Coffee futures may be set to stabilize or rally after a two-season production downturn to drought in Brazil, but with still strong exports mean the drawdown of arabica inventories now reaching 12M bags is quite a bit more than previously expected, a major coffee producer contends. Coffee futures are trading up 55 points today settling near $1.2045 per pound at the Intercontinental Exchange.
The weaker Brazilian Real currency helped spark demand of arabica inventories creating more than usual coffee exports. The bumper exports cited the coffee producer to raise estimates to 5M bags shortfall for the forthcoming 2015-16 season.
“Coffee importers from around the world have found tangible value by Brazil’s currency creating bargain (coffee) prices,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental assessment of the coffee futures market. Evans added, “As arabica coffee stocks run lower, however, less selling can be anticipated bringing Brazilian coffee exports back to their normal average.”
The trend for coffee futures remains down but with a possible bottom happening. For now, coffee futures have been the consumers best friend with low prices to be enjoyed as long as possible.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
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