May arabica coffee (KCK24) this morning is up +7.85 (+3.49%), and May ICE robusta coffee (RMK24) is up +77 (+1.97%).

Coffee prices today are extending this month’s rally, with robusta coffee posting a new all-time high.  Coffee crop concerns in Brazil and Vietnam are fueling fund buying of coffee futures.  Somar Meteorologia reported today that Brazil’s Minas Gerais region received 15.8 mm of rainfall in the past week, or 74% of the historical average.  Minas Gerais accounts for about 30% of Brazil’s arabica crop.  Robusta coffee is surging to new record highs on fears that excessive dryness in Vietnam will limit the country’s robusta coffee production.

A bearish factor for coffee futures is weakness in the Brazilian real (^USDBRL), which fell to a 6-1/4 month low against the dollar today.  The weaker real encourages export selling by Brazil’s coffee producers.

Tight robusta coffee supplies from Vietnam, the world’s largest producer of robusta coffee beans, are a major bullish factor.  On March 26, Vietnam’s agriculture department projected that Vietnam’s coffee production in the 2023/24 crop year could drop by -20% to 1.472 MMT, the smallest crop in four years, due to drought.  Also, the Vietnam Coffee Association said that Vietnam’s 2023/24 coffee exports could drop -20% y/y to 1.336 MM.  In addition, Marex Group Plc forecasts a global 2024/25 robusta coffee deficit of -2.7 million bags due to reduced output in Vietnam.

Fund buying has supported this month’s surge in coffee prices.  Last Friday’s weekly Commitment of Traders (COT) report showed funds boosted their long arabica coffee positions by 9,560 net-long positions to a record 66,885 in the week ended April 9.  However, the record-long position could also exacerbate long liquidation pressures in a price downturn.

A bearish factor for coffee was last Wednesday’s report from Cecafe that showed Brazil’s Mar green coffee exports jumped +41% y/y to 3.9 million bags.  Brazil is the world’s largest producer of arabica coffee beans.  

Another negative factor for coffee was last Monday’s report from the International Coffee Association (ICO) that showed global coffee exports in Feb rose +6.8% y/y to 11.33 million bags, and total 2023/24 global coffee exports from Oct-Feb rose +11.1% y/y to 56.2 million bags.

A bearish factor for robusta was last Tuesday’s report from Vietnam’s General Department of Customs that showed Vietnam’s Mar coffee exports rose +17.7% m/m to 188,972 MT.  Also, Vietnam’s Q1 coffee exports are up +5.9% y/y at 585,696 MT.  

Coffee inventories have rebounded from historically low levels.  ICE-monitored robusta coffee inventories on February 21 fell to a record low of 1,958 lots, although they recovered to a 3-month high today of 3,376 lots.  Also, ICE-monitored arabica coffee inventories fell to a 24-year low of 224,066 bags on November 30, but they recovered to a 10-3/4 month high last Friday of 639,650 bags.

Larger coffee exports from Brazil are bearish for prices.  Brazil exporter group Comexim, on February 1, raised its Brazil 2023/24 coffee export estimate to 44.9 million bags from a previous estimate of 41.5 million bags.

This year’s El Nino weather event is bullish for coffee prices.  An El Nino pattern typically brings heavy rains to Brazil and drought to India, negatively impacting coffee crop production.  The El Nino event has brought drought to Vietnam’s coffee areas this year, according to an official from Vietnam’s Institute of Meteorology, Hydrology, and Climate Change.

In a bearish factor, the ICO projected on December 5 that 2023/24 global coffee production would climb +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year.  ICO also projects global 2023/24 coffee consumption will rise +2.2% y/y to 177 million bags, resulting in a 1 million bag coffee surplus.

