Coffee surges and March 2021 climbs above 120 cents on ICE U.S.


Coffee soars again on ICE Futures U.S. and the March 2021 position not only breaks through but also advances far above the important mark of 120 cents. The market closed at 122.85 cents Wednesday (18), accumulating 15% gains in November and, by overcoming resistances, regains technical strength. It is true that coffee is following the good mood of other markets. The good news about vaccine development has brought optimism to global markets. This led to the rise in crude oil prices, which also ended up boosting other commodities. The CRB commodity index, for example, has already accumulated gains of 7.9% in November.

(chart: CRB index)

Another point of support for coffee prices is the passage of Hurricane Iota in Central America, bringing casualties and destruction to Colombia, Nicaragua and Honduras. It is true that it ended up losing strength when hitting the ground, being downgraded to a tropical storm. However, it must still bring a lot of rain, especially in Nicaragua and Honduras, which can delay the harvest and create logistical problems, hampering the flow of mild coffee exports by these important sources, which of course makes room for price hikes on ICE U.S.

The market is subject to correction, especially after overcoming climatic stress in Central America. However, it is likely to hold part of the gains, predicting a change in the behavior of the price curve, bringing to the fore the ideas about crop losses in Brazil in 2021. In this sense, news on hurricane and vaccine partially break the short-term negative pressure caused by the accelerated flow of shipments, which helps to dismantle the logic of the market again for 2021, which is positive for prices.