Coffee soars and the Dec/23 expiration breaks the graphic top of 152.15 and gains bullish technical strength in New York. The commodity was boosted by strong oil earnings after having built a bottom supported by the falling dollar. The US currency lost value compared to its peers due to signs of a more lenient Fed, which served as a trigger for improved coffee prices on the ICE US benchmark. The escalation of the conflict in the Middle East raises concerns about an expansion of its territorial reach, increasing geopolitical complexity and more directly affecting the oil supply. Of course, this ends up influencing the prices of other commodities, particularly coffee in New York.
In general terms, the hike in coffee prices is still linked to short-term financial volatility. Market fundamentals remain weak and increasingly focused on the long term, which to some extent even favors the short-term instability in coffee prices. However, it is important to take into account that the influence on the long-term price trajectory migrated to the next Brazilian crop. Thus, the rains of recent weeks, beneficial for crops, reinforce the preliminary idea of a larger Brazilian crop in 2024. This reinforces the idea of comfortable supply also in 2024, which helps to keep the international coffee price curve flat, inhibiting more significant upward movements.
Technically stronger, the Dec/23 position broke the graphic top at 152.15 cents and moved toward new resistances. The upward challenge is the top at 157.60 cents, then aiming for the level of 160 cents. At the bottom, pay attention to the 150-cent line, as its loss tends to accelerate sell orders. Down below, the market tends to find support at 143.70 cents.
Besides Brazil, global industries are also monitoring the arrival of a new production cycle in Colombia, Central America, and, of course, Vietnam. The expectation of a good crop in Vietnam ended up affecting the robusta market. The New York/London arbitrage is rising to 46 cents, which reinforces the idea of a gradual relative appreciation of arabica as the Vietnam crop advances and that there is an improvement in the robusta supply around the world.
