Coffee Prices Swing as Dollar Wavers
May arabica coffee (KCK24) on Monday closed up +0.80 (+0.43%), and May ICE robusta coffee (RMK24) closed up +59 (+1.76%).
After recovering early losses on Monday, coffee prices surged moderately, fueled by dollar weakness, spurring short-covering in coffee futures.
Weather Impacts and Projections
Initially, coffee prices dipped as abundant rain in Brazil alleviated dryness concerns, casting a shadow over coffee prices. Brazil’s Minas Gerais region witnessed above-average rainfall, dampening worries. Minas Gerais, the heart of Brazil’s arabica crop, soaked up 28 mm of rainfall, surpassing the historical average.
On a different note, Rabobank’s projections painted a contrasting picture. While a 4.5 million bag surplus is forecasted for the 2024-25 marketing year, an upward revision in 2023-24 production estimates, albeit modest, hints at market uncertainties.
Shifts in Coffee Inventories
Coffee inventories are rebounding from a trough as ICE-monitored robusta coffee inventories witnessed a resurgence. After plunging to a record low, robusta coffee inventories are on the rise, surpassing previous levels. Additionally, arabica coffee inventories, that touched a 24-year low, are marking a turnaround.
Global Supply and Demand Dynamics
Global coffee dynamics are being reshaped by shifts in production and exports. Vietnam, a robusta coffee behemoth, grapples with supply constraints, triggering a surge in prices. Conversely, Brazil’s prolific coffee exports signal a bearish trend, contributing to the price volley.
Influence of External Factors
The El Nino weather event casts a shadow on coffee production, creating a bullish tilt. The Brazilian deluge and impending drought in Vietnam may lead to supply disruptions, prompting jitters among investors. Additionally, projections by the USDA’s Foreign Agriculture Service offer insights into the coffee market’s future trajectory.
More Coffee News from Barchart
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
