coffee futures exchanges.
Coffee futures markets continued to receive support from data reporting a continued decline in ICE inventories. ICE-monitored arabica inventories fell to a one-year low on October 31. Meanwhile, ICE-monitored robusta inventories stood at 39,530 tonnes on the same day, slightly above the record low recorded on August 31. In addition, congestion at Brazil’s main agricultural export ports also contributed to the upward trend.
 |
| Domestic coffee prices today 2/11 sharp decrease 1,200 VND/kg in some key purchasing localities. (source: Pinterest) |
At the end of the first trading session of November, the price of robusta coffee on the ICE Futures Europe London exchange for delivery in January 2024 fell sharply by 54 USD, trading at 2,312 USD/ton. The delivery in March 2024 fell by 53 USD, trading at 2,376 USD/ton. Average trading volume.
Arabica coffee prices on the ICE Futures US New York exchange for December 2023 delivery continued to fall sharply by 7.5 cents, trading at 159.8 cents/lb. Meanwhile, the March 2024 delivery price increased by 6.05 cents, trading at 158.85 cents/lb. Trading volume was very high.
Domestic coffee prices today 2/11 sharp decrease 1,200 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
Wall Street stocks rose on Friday after the Fed left interest rates unchanged at 5.25%-5.5%. This was the second consecutive meeting in which the Fed decided not to raise interest rates.
The Fed noted signs of surprising growth in the US economy in the third quarter of 2023 but also recognized the tight financial conditions facing businesses and households.
According to the Fed, “economic activity expanded at a strong pace in the third quarter” was the basis for Fed policymakers to unanimously keep the benchmark interest rate unchanged at 5.25% -5.50%, maintained from July 2023. Recent data showed that US GDP grew 4.9% in the third quarter of 2023.
Fed Chairman Jerome Powell said there was still more work to do to rein in inflation, while markets appeared "confused" about the possibility that the agency would raise interest rates again.
Meanwhile, in the coffee market, despite the negative inventory data, coffee exports in Brazil are progressing in a different direction. The Brazilian Coffee Exporters Association (CECAFE) said that in the past 30 days, the country has issued export permits for nearly 4 million 60kg bags of coffee, a record since March 2021. Of which, Arabica beans are the main contributor to this positive growth with 3.11 million bags, up 33% compared to 2.34 million bags last month.
Favorable weather is accelerating the coffee harvest of Vietnamese farmers. This will be important information that prevents prices from adjusting upward.
Source
Comment (0)