Global coffee prices recovered well on both London and New York exchanges as pressure from the USDX helped funds and speculators return to increase purchases. The 0.5% decrease in the USDX index encouraged funds and speculators to return to increase purchases of commodities in general, as the exchange rate is currently at a favorable level and there is a high possibility of a pause in US interest rate hikes amid the promise of increased stimulus measures for the Chinese economy.
Indonesian government trade data showed that coffee exports, mainly robusta, fell 46.7% year-on-year in the first month of the current coffee crop year (April 2023 to March 2024), while total output this year is expected to be around 10.3 million bags, contributing to the tight global robusta supply in the coming months. This information has curbed the decline in robusta prices.
The Brazilian real strengthened, while crude oil prices surged on the international market after Saudi Arabia announced production cuts independent of OPEC+, which was a novelty for the market. Arabica coffee was under pressure due to signs of larger supplies from Central America. Costa Rica’s May coffee exports increased +39% year-on-year to 140,142 bags, according to the Costa Rican Coffee Institute.
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| Domestic coffee prices today (June 6) increased by 500 VND/kg in some key purchasing localities. (Source: Kitco) |
At the end of the first trading session of the week on the international floor (June 5), the price of robusta coffee on the ICE Futures Europe London floor turned to increase. The price of robusta coffee futures for delivery in July 2023 increased by 32 USD, trading at 2,607 USD/ton. The price of delivery in September increased by 32 USD, trading at 2,574 USD/ton. Trading volume was above average.
Arabica coffee prices on the ICE Futures US New York exchange increased. The July 2023 delivery futures increased by 2.8 cents, trading at 183.1 cents/lb. Meanwhile, the September 2023 delivery futures increased by 2.5 cents, to 180.2 cents/lb. Trading volume increased sharply.
Domestic coffee prices today (June 6) increased by 500 VND/kg in some key purchasing localities.
Unit: VND/kg. (Source: Giacaphe.com) |
The report also showed that the unemployment rate rose from a 53-year low of 3.4% in April to 3.7% last month. This triggered a sharp increase in capital flows into Treasury bonds and the US dollar. The USD ended the weekend session up 0.48% to 104.04. G
According to the Center for Digital Transformation and Agricultural Statistics, Ministry of Agriculture and Rural Development, in May 2023, world coffee prices fluctuated sharply due to low robusta supply in leading producing countries. Meanwhile, the average export coffee price in the first 5 months of 2023 is estimated at 2,295 USD/ton, up 2.4% over the same period in 2022. Thus, in the last months of the year, the export value will be even higher when contracts at new prices are awarded.
Technical indicators on the robusta floor are showing signs of continued downward momentum. It is expected that in the short term, robusta coffee prices will fluctuate and accumulate within the range of 2530 - 2600. Robusta prices need to rise above the resistance level of 2600 and close at 2615 to open up an opportunity to increase. On the contrary, if the support price range of 2500 - 2530 is lost, robusta coffee prices may establish a downtrend.
According to technical analysis, technical indicators are giving neutral signals, the price trend is not clear. In the short term, Arabica prices are expected to fluctuate and accumulate within the range of 180 - 185. Arabica coffee prices need to surpass 185 and close above this level to have a chance to recover. On the contrary, if the 180 level is lost, a downtrend may be established.
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