Arabica Futures Higher Ahead of US, Brazil Interest Rate Decisions CoffeeNetwork - Arabica prices on the InterContinental Exchange were trading 1.35 higher for the March contract, last seen at 195.35. Volume was light with 9,431 contracts at the time of writing. The May contract is trading 1.75 higher at 192.00 with 8,015 contracts.
Arabica futures are higher this morning but the market remains quiet. After initial selling, prices recovered to unchanged, and now, positive levels. The H/K switch is losing 40 points, trading at 3.35 cents. Structure remains in backwardation, which is very clear to remain until end of Q2, and slightly until the end of Q3. In terms of fundamentals, focus remains on the developing Brazilian crop. The latest weather forecasts shows good rains for the main coffee producing regions, which will be beneficial for the crop. SOMAR data shows that Minas Gerais only received 53% of the historical average of rains last week, so higher levels of precipitation are surely welcome. So far, forecasts for the 24-25 crop are wide-ranging, from 58 to 68 million bags. Looking ahead, StoneX is currently conducting the second part of their Brazilian crop tour. Their findings will be combined with that of the first crop tour, which took place last month, and a full report with crop forecast will be published within the next few weeks. Additionally, activity from Brazil is expected to be muted when the country celebrates Carnival from February 9 to the 14th. External focus today is on the FOMC interest rate decision this afternoon, where the Fed is expected to keep the rate unchanged. Brazil’s Central Bank will also announce their interest rate decision later today. They lowered the key Selic rate by 50 bps to 11.25% for the fourth consecutive time in its December meeting and are expected to deliver a fifth consecutive 50-bps today.
Technically, the next area of resistance is 196-200. Support for March at 188.5 and 184.5. Oscillators with negative to neutral values.
We also have the release of Q4 and full year 2023 financial reports for many of the major coffee companies, which should shed some light on demand. Yesterday, Starbucks reported that global comparable store sales increased 5% with North American sales up 5% and international sales up 7%; a positive indicator of a possible recovery in demand.
Robusta futures are higher today as bullish sentiment continues to dominate the direction of the market. Concerns over tightness in supplies have seen prices remain near record highs. A pickup in selling may occur in the upcoming sessions before the Tet holiday begins on the 8th.
Commodities are mixed. Private businesses in the US hired 107K workers in January 2024, below a downwardly revised 158K in December and forecasts of 145K.
Brent Crude Oil fell 1.13% to 81.93 and Spot Gold Futures ticked 0.81% higher to 2,053.46.
The Dow Jones Industrial Average rose 0.082% to 38,498.81 and the Stoxx Europe 600 Index was last seen at 486.96, up 0.27%.
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