Coffee futures continued their ascent last week, with the December contract climbing 44.10 cents to close at 378.3 USc/lb – marking an impressive eight consecutive trading days of gains.
This sustained rally mirrors the market’s behavior from January and February, when futures climbed steadily for 12 straight sessions, advancing from $3.30 to $4.00 per pound.
Roaster buying activity increases significantly
Market data reveals roasters are actively securing supply coverage, with commercial gross long positions increasing 17% in the week ending Tuesday. This surge in buying activity suggests procurement managers are willing to pay premium prices to lock in December deliveries.
The increased roaster participation has brought coverage levels closer to seasonal averages, indicating the most urgent procurement needs may be subsiding. This shift could reduce the pressure from desperate buy orders that have been driving prices higher.
Weather conditions offer some relief
Brazilian weather patterns are showing signs of improvement heading into September, which could ease supply concerns that have contributed to the recent price volatility.
Additionally, with September futures now in the delivery period, market sentiment around inventory levels may begin to stabilize this week.
Volatile trading expected ahead
The combination of reduced roaster urgency and improving weather conditions could create challenging market dynamics. Limited liquidity on the upside presents risks for both buyers and sellers, as momentum-driven buying could quickly reverse if market sentiment shifts.
Analysts expect futures may attempt to test levels above $3.90 per pound before potentially declining sharply toward $3.50 by week’s end.
For real-time futures and spot prices, visit: https://app.vespertool.com/dashboard/