Brazil’s farmers hold coffee in the expectation of higher prices, driving up the price of coffee.

Market Analytics and Considerations

Key Points

On Tuesday, March arabica coffee (KCH23) closed up 0.90 percent (+0.55 percent) and January ICE robusta coffee (RMF23) gained 17 percent (+0.90 percent).

Coffee prices ended up slightly higher on Tuesday, with robusta reaching a six-week nearest-futures high. Brazil’s coffee farmers have withheld recently harvested beans from the market as a result of the drop in arabica prices last month, which has resulted in tightness in the spot cash market.

After ICE-monitored robusta coffee inventories fell to a new 4-year low on Tuesday of 7,785 bags, Robusta also has support from ever-tighter ICE supplies.

Coffee prices are also supported by worries about Brazil’s below-average rainfall. Somar Meteorologia revealed Monday that Brazil’s Minas Gerais locale got 56.5 mm of downpour last week, or 94% of the authentic normal. About thirty percent of Brazil’s arabica crop is produced in Minas Gerais.

Negatively, ICE arabica coffee inventory rose from a 23-year low of 382,695 bags on November 3 to a 3-month high of 648,648 bags on Tuesday.

The International Coffee Organization (ICO) reported on Friday that global coffee exports in October decreased by -1.9% y/y to 9.87 million bags, which was good news for coffee prices.

The abundance of Vietnamese coffee supplies is a negative factor for robusta. Vietnam’s General Statistics Office reported on Tuesday that January-November coffee exports were up 10.2% year-over-year to 1.54 MMT, and that November coffee exports were up 2.6% year-over-year to 110,000 MT. Vietnam produces the most robusta coffee beans in the world.

The USDA’s Foreign Agriculture Service (FAS) reduced its Brazil 2022/23 coffee production forecast on November 22 by -2.6% to 62.6 million bags, down from 64.3 million bags. Due to poor weather, Brazil’s crop agency Conab reduced its 2022 Brazil coffee production estimate to 50.4 million bags on September 20 from 53.4 million bags in May. The Brazilian biennial coffee crop was supposed to produce more coffee this year, but drought reduced production.

The Colombia Coffee Growers Federation reported on Monday that Colombia’s November coffee exports fell -25% year-over-year to 854,000 bags, supporting coffee prices. The second-largest producer of arabica beans in the world is Colombia. Meanwhile, Brazil’s green coffee exports in October decreased by -2.9% y/y to 3.18 million bags, as reported by Cecafe on November 17.

The Green Coffee Association reported on November 15 that U.S. October green coffee inventories increased by +5.8% y/y to 6,320,157 million bags, which is a bearish factor.

In a bearish development, the USDA predicted in its June biannual report that global coffee production in 2022/23 would rise by +4.7% y/y to 174.95 million bags, primarily as a result of Brazil’s arabica crop entering the first year of the biennial production cycle. The USDA predicts that global coffee ending stocks will rise by 6.3% annually to 34.704 million bags in 2022/23.

Technical Parameters

Futures Pivot Points Fibonacci- Daily

Exponential Moving Averages- Daily