Coffee on ICE and dolar on the sidelines



The coffee market decided to take a break. Arabica on ICE Futures U.S. is around 100 cents per pound. It indeed managed to move away from the lows, but it still does not show sufficient strength to sustain more significant gains. Even with funds holding a net short portfolio, coffee remains vulnerable to a new negative correction, overcoming the danger with the polar air mass that advances across the country. The market continues under pressure from the record Brazilian crop.

The dollar, which would be another important vector in the formation of internal physical coffee prices, also assumed a sideways stance. The U.S. currency has shown difficulty in finding direction. On the one hand, the Central Bank’s stimuli and the resumption of the economy, on the other hand the fear of a second wave of the pandemic, especially in the USA, where COVID-19 cases have accelerated again. Given the scenario of slower recovery in the world economy, a more cautious attitude is gaining ground in the market.

Thus, the internal physical market ended up retreating and now seeks stabilization. It is true that it is far away from the price levels practiced last May, when the best cups were trading above BRL 600 a bag, but slightly above the lows of the last month of June. This can relieve growers.