☕️ Coffee Market Update: Rallying Amidst Challenges

The coffee market witnessed a dynamic week as arabica hit a fresh 4-1/2 month high and robusta climbed to a 2-week peak. Despite a risk-off macro environment, arabica's certified stocks continued to decline, while robusta's exchange gradings slowed. In the face of a firm US dollar and a pause in the stock market's 8-day rally, Brazilian producers demonstrated discipline by controlling volumes, and exporters managed inventories while staying cautiously covered. Although the BRL strengthened by 2%, it has yet to test a key resistance at 4.84/USD. Weather conditions add an additional layer of complexity, as El Niño is forecasted to persist through April-June 2024, with limited rainfall reported in Brazil except for the Bahia region. Forecasts indicate dry weather in the upcoming week followed by light rains across all regions. The market landscape is further influenced by dwindling arabica certified stocks, currently at their lowest since 1999, and robusta stocks standing at 3,998 lots. The March contract rallied to its highest since June, reaching 174.45, reinforcing the nearby structure and supporting flat prices. However, with zero bags pending grading, FOB differentials above tender parity, and December options expiring on November 10th, caution is warranted due to potential high volatility. Technical Levels: Support: 163.20, 159.70, 156.25 Resistance: 174.45, 181.25, 190.30 Local Market Dynamics: Producers adopted a disciplined selling approach, closely managing volumes. While farm gate levels increased, there was no notable surge in coffee influx. Exporters remained cautious, given the current margin structure, keeping nearby internal demand robust. The local industry, however, remained on the sidelines due to higher internal prices. Export Market Insights: Reasonable roaster demand persisted, but static differentials led to reduced transactions. Weather Outlook: Light rains are anticipated, but the overall outlook suggests dry conditions for this time of the year. Economic and Political Landscape: Volatility in the BRL persisted, strengthening against the USD towards the end of the week. In a market characterized by complexity and challenges, staying informed and adapting strategies accordingly is key. Here's to navigating the currents of the coffee market with resilience and insight! ☕️📈 #CoffeeMarket #Commodities #TradeInsights #MarketAnalysis