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Technical - ICE ROBUSTA COFFEE

Robusta Coffee on ICE is currently trading near 2202. It forms Bearish Shark Pattern on the daily chart. Prices are currently trading below the 50-day moving average and below the 200-day moving average. Ichimoku indicators suggest prices are currently in negative zone. RSI suggests prices are currently in overbought zone. Markets are expected to trade with volatility in the coming trading sessions. Markets are expected to trade with the bearish sentiments as stochastic oscillator is mirroring decrease in strength in the prices and is endorsing pressure in the coming trading sessions.

Robusta Coffee prices trading below 2268 will keep the bearish trend scenario active for the level at 2135 level and below same can test 2050 while major resistance comes at 2365, a break above same will activate fresh rally.

Relative Strength Index

As per the Daily chart of Robusta Coffee, RSI (Relative Strength Index) is currently trading at 47.83, which suggests that it has arrived in the zone where the downtrend may continue. The RSI can be used to identify trends and momentum. As per our analysis, we can say, the trend has started moving towards the downside and traders should avoid creating long positions and be bearish at this level.

Fisher Transform

As per the technical indicator Fisher Transform on the Daily chart of the Robusta Coffee, we can see the value of which is at -0.38 which suggests that it is now at a fair zone but as the trend is signaled downwards traders could look to create short positions as a bearish rally could restart

Choppiness Index

As per the Daily chart of Robusta Coffee, Choppiness Index is trading at 55.69, which is showing low volatility in the price, price has hit the ceiling now. This means that a sideways trend is quite likely in the near future. The Choppiness Index indicator is a volatility indicator that determines whether the market is following a trend or the market is choppy and trading sideways.

MACD

MACD is trending down and suggesting bearish Momentum. A bearish crossover is seen as MACD is crossing below signal line indicating strength in bearish move. Prices looks to extend losses with bearish move expected to be continued. Traders should look for selling opportunities and avoid taking long positions.

SWOT Analysis

Strength

• Robusta is gaining support from tightening supplies in Vietnam, where cherry development has suffered from a lack of fertilizer.

• Brazil’s record-low inventory highlights global woes

• Global demand keeps increasing, with consumption this season growing 1.5% after a 2% increase last year

• Indonesia exported 16,863.58 tonnes of Sumatra robusta coffee in July, up 19.8% compared to the same month last year

• Costa Rican coffee growers exported 5.3% more coffee beans in August compared with the same month last year.

• Vietnam Jan – Aug coffee exports up 14.7% y/y at 1.2 mln tonnes

Weakness

• U.S. green coffee stocks rose by 226,801 bags to 6.5 million 60-kg bags by the end of August, according to Green Coffee Association.

• Brazil shipped 2.44 million 60-kg bags of green coffee abroad in August, 1.2% less than in the same month

• Global green coffee exports fall 8.8% in July – ICO

• Uganda's coffee exports dropped 17.7% in July compared to the same month last year, hurt by a prolonged drought

• Shipping constraints have eased and some traders have started bulk exports

Opportunity

• In 2022/23 Vietnam production is forecast at 30.9 million bags, down 700,000 from last year’s record harvest.

• Vietnam has seen its stockpiles shrinking amid a poor harvest outlook.

• Brazil may just barely have enough to serve demand

• Inventories in the South American nation may dip to just 7 million bags by March

• Rabobank lowered its forecast for global coffee output in the upcoming 2022/23 season

Threats

• The Coffee Board has projected a bumper crop in FY23 at 393,400 tonnes, up 15 percent from last year.

• In 2022/23 India production is forecast to gain 200,000 bags to 5.7 million

• In 2022/23 Indonesia Robusta output is expected to reach 10.0 million bags

• In 2022/23 Brazil Robusta harvest is forecast to continue expanding to reach a record 22.8 million bags, up 1.1 million.

• USDA projected that 2022/23 global coffee production would climb +4.7% y/y to 174.95 mln bags

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