The USDA’s Foreign Agriculture Service (FAS), in its biannual report released on December 21, projected that world coffee production in 2023/24 will increase +4.2% y/y to 171.4 million bags, with a +10.7% increase in arabica production to 97.3 million bags, and a -3.3% decline in robusta production to 74.1 million bags.  The USDA’s FAS forecasts that 2023/24 ending stocks will fall by -4.0% to 26.5 million bags from 27.6 million bags in 2022-23.  The USDA’s FAS projects that Brazil’s 2023/24 arabica production would climb +12.8% y/y to 44.9 mln bags due to higher yields and increased planted acreage.  The USDA’s FAS also forecasts that 2023/24 coffee production in Colombia, the world’s second-largest arabica producer, will climb +7.5% y/y to 11.5 mln bags. 
More Coffee News from Barchart

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Fibonacci Confluence on the Radar

Next, watch the approaching Fibonacci confluence zone from 2.68 to 2.70. The price of natural gas may get there quickly as it is on track to end the week near the highs of the week, and bullish momentum has accelerated as seen in Friday’s wide price range and strong green candle. Further up is the top line of a declining blue dashed trend channel, as well as the 78.6% Fibonacci retracement at 3.00.

Caution Warranted as Natural Gas Further Extends

This looks like a swing back rally in response to the sharp decline from the January 12 swing high of 3.38. Natural gas fell by 1.86 or 54.9% in 25 days, finding a bottom at 1.52. Since the subsequent swing low at 1.58 (C) the price of natural gas has risen by as much as 65.3% as of today’s high. The relative strength index momentum oscillator (RSI) continued to rise today and reached a height not seen since the peak in April 2022.

That peak was followed by a quick 21% decline to the 38.2% Fibonacci retracement. If a similar scenario were to unfold with the current rally, natural gas would complete a 38.2% retracement at 2.23. That is assuming that 2.64 turns out to be a swing high. On the other hand, if the retracement began from the top of the upcoming resistance zone at 2.70, a 38.2% retracement would put natural gas around 2.28.

For a look at all of today’s economic events, check out our economic calendar.

If we can find that value, then it will be a wonderful thing and we can get long again. As for myself, I am currently long, although less long than I once was in my ETF position. With that being said, I like the idea of buying dips near the 200 day EMA and would love to get closer to the $2 level in order to find a little bit of value in this market.

The $2.50 level above could offer a bit of a resistance barrier as well, so do keep that in mind. And I think you’ve got a situation where traders will continue to look at this as a market that’s played through momentum, nothing else. There’s nothing else driving it at this moment. Just like most other financial markets, it’s about the gamification of indices and stocks etc.

So, with that being said, you need to see a pullback in order to find some value. And at that point in time, you can take advantage of it. Chasing the natural gas markets up here is not a wise idea as we are so overbought.

For a look at all of today’s economic events, check out our economic calendar.

Gold (XAU/USD) is currently trading at $2,378.755, up 0.15% for the day. The 4-hour chart highlights key levels that traders should monitor. The pivot point is at $2,373.92, which serves as a critical support level. Immediate resistance is at $2,395.84, followed by $2,410.62 and $2,425.87.

On the downside, immediate support is found at $2,357.95, with further support at $2,336.74 and $2,318.86.

Technical indicators show a balanced outlook. The 50-day Exponential Moving Average (EMA) is at $2,354.84, while the 200-day EMA stands at $2,312.01. The formation of a Doji candle above the pivot point level of $2,373 is likely to drive a buying trend.

Conclusion: The outlook remains bullish above $2,373.92. A break below this level could trigger a sharp selling trend.

Oil prices remained relatively stable in Asian trade on Friday, poised for a mildly positive week. The softer dollar, shrinking U.S. inventories, and increased Chinese stimulus boosted hopes for improved demand. However, the market faced mixed signals, as the International Energy Agency lowered its demand forecast for the year due to economic uncertainty, particularly concerning China, which faced higher U.S. trade tariffs.

Brent and WTI futures gained this week, driven by softer-than-expected U.S. inflation data. This data weakened the dollar and fueled expectations of Federal Reserve rate cuts by September. However, some Fed officials cautioned that more evidence of falling inflation is needed before trimming rates.

Can Strength Continue?

