Alex Bobrov
During the short period (June 26th – July 5th) the price of coffee gained as much as $27 per bushel, thus reaching $187/b. The coffee price rallied as the US Dollar weakened. The rally stopped as soon as the US Dollar started recovering from the downswing.
According to the Commodity Trading Department of , the current instability seen in stock and currency markets, was the trigger in this case. Several days before the rally, the experts indicated that the market of coffee was oversold when the price on Arabica went below $160 per bushel. The US Dollar kept growing while coffee prices remained within a price range.
The major reason for the recent rally was the fact that speculators started closing their short trades amid an increase in the supply of the new harvest form Brazil (speculative trades do not imply the real supply of the commodity), along with market instability.
Later on, the price went back into the range. Most likely, we will see the price moving within the $187-175/b range because the USDA’s recent report feels bearish as far as coffee is concerned. However, external factors may force the price out of the price range in any direction.
As for the weather factor, it is expected to favor the current harvesting campaign.
Alex Bobrov
