The recent rebound in the market of coffee made the price go down to the previous lows. The September futures stopped rallying on Wednesday and declined down to the lower border of the recent price range before recovering. The rapid strengthening of the US Dollar turned out to be the main factor pressing coffee and other commodity markets.
The export of coffee from Ethiopia hit a record level and exerted extra pressure on the market. The news that Indonesia reduced its exports of coffee helped the price to recover, thus preventing it from making new lows. Vietnam also demonstrated an increase in the prices for cash deals because of the difficulties in short-term supplies. Unfavorable weather forecasts for Brazil start improving.
However, it is necessary to pay attention to the fact that the coffee reserves at ICE, the London-based exchange, declined from 2 290 down to 1.541 on July 26th. Moreover, the harvesting season in Brazil is about to be over, which means that the Brazilian export (over 30% of the net global export) won’t see any major increase.
The global consumption of coffee is constantly growing. In China it gained 40% and doubled in Brazil. In a couple of months the consumption of hot beverages (including coffee) will obviously increase because of colder weather.
According to the Department of Commodity Trading, , the current retracement in the market of coffee will be temporary as in the near future the market will see another rally.
