On Friday, Capital Economics, a London-based research consultancy, said it sees only a limited recovery in coffee prices over the coming year, as a forecast 2 percent increase in global demand from the U.S. Department of Agriculture easily outstrips an expected 0.4 percent gain in world output. In the immediate future, the fact that the currencies in Brazil and Colombia have weakened sharply against the dollar is encouraging exports as producers take advantage of the favorable exchange rate to sell dollar-priced beans, drawing down stockpiles in producing countries. However, the International Coffee Organization said Friday that this year is likely to see the first increase in global production in three years, and analysts predict ample rains will boost Brazil’s crop next year. ICE Futures U.S. March arabica coffee settled up 1.60 cents, or 1.40 percent, at $1.1600 per lb. Vibiz Research Center analysts estimate that the movement of arabica coffee prices on the ICE Futures New York will continue in a bearish pattern. The availability of production with plentiful rainfall in Brazil may increase expectations of increased production. Likewise, the potential for a stronger dollar with interest rate increases in the United States and the expected subsequent gradual increases will be potential triggers for weakening arabica coffee prices. ICE Futures New York arabica coffee is likely to test the support level at 1,1300 dollars and 1,1000 dollars, while resistance will be seen at 1,1900 dollars and 1,2200 dollars in the event of a continued increase.
Freddy/VMN/VBN/Analyst-Vibiz Research Center
Editor: Asido Situmorang
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