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Coffee Weekly Report

By: StoneX Intelligence Brazil, StoneX Intelligence Brazil

Coffee futures ended the week with mixed results
 
Fernando Maximiliano
 
Leonardo Rossetti
Despite the high volatility, Arabica futures prices ended the week almost unchanged while Robusta extended the upward movement.
HIGHLIGHTS 

•    Arabica futures ended steady. 
•    Robusta quotes advanced USD 38/t (1.6%). 
•    Cepea indicator for Arabica fell 1.2%; Robusta rose 0.1%. 
•    USDBRL ended the week 2.8% higher in Brazil and 2.3% in Colombia.
•    Global macroeconomic scenario fostered greater investor appetite for risky assets.
•    Funds extended their long position to more than 20 thousand contracts on 04/18.
•    Vietnam inter-crop and lower production in Indonesia support Robusta prices.
•    Higher-than-expected Chinese Q1 GDP supported commodities appreciation.
•    GCA stocks fell 1.45% in March.

   Bearish factors        Bullish factors

Access: El Niño and its possible impacts on world coffee production 

Arabica futures started the week extending the increase in prices seen in recent weeks, with the most active contract (July) advancing 1,155 points (6.0%) in the first two sessions of the week. However, the movement lost momentum, and quotes retreated for the rest of the week, with the referred contract closing Friday's session (21) steady at US₵ 191.45/lb. In London, the upward movement extended for almost the entire week, supporting an increase of USD 38 (1.6%), closing Friday's session at USD 2,382/t. 

In the Brazilian domestic market, coffee prices ended Thursday (20) with mixed results – the Brazilian market was closed on Friday (21) due to the Tiradentes Day holiday. The Cepea indicator for Arabica ended the week at BRL 1,111.77/ bag, posting a drop of 1.2% compared to the previous week. For Robusta coffee, the indicated showed an increase of only 0.1%, closing quoted at BRL 665.23/bag. 
 

Weekly Intraday (most active contract) - April 17 to 20

image 69464
Source: CommodityNetwork Traders' Pro. Design: StoneX.
The bullish movement observed in recent weeks has strong relationships with macroeconomic and currency factors, with no news on the fundamentals side. Initially, the OPEC+ announcement on the cut in oil production and the release of a higher-than-expected Chinese Q1 GDP supported a rise in energy commodity prices, which contributed to the advance in commodity prices in general. For Robusta specifically, the prospect of lower production in Indonesia and the inter-crop period in Vietnam has been supporting prices. Due to seasonality, Vietnamese coffee exports are expected to decrease in the coming months.
Seasonality of coffee exports in Vietnam (million bags)
image 69465
Source: Vietnam Customs. Design: StoneX. 

Then, the release of lower-than-expected figures on the US economy and other factors, such as the IPCA in Brazil, contributed to the fall of the dollar in producer countries, such as Brazil and Colombia, supporting coffee prices. However, there was a correction process last week, with the dollar index ending the period with an increase of 0.2%, the USDBRL +2.8% and the USDCOP +2.3%, contributing to the correction in Arabica prices. 

In addition, in this macroeconomic context, there was a greater appetite by investors for risky assets such as commodities, including coffee. The latest CFTC report showed that the funds went from a net short position of 342 contracts on 04/04 to 10,907 contracts long on 04/11 and 20,262 contracts long on 04/18. 

GCA stocks fell 1.45% in March

The latest report by the Green Coffee Association pointed out that coffee stocks at American ports totaled 6,016 million bags in March, representing a drop of 1.45% compared to the previous month. The data also points out that stocks are 0.4% below the average for the month in the last five years. However, the volume is still 3.4% higher than in 2022.

Seasonality of stocks at US ports (million bags)

image 69466
Source: GCA. Design: StoneX. 
INDICATORS
image 69467
Sources: ICE/NY; ICE/EU; B3; Commodity Network Trader’s Pro.

image 35317

 
 
  • Coffee

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