🌎 Brazilian Subdued Activity: Brazil's coffee producers exercised caution, holding back their beans in anticipation of better terminal prices. Meanwhile, New York coffee prices remained within a tight range as the Brazilian harvest season approached its conclusion.
☕ Robusta Resurgence: Robusta futures experienced a resurgence, reaching a 1½-week high due to persistently tight supply and demand dynamics. Stocks remained at critically low levels, and Vietnam's coffee exports in the first eight months of this year saw a 5.4% year-on-year decline to 1.21 million metric tons.
🌦️ El Niño Weather Outlook: The US Climate Prediction Center forecasted a more than 95% chance that El Niño weather conditions will persist through the first quarter of 2024. This could have far-reaching implications for the global coffee market.
🌱 Brazilian Blossom: Recent rains in Brazil triggered another round of blossoms in Arabica regions. Thankfully, there are currently no concerns about blossom setting, thanks to favorable vegetative conditions. The forecast also indicates light rains in the upcoming week.
📊 Market Metrics: ICE Arabica certified stocks currently stand at 442,558 bags, while robusta certifications have reached 3,873 lots. Arabica coffee prices spent most of the week hovering near the 150 cents per pound mark, with a sharp rally observed on Thursday. The main driver continues to be macroeconomic factors, with many commodities rallying alongside coffee. Short covering by shorter-term momentum players was observed, although the trend of selling KC against other commodities remains intact. Strong performance by the Brazilian Real (BRL) has pushed anticipated origin hedging further away from the market, and dry weather concerns appear somewhat premature in light of impressive flowering in Brazil.
📈 Price Levels: For traders, support levels to watch are 147.20, 143.00, and 132.50, while resistance levels stand at 157.60, 166.65, and 173.95.
🇧🇷 Brazilian Coffee Market: In the local market, Arabica futures traded sideways for most of the week, with recent upward moves prompting increased activity. Differentials remained robust as the US dollar lost 1% against the BRL. Producers continue to hold out for higher prices, resulting in limited selling of large volumes. Cecafe's latest shipment numbers for August 2023 stood at 3,675 million bags, with Arabica exports meeting expectations, while Conilon surpassed the previous record by 25k, reaching 700k per month.
🌦️ Weather Update: Rain is in the forecast for the coming week.
💼 Export Market: Differentials on offer trended higher, with some sellers yielding to firm bids.