05 June 02:07 AM
Futures news, coffee. Price for Arabica keeps falling, having currently reached the point of 161.1 per bag. Analysts of Commodity Trading Department of Masterforex-V Academy have already stated that it is influenced by several factors.
Major bearish factors are the following:
1. Specified assessment of Brazilian coffee crop by Conab company. According to it, the crop amounts to 50.45 mln. bags, which is considerably higher than ICO prediction for Brazilian coffee in 2011/12 that amounts to 43.15 mln. bags and slightly higher than USDA prediction (49.2 mln. bags);
2. Rapid increase of US dollar rate during last previous two days.
Bullish factors are also to be remembered:
1. Coffee keeps gaining popularity, and its demand keeps rising (although at a slower pace lately);
2. Remains of coffee stocks as of the beginning of 2011-2012 season were record low, namely, 17.4 mln. bags. This is lower than at the beginning of 2010-2011 season, and this season’s world yield is expected to be 2 mln. bags less than last season.
If during nearest 1-2 months bullish factors may be neglected due to abundant inflow of new coffee yield, in future they are most likely to outweigh, and coffee will start gaining in price. However, the pace of appreciation will be influenced by US dollar dynamics (in case of rapid price change) and situation at stock and financial markets.
It is worth mentioning that mass supplies of new coffee yield usually start in June, although farmers have already started selling unharvested yield (future sales).
Besides, there has emerged a new factor that brings more uncertainty about coffee price. As mentioned before, the prices for Arabica and Robusta coffee are about 1.5 times different. Price for Robusta has lately remained at about $ 2200 per ton. On this basis, the price of one 60-kg bag amounts to about $ 132, which means that Arabica has become very close in price to Robusta. One of them has to concede: either Robusta will drop in price, or Arabica will gain. Taking into consideration rich yield of Arabica, it is clear that perturbation is bound to happen – there will be flat, unexpected bursts, and price drops. Happy hunting ground for speculators.
Certain points about weather:
• Due to last week’s rains early harvesting was slowed down in southern part of Brazil. This week’s downpour will result to minor slowdown in the regions at far south, but most regions are expected to face favourably dry weather.
• Last week in Columbia rains covered the regions at the north and at the far north, allowing minor drought to cover southern regions.
• Emerging hurricane got weaker when it reached Mexican coast, so the damage it caused was minor. It is raining heavily in Central America, encouraging coffee growth, but they may lead to flooding.
• Last week it rained harder at coffee regions of Vietnam , favouring early filling. This week’s rain will improve the conditions further.
• This week rain is expected to become heavier in certain regions of Sumatra and South-Western Asia, favouring late filling.
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US stock indices are trading without any major moves as they cannot find common dynamics. Yesterday, Standard & Poor's 500 dropped down to the local low, which can affect other stock indices. However, most indices are currently trading in the green zone.