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TECHNICAL ANALYSIS OF ARABICA COFFEE
Last week, ICE US coffee futures closed lower at 117.55 ct/lb.
The National Federation of Coffee Growers of Colombia reported that the country's coffee production for November was 63,000 bags, 4.18% less than the same month last year, for a total of 1,443,000 bags. She also reported that the country's coffee exports for November were 109,000 bags, 9.38% more than the same month last year, for a total of 1,271,000 bags.
Arabica coffee almost erased the increase of the previous week. Fears that the crop in Central America will be affected are now over.
Arabica coffee prices had benefited from concerns about Robusta coffee supply. Vietnam, the largest producer of this type of coffee, experienced very heavy rains after the passage of several typhoons, raising fears of a smaller crop. The worst of the storms have now passed, weather conditions are better and the harvest is very active.
In Brazil, forecasts for the next harvest are still on the decline due to the effects of drought. Rainfall in the Brazilian coffee belt this summer and also in October and November has been below normal.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the resistance of the 92, is heading towards the 90, and the Euro was close to $1.22 after disappointing US empoi figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy has passed the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases in 24 hours on Saturday. The United Kingdom, the first country to authorize Pfizer vaccine, begins vaccination on Tuesday.
WEATHER IN BRAZIL
90% of Brazilian coffee is grown in 4 regions: Minas Gerais, Espirito Santo, Sao Paulo and Parana.
The rainy season has started and lasts until April-May. Rainfall was below normal in October in the Brazilian coffee belt. Rainfall was also lower in November. The rains were late in coming and irreversible damage is feared for the next harvest. Last week's rains were also below normal. Next week, heavy rains are expected in Minas Gerais.
ICE US CERTIFIED COFFEE STOCKS
Coffee stocks are up to 1.294 million 60 Kg bags, compared to 1.245 last week. ICE US stocks of Arabica coffee are below the five-year average. The low stocks may provide some support to the coffee price on futures contracts.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
Last week, the Brazilian Real closed sharply higher at 0.1935. The Dollar weakened against most currencies and the Brazilian Real took advantage of this in recent weeks, breaking the bearish vanal it was in. If the Dollar's downtrend remains unchanged, the Real will surely test the 0.20 it has not reached since June. The BRL/USD pair is positively correlated with coffee futures prices. A low Real increases the competitiveness of Brazilian producers and encourages them to export.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the coffee futures markets is up this week to 32.265 K instead of 30.616 K.
TECHNICAL ANALYSIS OF ARABICA COFFEE
Last week, ICE US coffee futures closed lower at 117.55 ct/lb.
The National Federation of Coffee Growers of Colombia reported that the country's coffee production for November was 63,000 bags, 4.18% less than the same month last year, for a total of 1,443,000 bags. She also reported that the country's coffee exports for November were 109,000 bags, 9.38% more than the same month last year, for a total of 1,271,000 bags.
Arabica coffee almost erased the increase of the previous week. Fears that the crop in Central America will be affected are now over.
Arabica coffee prices had benefited from concerns about Robusta coffee supply. Vietnam, the largest producer of this type of coffee, experienced very heavy rains after the passage of several typhoons, raising fears of a smaller crop. The worst of the storms have now passed, weather conditions are better and the harvest is very active.
In Brazil, forecasts for the next harvest are still on the decline due to the effects of drought. Rainfall in the Brazilian coffee belt this summer and also in October and November has been below normal.
Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the resistance of the 92, is heading towards the 90, and the Euro was close to $1.22 after disappointing US empoi figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline.
Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy has passed the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases in 24 hours on Saturday. The United Kingdom, the first country to authorize Pfizer vaccine, begins vaccination on Tuesday.
WEATHER IN BRAZIL
90% of Brazilian coffee is grown in 4 regions: Minas Gerais, Espirito Santo, Sao Paulo and Parana.
The rainy season has started and lasts until April-May. Rainfall was below normal in October in the Brazilian coffee belt. Rainfall was also lower in November. The rains were late in coming and irreversible damage is feared for the next harvest. Last week's rains were also below normal. Next week, heavy rains are expected in Minas Gerais.
ICE US CERTIFIED COFFEE STOCKS
Coffee stocks are up to 1.294 million 60 Kg bags, compared to 1.245 last week. ICE US stocks of Arabica coffee are below the five-year average. The low stocks may provide some support to the coffee price on futures contracts.
THE DOLLAR
The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply.
Last week, the Brazilian Real closed sharply higher at 0.1935. The Dollar weakened against most currencies and the Brazilian Real took advantage of this in recent weeks, breaking the bearish vanal it was in. If the Dollar's downtrend remains unchanged, the Real will surely test the 0.20 it has not reached since June. The BRL/USD pair is positively correlated with coffee futures prices. A low Real increases the competitiveness of Brazilian producers and encourages them to export.
COMMITMENTS OF TRADERS
The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators).
The net positions of speculators on the futures markets are particularly interesting to observe.
The speculative net position on the coffee futures markets is up this week to 32.265 K instead of 30.616 K.