Although coffee prices were fairly volatile this week, both markets ended the week very close to where they were at the beginning of the week. Arabica coffee prices finished the week losing just 0.45 cents/lb with the second position (May 24) closing at 189.00 cents/lb, while the London robusta coffee market gained $4/ton (0.20 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be unchanged from what they were last week.
Reports suggest that there has been very little rain in many of the coffee growing regions of Colombia this year prompting concerns about the upcoming crop. However dry weather at this time of the year would not normally be seen as something to be concerned about, but given the weather patterns over the last 3 to 4 years when there has been excessive rain, this year’s dry spell is something to note. So far, it is unlikely that there has been any damage to the crop but if the dry spell continues into March then this will have an impact. Brazil-based coffee exporter, Comexim, published their first forecast for the country’s 2024/25 coffee crop this week, estimating total output at 67.15 million bags, just over 2% larger than last year, but 9 million bags higher than the recently published CONAB estimate. Arabica production has been estimated at 45.15 million bags, while the robusta harvest is put at 22 million bags. Exports are expected to total 45 million bags. According to the latest data from the All Japan Coffee Association coffee stocks in Japan have reached their lowest level since 2017, totalling 2.38 million bags in December, down 8.8% from the same month last year. Starbucks reported this week sales during the last quarter of 2023 global comparable store sales increased by 5%, driven by a 3% increase in comparable transactions and a 2% increase in prices. The company opened 549 new stores during the quarter to end the period with 38,587 stores, 51% of which are company-operated and 49% were operated under license.
I still cannot get access to any reliable regularly-published data on price differentials, so once again, I have had to use sources, the accuracy of which cannot be guaranteed. Physical price differentials do not appear to have moved much this week and remain relatively stable. Brazilian 3/4’s remain at minus 11; as do Honduras HG’s at plus 8; Kenya AB FAQ’s are also steady at between plus 60 and plus 75; as are Colombian UGQ’s at plus 12. So, without any update on PNG Y1’s, I would guess that they might also be steady at around minus 2/3. Therefore, had an exporter fixed on Friday in New York for May delivery he may have been able to secure a price somewhere between 185.65 cents/lb and 189.70 cents/lb.
The ongoing disruption in the Red Sea appears to have been factored into prices on both markets, so other factors are now becoming dominant. Attention is now focused on the upcoming crop in Brazil and various forecasts are expected to emerge over the next few weeks. At the moment the forecasts are all suggesting that this year’s crop will not be significantly larger than last years. This suggests that the supply/demand balance will be relatively even, although there are disagreements over whether it will be positive or negative. The immediate outlook continues to be uncertain but there is no reason to expect anything significant will develop over the week ahead. Consequently, both markets will probably remain volatile but once again will probably end the week remaining very close to where they are now.
Source:
Mick Wheeler, UK.