Certainly, today’s bullish price action is a sign of strength as natural gas recently busted through three price zones that could have seen resistance, especially the 200-Day line. However, can demand remain strong enough to take out today’s high and keep rising? That remains to be seen.

Rally Extended

The current rally is extended and closer to a top than it has been. As of today’s high, natural gas is up by 62.7% from the April 25 swing low at 1.58. That makes the current rally the largest on a percentage basis since the initial trend low from February 2023. Nevertheless, if the 200-Day MA can continue to act as support, the price of natural gas has a chance of continuing its rise. The next higher target zone is at 2.68 to 2.70. Those price levels are the 61.8% Fibonacci retracement and a 127.2% extension of a 51.8% measured move (purple arrows) that matches the rally beginning in August 2023, respectively. The high target is the top blue dashed falling channel line.

Drop Below 2.39 Should Lead to Deeper Pullback

A decisive drop below the 200-Day MA may provide an initial indication that a retracement may be coming. But a drop below today’s low of 2.39 will provide a clearer short-term bearish signal. Potential support from the 20-Day MA is down at 2.07. Higher price levels to watch on the way down are marked on the chart in black right extended lines from prior swing highs and lows. They include 2.31, 2.23, and 2.17. Fibonacci levels will be added on the chart if a retracement begins.

For a look at all of today’s economic events, check out our economic calendar.

The U.S. Energy Information Administration (EIA) lowered its West Texas Intermediate (WTI) oil price forecast for 2024 and 2025 in its latest short term energy outlook (STEO).

According to its May STEO, the EIA now sees the WTI spot price averaging $83.05 per barrel this year and $80.88 per barrel next year. In its previous April STEO, the EIA projected that the commodity would average $83.78 per barrel in 2024 and $82.48 per barrel in 2025.

The EIA forecast in its latest STEO that the WTI spot price will average $84.76 per barrel in the second quarter of this year, $85.50 per barrel in the third quarter, $84.17 per barrel in the fourth quarter, $83.50 per barrel in the first quarter of 2025, $81.50 per barrel in the second quarter, $80.50 per barrel in the third quarter, and $78.16 per barrel in the fourth quarter of next year.

That STEO highlighted that the WTI spot price averaged $77.50 per barrel in the first quarter of 2024 and $77.58 per barrel overall in 2023.

In its previous April STEO, the EIA projected that the WTI spot price would average $85.30 per barrel in the second quarter of 2024, $86.84 per barrel in the third quarter, $85.17 per barrel in the fourth quarter, $83.84 per barrel in the first quarter of 2025, $82.50 per barrel across the second and third quarters of next year, and $81.16 per barrel in the fourth quarter.

In a report sent to Rigzone last week, Standard Chartered projected that the nearby future NYMEX WTI basis price will average $95 per barrel in the third quarter of this year, $103 per barrel in the fourth quarter, $104 per barrel in the first quarter of 2025, $100 per barrel in the second quarter of next year, and $108 per barrel in the third quarter of 2025.

The company forecast in that report that the commodity will average $106 per barrel overall in 2025, $125 per barrel overall in 2026, and $112 per barrel overall in 2027.

In a separate report sent to Rigzone earlier this month, analysts at Morningstar DBRS said they were increasing their full-year 2024 WTI oil price forecast to $75 per barrel from $65 per barrel “to reflect actual year to date pricing, a more favorable full-year global liquids supply/demand balance, and a greater risk premium related to geopolitical tensions relative to our prior forecast”.

“There is no change to our previous 2025 and 2026 WTI price forecasts of $60 per barrel,” the analysts added in the report.

The Morningstar DBRS analysts noted in that report that their midcycle or normalized long-term price band of $50 per barrel to $70 per barrel for WTI oil remained unchanged.

“The band reflects our best judgment of (1) the marginal cost of adding new oil supplies from sources such as U.S. shale resource plays and (2) a global market that is reasonably well balanced (based on modest production-containment efforts by OPEC+ and modest growth in global demand),” they added.

