MILAN – Coffee futures prices fell sharply over the last week, from two and half month highs in New York and 5-week highs in London. ICE Arabica recorded a streak of five consecutive sessions in the red. The fall in the dollar, the rise in oil prices, and low certified stocks supported gains in New York earlier this month.
But there were signs that the market was overbought, opening space for corrective movements, commented Safras & Mercado in a recent report.
The main contract for December delivery closed yesterday at 159.10 cents per lb, from a high of 165.85 cents reached on October 23rd. January ICE robusta coffee closed down $63 to a three-week low of $2,314.
According to barchart, coffee prices in New York are also being undercut by the outlook for favorable rains in Brazil, which would support coffee yields.
Somar Meteorologia reported Monday that Brazil’s Minas Gerais region received 43.7 mm of rain in the past week, or 130% of the historical average.
Also weighing on coffee prices Monday was the weakness in the Brazilian real, which fell to a 1-week low against the dollar.
According to S&M, the fundamental market determinant is the potential of the next Brazilian crop. Even with lower-than-expected rainfall and high temperatures in some growing regions, overall, the picture is still quite favorable for Brazil’s 2024 crop.
Prices are still receiving support from tight inventories in both markets. The certified stocks held against the New York exchange Monday fell to a nearly 1-year low of 390,135 bags. The same day, ICE-monitored Robusta coffee inventories were at 3,959 lots Monday, slightly above the record low of 3,374 lots posted on August 31.
The latest Commitment of Traders report from the New York market has seen the shorter term in nature Managed Money fund switch their net short position into a new net long position within this market over the week of trade leading up to Tuesday 24th. October 2023; to register a new long position at 7,456 Lots.
The longer term in nature Index Fund sector of this market posted an increase their net long position by 14.33% within the market, to register a new net long position of 53,364 Lots on the day.
Over the same week, the Non-Commercial Speculative decrease their net short position by 86.35% within the market over the week of trade leading to Tuesday 24th. October 2023: to register a new net short position of 15,781 lots.
