Coffee improves performance, and March 2021 beats 110 cents on ICE U.S.


Coffee improves performance, and March 2021 beats 110 cents on ICE U.S.

Coffee sustains gains and continues its corrective movement on ICE Futures U.S. The confirmation of Joe Biden’s victory in the U.S. elections generated optimism in markets, intensifying the sequence of coffee highs. The gains in oil and the fall of the dollar, especially against the real, further improve coffee prices in the international market. On the other hand, the return of rain in Brazilian coffee areas ended up weakening the reaction capacity of coffee in NY.

Highlight on the rollover from the Dec/2020 position due to the proximity of the first delivery notice day on November 19. The Mar/2021 position takes the center stage, carrying the largest number of open contracts and trading at 113.25 cents at the high of this Wednesday (11). The contract was unable to hold the gains and closed the day at 111.95 cents, but the market changes its performance level upwards, working above the mark of 110 cents.

The fact is that so far the upward movement on ICE U.S. is linked much more to the improvement in the financial mood and the dynamics of the rollover than to fundamental support. The short-term scenario remains quiet for buyers. Accelerated flow of shipments from Brazil and the expectation of advancement in the supply from other important growing countries. Cecafé’s data confirmed shipments in October in Brazil of 4.1 million bags. The export flow should continue to speed up in the coming few months.

Shipments below expectations in Colombia in October only ease this scenario. South America shipped 1.04 million bags, down 15% from the same period last year. Despite this bad start, the trend is for the flow to normalize in the coming months, with Colombia confirming the production of 14 million bags.

Brazil’s 2020 crop must be revised upwards, reinforcing the production record. With more coffee, the flow of shipments is likely to remain high, prolonging the seasonal effect on international prices. In other words, the short-term supply pressure tends to delay the improvement in the price curve due to a smaller Brazilian crop in 2021.