Coffee futures are reacting to news from SE Asia that Vietnam’s coffee harvest is expected to decline to a four-year low amid reoccurring dryness which threatens a further downgrade to overall production. Coffee futures are up just over .07 cents today currently trading at $1.3925 per pound at New York’s Intercontinental Exchange.
Vietnam mainly produces “robusta” coffee beans and the USDA’s Hanoi-bureau forecasts output there to drop by 7% for the 2016-17 season. What’s reportedly saving more of Vietnam’s coffee crop is the fact that farmers there have access to irrigation water from both reservoirs and underground sources.
The USDA-bureau in Hanoi, Vietnam, shared their fundamental view of the coffee futures market by stating, “Despite the dryness, damage to the 2016-17 crop during the key flowering and fruit-setting stage (from January to early March) has been minimal.” The USDA adds, “May rainfall… has been much lower than the same period in the last five years. The lack of May rain is adding stress to coffee trees. If the lack of rains continues in June coffee crops will face additional losses.”
Coffee futures trend has been choppy at best for the past six months. Just today coffee futures have broken out above a key resistance level turning the trend “up” in my work.
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