Robusta, Arabica coffee prices soar, corn, soybeans near death cross
Coffee price continued its strong surge this week, continuing a trend that has been going on for the past few years. Data by TradingView shows that coffee has jumped in the past seven consecutive months, reaching its highest point since 2011. It has soared by over 205% from its lowest level in 2020.
Robusta coffee futures have surged by about 400% from the lowest point in 2020 and is up by almost 100% this year.
Corn, on the other hand, has risen in the last two consecutive months even as it remains 40% below its highest point level in April 2022. It is also hovering near its lowest point since April 2021.
Soybeans has also risen slightly and is hovering near its lowest level since December 2021 and is about 25% below the highest point in 2023.
Coffee price is soaring
Coffee has jumped sharply in the past few months, helped by the ongoing weather issues in key countries like Brazil, Vietnam, Colombia, and Indonesia.
The main reason for the surge is that Arabica and Robusta coffee brands are going through major supply disruptions. In Brazil, where an harvest is going on, production has been relatively weaker-than-expect.
Most notably, future supply prospects are at risk as the country goes through its worst drought in decades. Other countries like Vietnam and Colombia are also facing substantial droughts because of the impact of climate change.
At the same time, coffee is rising because of the ongoing laws by the European Union to ensure that coffee production does not come from places where deforestation has taken place.
Analysts believe that coffee prices will remain at an elevated level for a while. Unlike corn and soybeans, new coffee trees take longer to grow and start producing beans. As such, while many farmers have started planting new crops, their impact in the market will take time.
Coffee price is also rising because of the ongoing logistics issues in the industry. Suez Canal, a key artery in global trade, has continued to see disruptions, meaning that farmers are adding these issues to their prices.
There are no signs that coffee demand is rising in key countries like in the United States and China.
Coffee price forecast
The monthly chart shows that coffee price has been in a strong bullish trend in the past few months. It has risen in the past seven straight months and the momentum is continuing. This is its longest winning streaks in years.
Coffee has crossed the important resistance point at $260, its highest swing in February 2022 and the upper side of the cup and handle pattern. In price action analysis, this is one of the most popular bullish signs in the market.
Coffee has remained above the 50-month moving average, meaning that bulls are in control. Therefore, the price will likely continue soaring as bulls target the next key resistance point at $300.
Corn rises after the WASDE report
Meanwhile, the price of corn has crawled back in the past few days. The closely-watched Teucrium Corn Fund (CORN) rose to $18.16, its highest point since July this year and over 6.7% from its lowest point this year. It has dropped by over 40% from its highest level in May 2022.
The most recent catalyst for corn prices was last week’s WASDE report, which is released by the US Department of Agriculture (USDA). In its report, the agency noted that corn would have smaller supplies, with beginning stocks being about 55 million bushels lower. Corn production in the US is expected to rise by 55 million bushels to 15.2 billion bushels.
Corn price forecast
Turning to the weekly chart the CORN ETF peaked at $30.31 in 2022 and then dropped to $17, its lowest point in August. It has formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) have crossed each other.
Corn has also moved below the 61.8% Fibonacci Retracement point. Therefore, the price will likely continue falling as sellers target the key support at $15.50, the 78.2% retracement point.
Soybeans price analysis
SOYB chart by TradingView
The WASDE report estimated that the US production will drop by 3 milion bushels to 4.6 billion bushels this year. It also estimates that global soybeans trade willl jump to 181.6 million tons, helped by higher exports from Paraguay and imports from Argentina.
Turning to the weekly chart, we see that the soybeans price formed a triple-top chart pattern at $29.35 and then crossed below the neckline at $23.80 on May 30th.
Soybeans is about to form a death cross as the spread between the 50-week and 200-week moving averages narrow. Therefore, the path of the least resistance is downwards, with the next point to watch being at $20, which is about 10% below the current level.
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