Global coffee prices have turned green across the derivatives markets. Harsh weather conditions caused by El Nino have raised concerns that robusta beans from major producers such as Vietnam and Indonesia will be affected, leading to a spike in prices.
Robusta prices rose sharply for the third consecutive session, while London inventories continued to decline. ICE London inventories continued to fall by 1,970 tonnes, or 2.41%, from a week earlier, to 79,640 tonnes.
Meanwhile, related information continues to support robusta coffee prices. The Foreign Agricultural Service (FAS) of the United States Department of Agriculture (USDA) has predicted that Indonesia's coffee production this year will decrease by up to 20% compared to the previous crop, down to 8.4 million bags, due to excessive rain during the flowering stage, preventing pollination, the worst result in the past 10 years.
The pressure of the new arabica crop continues to weigh on New York coffee futures. While the appreciation of the Real has helped Brazilian farmers boost coffee sales, the ICE New York stockpile has fallen to a six-and-a-half-month low of 557,304 bags as of June 6, helping to curb the decline in arabica prices.
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| Domestic coffee prices increased by 100 VND/kg in some key purchasing localities during the trading session on June 7. (Source: Newtimes) |
At the end of the trading session on June 7, the price of robusta coffee on the ICE Futures Europe London continued to increase. The price of robusta coffee futures for July 2023 delivery increased by 60 USD, trading at 2,674 USD/ton. The price of September delivery increased by 53 USD, trading at 2,636 USD/ton. Trading volume increased.
Arabica coffee prices on the ICE Futures US New York exchange continued to increase. The July 2023 delivery futures increased by 2.8 cents, trading at 185.40 cents/lb. Meanwhile, the September 2023 delivery futures increased by 2.15 cents, to 181.70 cents/lb. Trading volume increased sharply.
Domestic coffee prices increased by VND100/kg in some key purchasing localities during the trading session on June 7.
Unit: VND/kg. (Source: Giacaphe.com) |
The US dollar rose again in the last trading session, as investors focused on assessing the possibility that the US Federal Reserve (Fed) will continue to raise interest rates. The market is waiting for information on US consumer price inflation data for May, which will be released next week.
According to technical analysis, technical indicators are showing that the downward momentum is still there. It is expected that in the short term, robusta coffee prices will fluctuate and accumulate within the range of 2575 - 2630. Robusta prices need to increase above 2615 to continue to increase to explore the resistance zone of 2630 - 2650. On the contrary, if the support zone of 2565 - 2570 is lost, robusta prices may establish a downtrend.
For the Arabica market, according to technical analysis, the MACD line has crossed but the price trend is not clear, RSI is at 49.65%. In the short term, Arabica prices are expected to fluctuate and accumulate within the range of 180 - 185. Arabica coffee needs to surpass 185 and close above this level to have a chance to recover. Conversely, if the 180 level is lost, a downtrend may be established.
BMI said the widely anticipated El Nino transition in the coming quarters has raised concerns about lower yields in Vietnam and Indonesia, the world’s two largest robusta producers. Across Southeast Asia, El Nino is associated with below-average rainfall and higher temperatures, both of which reduce coffee production, BMI said.
The US Department of Agriculture (USDA) forecasts that global robusta coffee production will fall by about a fifth. Meanwhile, the International Coffee Organization (ICO) expects world coffee consumption to exceed supply by 7.3 million bags this crop year, up from a deficit of 7.1 million bags last crop year.
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