Robusta coffee prices continuously decrease, investors flee, market sets downtrend?

Vietnam's coffee exports in June are estimated at 150,000 tons, up 0.1% over the previous month, bringing coffee exports in the first 6 months of the year to an estimated 1.016 million tons (about 16.9 million bags, 60 kg bags), down 2.2% over the same period last year, according to the General Statistics Office.

Global coffee prices fell continuously as risk aversion prompted funds and speculators to continue liquidating net positions . Coffee prices entered a downward trend as the US dollar rose as investors aggressively shifted capital flows out of derivatives exchanges to seek safe havens, following the Fed Chairman's statement at a meeting of global central bank leaders.

While New York arabica coffee prices continued to weaken technically to set a new five-month low, London robusta coffee prices continued to slide from a 15-year high hit on Tuesday, according to Barchart.com.

According to FNC information – Colombia reported a sharp increase of 22% in May exports compared to the same period and the Brazilian government announced a record funding (worth about 76 billion USD) to promote sustainable, friendly coffee production for large and medium-sized farmers, which caused commodity funds to rush to activate technical sell orders due to previous overbought. The above information caused Robusta coffee prices to reverse sharply.

Meanwhile, after months of no change, a quantity of high-quality wet-processed Arabica coffee has just been registered at ICE – New York for auction. Favorable weather information in Brazil has helped farmers continue harvesting coffee, along with the increase in the value of the USD, contributing to pressure on Arabica coffee prices.

Domestic coffee prices today, June 30, continued to decrease by 400 - 500 VND/kg in some key purchasing localities. (Source: YouTube)

At the end of the trading session on June 29, the price of robusta coffee on the ICE Futures Europe London continued to fall sharply. The price of robusta coffee futures for delivery in September 2023 decreased by 46 USD, trading at 2,570 USD/ton. The price of futures for delivery in November decreased by 47 USD, trading at 2,474 USD/ton. The average trading volume was high.

The New York Arabica Coffee Futures Exchange slightly decreased, the price of Arabica coffee on the ICE Futures US New York for September 2023 delivery decreased by 0.55 cents, trading at 161.60 cents/lb. Meanwhile, the December 2023 delivery decreased by 0.35 cents, to 160.25 cents/lb. The average trading volume is high.

In the domestic market, coffee purchasing prices continued to decrease by 400 - 500 VND/kg, accordingly, 65,100 VND/kg is the lowest transaction price in the localities, recorded in Lam Dong province.

Domestic coffee prices today, June 30, continued to decrease by 400 - 500 VND/kg in some key purchasing localities.

Average price	Change
USD/VND exchange rate	23,390	+ 10
DAK LAK	65,400	- 400
LAM DONG	65,100	- 500
GIA LAI	65,200	- 500
DAK NONG	65,500	- 500

Unit: VND/kg.

(Source: Giacaphe.com)

Fed Chairman Powell stressed that two more rate hikes are likely this year, and he also said that inflation will be unlikely to fall to the Fed's 2% target until 2025.

Money flowed away from risky assets, specifically agricultural products, in which coffee on the two exchanges could not escape the situation of being sold off at reduced prices.

In the robusta market, according to technical analysis, technical indicators are showing that the downward momentum is still there. It is expected that in the short term, robusta coffee prices will fluctuate and accumulate within the range of 2585 - 2680.

Robusta prices are assessed by analysts to need to increase above 2680 to have a chance to recover. On the contrary, it is necessary to pay attention to the price level of 2585, if falling below this level, robusta coffee can establish a downtrend.

According to technical analysis on the arabica market, RSI is approaching the oversold zone. Technical indicators all show that the downward momentum is still there. It is expected that in the short term, the price may continue to decrease to test the support zone of 160 - 161. On the contrary, it needs to surpass the level of 164.5 to have a chance to increase and recover. With the price having fallen deeply in recent sessions, chasing the opening price of a new position is not recommended at this time because there may be a technical recovery correction.

Source