Good Day! Here is the weekly market news covering coffee futures pricing Monday 24 January – Friday 28 January 2022.

Summary

  • FX data points to a favourable green coffee seller’s market with the weak performance of the Brazilian Real (BRL)
  • US FED looking at tightening of monetary policy has had a further softening effect on the coffee futures market

Arabica Futures Chart (NY)

Arabica futures opened down at 238.35 c/lb but quickly rose by midweek to $240.70 c/lb indicating a bullish sentiment to the start of week, looking to test last week’s high of 243.50 c/lb. The market however encountered resistance that attracted a degree of selling pressure which then set it on a softer path to close lower at $236.20 c/lb.

Robusta Futures Chart (Lon)

 

 

 

 

 

 

 

 

 

Robusta looked to reverse its downtrend from the previous weeks, opening at 2,166 $/MT and quickly rising to 2208 $/MT to eventually close at 2,184 $/MT, failing to find any support at the high.

Analysis

The commodities markets have been trading sideways since the Federal Reserve announced plans to raise interest rates “soon” in a bid to control inflation this week. Commodity prices and interest rates have historically had an inverse relationship. The cost of maintaining inventory is why interest rates and raw material prices are so tightly linked. When interest rates rise, commodity prices tend to fall as it becomes more expensive to hold stock, so demand tapers off.

Looking at FX, the week started with USD trading at 1.332 Sterling, at 1.141 Euro and ending with 1.326 Sterling, 1.134 Euro indicting a slight weakening of the dollar. Additionally, the Dollar was worth 5.41 Brazilian Reais at end of the week, indicating a further weakening of the BRL – encouraging farmers to sell. As Brazil is the largest seller of green coffee globally, any changes in supply have a knock-on impact the Arabica NY market.

There’s more! Read more about this week’s fundamentals moving the market in our Coffee Origins Weekly Digest 31-01-22.

Published January 29, 2022
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