Arabica futures were mixed this week as positive reports of favourable growing conditions in Brazil were offset by smaller coffee exports and mixed predictions for the 2022/23 harvest. Robusta prices saw marginal gains this week on the back of reduced economic concerns and continued predictions of a major shortfall for the upcoming harvest.
The front month KCK23 contract for May was mixed throughout the week as conflicting fundamentals prevented a clear uptrend or downtrend from emerging. This volatility was evident as prices traded within a USC 9.5/lb (5.2%) across the course of the week. Prices fell at the start of the week under pressure from wider economic concerns but recovered as this eased mid-week. Traders again tried to sustain momentum to break through the USC 180/lb but were unable to overcome resistance at the 183 USC/lb level. The KCK23 contract for May closed with a moderate loss for the week of USC 5.4/lb (3%) overnight in New York.
Robusta prices recovered the losses of the previous week and climbed sharply mid-week as broader economic concerns eased and traders took advantage of lower prices and re-entered the market. Robusta is still finding support on the back of a predicted record shortfall for the 2022/23 harvest but the continuing rebound of ICE inventories is serving to keep a cap on any major market fluctuations. The front month RMK23 contract for May closed slightly up by USD 25/kg (1.2%) overnight in London.
Prices for both arabica and Robusta recovered from the losses of last week and wider economic concerns eased mid-week and traders took advantage of the lower prices to re-enter the market. Volume and liquidity were low in both markets adding to their volatility, with participation dominated by commercial operators as the larger speculators remained mostly absent.
The main fundamental indicators continue to be mixed. Weather reports out of Brazil continued to be mixed, with conditions for the upcoming harvest appearing to more favourable this week. Much will depend on the ability of farmers in Minas Gerais to access fields to apply fertilisers and pesticides in the coming weeks.
Volume predictions also continue to be mixed as reporting organisations deliver conflicting prediction of a deficit or small surplus for the arabica harvest this year.
Export reports from producing countries are also mixed, with Brazil and Colombia both reporting a decline in year-on-year volumes for January, in contrast to reporting from Honduras of an increase of 32% year-on-year for February. Predications for the 2022/23 Robusta harvest continue to point firmly to a deficit, however.
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