Coffee Prices Rise As Dollar Weakens
Coffee prices rose Wednesday, helped by a weak dollar as the Fed concludes it's two-day policy meeting.
Arabica coffee for December delivery was up 1.4% at $1.3720 a pound on the ICE Futures U.S. exchange, on track to break a two-day losing streak.
Investors are focused on any changes to the Fed's projections for future rate increases, and have been preparing for months for an announcement that it will begin unwinding from its $4.2 billion bond portfolio.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, was down 0.3% recently to 85.06. The dollar weakened against many emerging-market currencies, a boost to commodities sold in these countries as a weak dollar helps stoke demand for dollar-denominated goods.
Arabica coffee prices were helped lower this week by favorable rains in Brazil, the world's largest growing region. But Rodrigo Costa, director of trading at Comexim USA, said in a note to clients that the dollar's "shy recovery," along with late rains, could point to higher prices.
"Farmers in general are consensually saying, especially those that see their trees suffering, that a normalization of rains will not give back the vigor of the trees that could have been noticed before," he said.
At the same time, coffee stocks in the United States have stopped rising, Mr. Costa noted. According to the Green Coffee Association there was a drop of 147,285 bags in August, with the inventory totaling 7,266,027 bags. The inventories are unlikely to stay down for long, however, as arabica coffee harvests are just over a month away in some major producing regions.
In other markets, raw sugar for March was up 1.6% at 14.60 cents a pound, cocoa for December was up 1.4% at $1,993 a ton, frozen concentrated orange juice for November rose 1.3% at $1.541 a pound and December cotton lost 0.2% to 69.14 cents a pound.
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(END) Dow Jones Newswires
September 20, 2017 11:26 ET (15:26 GMT)