Price decreases after hot rise, technical activities still dominate (September 22, 2017)

After a tumultuous session of skyrocketing prices when speculation the Fed has not raised interest rates this time, the market has returned to the reality of the current crop of Brazil and Vietnam. Closing on Thursday, the December Arabica term fell 1.55 cents / lb to 135.00 cents / lb. Meanwhile, November Robusta decreased by 28 USD / ton to 2,007 USD / ton.

According to Brazilian traders, doubts about the 18/19 production increase have been raised again when the rainfall forecast at the end of this month is updated with the forecasted rainfall from September 28 to October 3. measuring up to 80mm in the state of Minas Gerais elsewhere is a bit lower. This forecast rainfall shows that this will be moderate rainfall and the drier situation will improve significantly. Even Rabobank said that if rain occurs as expected, the price of Arabica will be difficult to increase. Rabobank also said that although the rainfall is not much, but remember that this is only the beginning of the Brazilian rainy season only.

Regarding the Vietnamese crop, in addition to the news of an increase of about 10% of the crop coming from USDA (the US Department of Agriculture), Citibank’s goods sales department also asserts that the crop is about to be harvested in Vietnam this year. would increase by 7-8% and also added that inventories in Vietnam are now very low and the new crop will start without the pressure of inventory to sell as in previous years.

November price chart of London trading floor at the end of September 21, 2017

Analysts estimate that although yesterday’s decline, it was the heat of the previous day that kept the fluctuation of the November term Robusta in the short-term uptrend but the price is at the threshold that from That price may change down deeper. The wide range continues to be proposed by the technicians from 1970 to 2030 and is intended to be evaluated in the downward direction.

Meanwhile, Arabica floor in December still fluctuated in the range 132 – 137 and tended to accumulate in this frame so the price could still increase and decrease alternately in the session. The market only confirms the recovering trend when the price fluctuates above 139.5 and will confirm an increase when it breaks through 140.2. In the case of a decrease, it is also very difficult to break the hard 130 due to the need for additional supportive information from the Brazilian crop.

Pham Vy (giacaphe.com)