As we approach the peak of mid-summer, the coffee market has been relatively calm, with minor gains noted. Traders have witnessed predictable short liquidation by funds, prompted by decent roaster and arb type buying around and below the 160 c/lb mark. However, prices weakened towards the end of the week due to an unexpected cut in the Selic rate, leading to a decline in the BRL and bringing origin hedging back into play.
On a positive note, front month arabica hit a one-month peak earlier this week before easing back, while September robusta reached an impressive $2,683 per ton.
🌱 Agriculture Update 🌱
In Brazil, soil moisture remains at good levels, and there have been reports of a few premature blossoms in Mogiana. We can all breathe a sigh of relief as there are no cold fronts forecasted for the next two weeks, indicating that the frost risk is over for this season.
Certified stocks stand at 527.9k bags for arabica and 5.01k lots for robusta, signaling a delicate balance between supply and demand.
📊 Local and External Market Insights 📈
The local market has seen slow activity over the week, with exporters paying higher prices to fulfill nearby shipments. Interestingly, the local industry appears to be showing a preference for the conilon variety for the September onwards period, though ample choices between low-grade arabica and conillon are available.
On the external front, arabica shipments for July have been slower than expected, but conilon exports have been robust, reaching an impressive 475k bags of green bean. Moreover, there have been notable reports of increased arabica fob business during this period.
🌦️ Weather Watch 🌦️
Intermittent rainfall in the arabica growing regions is being closely monitored. There is a concern that this pattern might induce early scattered flowering without sufficient follow-up rainfall, potentially impacting the plants' blossoming when the rainy season begins in earnest in September. For the next two weeks, no cold fronts or frost risks are anticipated.
Key Levels to Watch 📊
Support: 159.50, 155.00, 144.50
Resistance: 165.50, 173.00, 181.20
Stay tuned to these important levels as they might influence market sentiment and trading decisions.
In conclusion, the coffee market presents intriguing dynamics, and it's essential for traders and industry players to stay vigilant and adapt to changing conditions. Let's keep a keen eye on the weather and market trends as we navigate through this exciting season. Cheers to the coffee community! ☕️🌱