“Our forecasts for both 2025 and 2026 fall within this band,” they highlighted.

In a research note sent to Rigzone on April 26, J.P Morgan projected that the WTI crude price would average $79 per barrel this year and $71 per barrel in 2025. The company forecast in the report that the commodity would average $80 per barrel across the second and third quarters, $81 per barrel in the fourth quarter, $78 per barrel in the first quarter of 2025, $73 per barrel in the second quarter, $69 per barrel in the third quarter, and $65 per barrel in the fourth quarter.

To contact the author, email andreas.exarheas@rigzone.com

XAU/USD Current price: $2,379.65

• The US Dollar shed ground in the American session on dismal United States data.
• Wall Street maintains a positive tone amid fresh hopes for Fed rate cuts
• XAU/USD corrected from near $2,400, seems ready to resume its advance.

Gold trades with a soft tone on Thursday, hovering around the $2,380 level at the time being after peaking earlier in the day at $2,397.34. The US Dollar recovered some ground throughout the first half of the day after falling to fresh multi-week lows against major rivals following the release of discouraging United States (US) data on Wednesday. The country confirmed the Consumer Price Index (CPI) held at 3.4% YoY in April, matching March’s reading and still far from the Federal Reserve’s (Fed) 2% goal.

A mostly quiet European session temporarily helped the USD, but the American currency resumed its slide following the release of dismal US data. On the one hand, Initial Jobless Claims for the week ended May 3 were up by 222K, worse than anticipated. Furthermore, the previous week’s figure was upwardly revised to 232K. Additionally, the country published the May Philadelphia Fed Manufacturing Survey, which contracted to 4.5, also missing expectations. Finally,  April Industrial Production remained unchanged, while Capacity Utilization slid to 78.4% from 78.5% in March.

Wall Street shrugged off the negative headlines, and the three major indexes trade in the green, although gains are modest. Speculative interest somehow believes negative figures could speed up the Fed’s decision to cut interest rates, retaining optimism.

XAU/USD short-term technical outlook

The XAU/USD pair is marginally lower on a daily basis, but the overall stance is bullish. The daily chart shows that technical indicators remain within positive levels, partially losing their upward strength but far from suggesting an upcoming decline. At the same time, the pair is developing well above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMA maintain their bullish slopes below the shorter one, usually a sign of bullish strength.

Technical readings in the 4-hour suggest the recent slide was corrective, and also that XAU/USD is poised to resume its advance. The pair trades well above bullish moving averages while technical indicators consolidate within positive levels, paring their slides from overbought readings. Renewed buying pressure beyond 2,390 will likely result in an advance beyond the $2,400 mark.

Support levels: 2,378.10 2,361.35 2,345.20

Resistance levels: 2,392.50, 2,403.10 2,417.60 

XAU/USD Current price: $2,379.65

• The US Dollar shed ground in the American session on dismal United States data.
• Wall Street maintains a positive tone amid fresh hopes for Fed rate cuts
• XAU/USD corrected from near $2,400, seems ready to resume its advance.

Gold trades with a soft tone on Thursday, hovering around the $2,380 level at the time being after peaking earlier in the day at $2,397.34. The US Dollar recovered some ground throughout the first half of the day after falling to fresh multi-week lows against major rivals following the release of discouraging United States (US) data on Wednesday. The country confirmed the Consumer Price Index (CPI) held at 3.4% YoY in April, matching March’s reading and still far from the Federal Reserve’s (Fed) 2% goal.

A mostly quiet European session temporarily helped the USD, but the American currency resumed its slide following the release of dismal US data. On the one hand, Initial Jobless Claims for the week ended May 3 were up by 222K, worse than anticipated. Furthermore, the previous week’s figure was upwardly revised to 232K. Additionally, the country published the May Philadelphia Fed Manufacturing Survey, which contracted to 4.5, also missing expectations. Finally,  April Industrial Production remained unchanged, while Capacity Utilization slid to 78.4% from 78.5% in March.

