10/23/2024 Coffee futures prices fall. Financial hedge funds liquidate short positions

Closing price of 2 coffee futures exchanges on October 22, 2024: London futures for January 2025: 4,425 USD/ton (-78), New York futures for March 2025: 248.75 cents/lb (-1.70)

Closing price of 2 coffee futures exchanges on October 22, 2024:

London Robusta Exchange November 2024 and January 2025

4487 -90 4647/4459

4425 -78 4582/4395

Arabica New York Exchange December 2024 and March 2025

249.85 -1.85 255.70/248.55

248.75 -1.70 254.35/247.55

Parameters affecting coffee prices:

– Price difference between 2 floors of arabica base for March 2025 and robusta base for January 2025: 48.03 vs 46.19 cents/lb.

– DXY index: 103.89 vs 103.82 points.

– Value of the Brazilian Real (BRL) in the USD/BRL pair: 5.69 vs 5.68. Record low of 5.99 BRL set on May 8, 2020!

Domestic price (expected):

– The expected price of raw coffee in the Central Highlands today is 103-110 million VND/ton compared to 105-110 million VND/ton yesterday.

Economic & policy events and data that can impact coffee prices:

In a newly released profile, “The Economist” magazine shows that the US economy is growing rapidly and that the economies of other developed countries can only look on in envy and “smell the smoke”.

For the past three decades, the US has grown much faster than all other economies. In 1990, its GDP accounted for two-fifths of the GDP of the G7 developed countries. Now it accounts for 50%. Per capita, it is now 40% higher than Western Europe and 60% higher than Japan. The document cites those figures.

Don’t think America is an economy with a low average wage. Don’t be fooled. The average wage in America’s poorest state, Mississippi, is higher than the average wage in the UK, Canada or Germany. When the world economy goes through a crisis, America comes out strong. Even after the post-Covid crisis:

America is the only G20 country with output and employment higher than pre-Covid levels.

What is behind it? The size of the market, the demographics, the choice of energy as an industry that generates momentum despite its reputation as an autonomous country and an energy exporter, the mobility and flexibility of employment, the power of the financial engine and especially the investment in companies, from startups to large companies and… the power of the Stock Exchange.

But it is also important to note that the US economy is fueled by the flexibility of regulations and laws. Unlike many other countries, including Europe. In particular, we see very clearly that the state participates very limitedly in the economy. That is what our country is currently discussing as a trendy issue: “institutions”.

Coffee Market Commentary (November London and December New York):

– Development: Prices of two coffee exchanges decreased, robusta fell more with -1.97% and arabica -0.68%.

– This is the closing day for trading positions. Hedge funds pushed prices up by giving London +79 USD and New York +3.90 cents/lb but then pushed them down to sell for profit, closing both exchanges in red. Thus, this is a down session due to liquidation of short positions of hedge funds.

– More and more regular rains in Brazilian coffee regions have made speculators worry that exporting countries will sell heavily, especially Brazil with a falling domestic currency.

– The DXY index increased slightly yesterday when the US Republican presidential candidate won in the opinion polls, also putting a lot of pressure on coffee prices, which are very sensitive to geopolitical changes.

– Brazil’s coffee exports increased sharply in September to a record high of 4.46 million bags, of which green coffee increased by nearly 40% to more than 4.1 million bags, including arabica up 31.9% and robusta up 40.9%.

– Ethiopian Prime Minister Reports Doubled Coffee Revenue Despite Challenges. At an awards ceremony on October 10, Prime Minister Ably Ahmed honored leaders in Ethiopia’s coffee sector and highlighted efforts to become one of the world’s top producers of fine coffee. He credited the Green Legacy Initiative and growing export revenues, which reached $1.4 billion by 2023, with a target of $2 billion by the end of the year.