After testing new performance ranges, coffee has slowed down on ICE US. The Mar/22 position set a 10-year hike by changing hands at 252.35 cents. But it did not sustain this price level for long, weakening in the face of profit-taking movements and technical signs of overbought market. Then came a strong and fast negative realignment, only finding a bottom at 231.95 cents. These references serve to delimit the current range of operations, with arabica settling closer to the base of this range when closing this Wednesday’s trading session at 237.20 cents.
Brazilian export data support prices, as they reinforce indications of short-term tightening. Cecafé indicated coffee shipments in Brazil of only 2.93 million bags in the last month of November, which corresponds to a decrease of 39% from 4.77 million bags in the same period last year. Besides the lower supply in the current season, due to Brazil’s 2021 crop losses, the problems with the lack of containers and space on ships, besides the very expensive freight, explain this performance. The heated demand, with the advance of the cold season in the Northern Hemisphere, reinforces the concern with supply.
In any case, the market has already gone up a lot, inflated in a way by the great liquidity in global markets. In this sense, the signs of change in the behavior of central banks, especially the Fed, withdraw this financial support and promote a new adjustment in markets. The Fed will reduce asset purchases, which means less liquidity in markets. And a more austere inclination by the Fed, seeking to contain the inflationary spiral, tends to accelerate the increase in interest rates and monetary normalization. All this all reinforces a tighter financial scenario, which negatively impacts commodities prices.
The commodities index is already showing signs of slowdown, hovering around 223 points. WTI oil is trading at USD 71 a barrel, following the same behavior. It is true that commodities remain highly valued, but they are already moving away from the highs and signaling a slowdown movement, which is followed, to a certain extent, by coffee.