Wall Street shrugged off the negative headlines, and the three major indexes trade in the green, although gains are modest. Speculative interest somehow believes negative figures could speed up the Fed’s decision to cut interest rates, retaining optimism.

XAU/USD short-term technical outlook

The XAU/USD pair is marginally lower on a daily basis, but the overall stance is bullish. The daily chart shows that technical indicators remain within positive levels, partially losing their upward strength but far from suggesting an upcoming decline. At the same time, the pair is developing well above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMA maintain their bullish slopes below the shorter one, usually a sign of bullish strength.

Technical readings in the 4-hour suggest the recent slide was corrective, and also that XAU/USD is poised to resume its advance. The pair trades well above bullish moving averages while technical indicators consolidate within positive levels, paring their slides from overbought readings. Renewed buying pressure beyond 2,390 will likely result in an advance beyond the $2,400 mark.

Support levels: 2,378.10 2,361.35 2,345.20

Resistance levels: 2,392.50, 2,403.10 2,417.60 

Natural Gas markets tend to move on fundamentals more than technicals, although technicals can help. It’s in that spirit that I believe the market’s overbought, but you can see it continues to go higher. We had reached a point where drillers in the United States were simply starting to lose money, and eventually that has to come to an end, and that’s what we’ve seen, I think, more than anything else.

If we can get a pullback anywhere near $2, I’d be interested in getting more of my ETF involved. We’ve had some questions about the ETF I use. It’s called UNG. It’s listed in America. I don’t know about other countries. You have to have access to US stocks or ETFs, but there probably are ETFs in European countries, Asian countries, whatever, that deal with natural gas.

But make sure it’s based on the Henry Hub contract and not something like Dubai because that might have a completely set, different set of fundamentals pushing it. The Henry Hubb is by far the biggest contract in the world but it’s not the only one, so you have to be very cautious with that. Again, I’m a buyer of dips in the ETF. I don’t care about the leverage. This is a small part of my portfolio. Quite frankly, when I trimmed it, it wasn’t that astonishing to me.

This thing could rip to $3. That really isn’t going to change my life either, but it does add to the pile. And at the end of the day, that’s all we’re trying to do.

For a look at all of today’s economic events, check out our economic calendar.

By Bhvishya Patel, Money team

We spoke to three buskers to find out what it’s like performing on the street in the UK.

Amir, 29, came to UK from Pakistan with passion for music

Amir Hashmi moved to the UK in 2022 to study, said he began busking in central London 10 months ago because “music was his passion”.

“In Pakistan there are many problems so I decided to leave and move to London. I feel I can do better in London than my country,” he said.

He said busking was now his primary income but at times he did jobs at warehouses to get by.

“I never started this for money, I started because it is my passion but now this is my main job as well,” he said.

Amir, who often performs in the capital’s Piccadilly Circus or along Oxford Street, said often he returned home with just £10-15 in his pocket after a day’s busking.

He said: “Many times I sleep without food and sometimes I sleep on the floor of the road when I have no shelter.

“I don’t have my own place to live but I have friends who often let me stay with them. They don’t charge me any rent – they look after me.

“Sometimes I do private shows for income but it’s very hard because the cost of living is increasing. If I go somewhere then most of the time I prefer to walk. I walk with my speakers and carry my gear.”

Despite his financial struggles, Amir said he wanted to continue performing on the street as his “goal was to make people happy”.

He said: “With busking, there is no stage and you can just start performing. Whenever I am performing, I connect with the people who have come to listen. If I feel people are not enjoying it, I change the song and try and make them happy.”

Earlier this year, Amir recorded a song with Neha Nazneen Shakil, a Malayalam actress from India, who approached the singer three months ago in Oxford Street.

“I wrote that song 12 years ago and after all these years my song has been recorded now in London,” he added.

Jade, 24, quit retail to busk

Jade Thornton, from Amersham, started busking in 2017 with a friend after leaving college at the age of 17 and quickly realised it was something she enjoyed doing and could make a living from.

