By ForexTime
Prices rallied to fresh records last week as fundamentals fuelled concerns over tight global supplies.
Note: Prices are trading roughly 4% away from all-time highs.
Before we take a deep dive into the world of Robusta coffee, here are the basics:
Robusta coffee bean is often used for expresso-based drinks and accounts for roughly 40% of the world’s coffee production.
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FXTM’s Robusta Coffee tracks the ICE US Robusta Coffee futures, the world benchmark for producers of Robusta coffee.
Coffee of this variety is grown mainly in Vietnam, Brazil, Indonesia, Uganda and India.
Robusta coffee prices have been on a tear!
The commodity has gained over 35% since the start of 2024 thanks to fundamental forces.
Negative factors in the form of severe weather, aging trees and freight disruptions continue to fuel fears about a global shortage of this coffee variety.
This in turn has sparked panic buying by roasters, further fuelling Robusta’s upside gains.
Vietnam is the world’s largest producer of Robusta, accounting for roughly 35% of global output.
Heatwaves and ageing trees are expected to hit crop yields, with concerns rising over possible water shortages for irrigation hurting output of the next season.
Brazil, the world’s second-largest producer of Robusta is also facing its trials. Adverse weather conditions are also threatening output, for the country that produces around 28% of global output.
Essentially, there are concerns over the amount of Robusta left in Brazil as the 2024 harvest approaches.
A combination of negative factors continues to impact output from the world’s two largest producers of Robusta coffee.
This development could mean more gains for the commodity which is trading near all-time highs.
Prices seem to be in a range on the H1 charts with support around $4130 and resistance at $4280.
Although the path of least resistance points north, a move lower could be on the cards before bulls jump back into the scene.
Potential support levels can be found at $4130, $4040 and $3980.
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