Arabica Coffee Futures (COFFEE) are rising nearly 1.5% today, following a record-breaking sell-off that has lasted for years. Since April 11, coffee prices have dropped by nearly 20%, falling from $415 to $334.
- This year’s coffee harvest has so far been successful and is already at an advanced stage, dispelling earlier concerns about supply issues in the arabica coffee market. In Brazil, Safras & Mercado reported that 20% of the coffee crop has been harvested, compared to 21% at the same time last year.
- Data from the USDA Foreign Agricultural Service (FAS) indicates that coffee production in Brazil has increased by 0.5% year-over-year, while production in Vietnam — a key region for robusta coffee — is expected to rise by 6.9% year-over-year. Meanwhile, global robusta prices have dropped to seven-week lows.
- Coffee inventories on the ICE exchange have climbed to near 9-month highs for robusta, and arabica inventories have reached 4-month highs, according to data collected on Tuesday, June 3, showing 892,000 bags in storage.
- Part of today’s price rebound is driven by unfavorable weather patterns in Brazil, the world’s largest arabica producer. Data from Somar Meteorologia shows that no rainfall was recorded in the key growing region of Minas Gerais during the week ending May 31. Forecasts for the coming days suggest virtually no chance of rain.
COFFEE (H1 chart)
Looking at the chart, the technical outlook hasn’t changed significantly, and downward pressure persists. Key resistance levels today include the 23.6% Fibonacci retracement and the 50-period EMA (orange line).
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Source: xStation5