She began doing it full-time at the end of 2018 but when the pandemic hit she described becoming “unemployed overnight” and having to take up retail jobs to support herself.

“I chose not to go to university – I just thought it wasn’t for me so I went straight into some part-time retail jobs,” she said.

“I take my cap off to anyone who does retail – it is one of the most gruelling jobs. People who do retail don’t get nearly as much respect as they deserve. 

“Some of the customers I was facing were not that kind and I thought this is making me miserable, so I just thought ‘if I don’t leave now then when?'”

As the global economy slowly began to recover, she decided to leave retail and pursue music full-time in 2022.

“It is hard to switch off – I do busking but I am constantly messaging clients, writing set lists and learning songs,” she said.

When it came to finances, Jade said there was no average to how much she could earn but it could fluctuate from £15-100 day-to-day depending on a number of factors.

“It relies on the time of month, whether the sun is out, if people have been paid, if Christmas is on the way or if Christmas has just passed,” she explained.

The musician said she did struggle initially when she began busking but her parents were always supportive.

She said: “You obviously get a few questions from people asking ‘are you sure you want to quit your job and sing on the street?’

“I lived at home for a long time and I’m grateful my parents could support me in that way because I know not everyone has that opportunity.”

While performing outdoors is now Jade’s full-time job, she said some months were more difficult to make money than others.

“If I’m being brutally honest in months like January and February it would be super difficult. This year I had enough gigs in December to cover me for January,” she said.

“Last year from June-July and December I did not have to go busking because I got so many gigs through busking. I’m part of a lot of online agencies and I also do lots of pub gigs, weddings, birthdays and other events.”

Jade noted though that the cost of living crisis had made things harder.

She said: “A few pub gigs I’ve had have been cancelled because they’ve had to rethink their strategies but if somebody cancels then I can just go out busking. There has been a slight dent when it comes to finances but that’s from COVID as well – with COVID I was unemployed overnight.”

The young musician went on to say she was “very grateful” when somebody did tip her and even small gestures like sitting, listening or just a smile were “currencies in themselves”.

“It’s escapism for me as a singer and then it’s escapism for the audience as well,” she added.

“Children also have such a great time listening to buskers and some may not have an opportunity for many reasons to go and see live music so if they can come across it in the street and that can spark something that’s a wonderful thing to think I’m a little part of that.”

Charlotte, 34, long-time busker

Charlotte Campbell, 34, who usually busks along the Southbank or in the London Underground, said she started busking during the 2012 London Olympics and while “busking used to be enough”, more recently she has had to take on more gigs in the evening.

“A typical day is usually busking until around 6pm and then a gig in the evening – 8pm onwards,” she said.

“I could still probably make a living from busking but I’ve taken on more paid gigs since the pandemic because everything became so uncertain. I think that uncertainty has just carried through now – that seems to be the way of life now.”

The musician said tips for her CDs, which she puts on display during her performances, ranged between £5-10 and in the current cashless climate a card reader was “essential”.

She said she pre-sets her card reader to £3 when playing on the Southbank and £2 when busking inside the London Underground “because people are rushing”.

While she described her earnings as a “trade secret”, she said the busker income had “definitely gone down” but this was due to a few factors – the pandemic, people carrying less cash and the cost of living crisis.

“Also, a lots of pitches have closed which means there are a lot more buskers trying to compete for one spot so all of those things have impacted my living as a busker,” she said.

“I would say even though my income is primarily from busking I have had to subsidise it with more paid gigs than before. I just haven’t felt as secure in my living from busking in the last couple of years.

“Most of the gigs I have are booked by people who have seen me busking so indirectly busking is my entire career- if I don’t busk I wouldn’t get the gigs I play in the evening. So directly and indirectly busking is my entire income.”

In spite of uncertainty, she said it was freeing to be able to go out and perform for people in an intimate way.

“You are not up on a stage and there is no separation between you and them.  It’s a really great connection you can make – I want to be able to hold onto that,” she added.