Both markets saw wild swings in prices this week, oscillating up and down by over 10 cents/lb on some days, although the overall trend was downwards. Arabica coffee prices lost 14.45 cents/lb over the week, with the second position (July) closing at 385.45 cents/lb. Robusta coffee prices suffered a similar fate losing $123/ton (5.50 cents/lb) over the week. In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 120 and 125 toea/kg lower than they were last week.
Once again it is difficult to pinpoint why prices were so volatile this week, although trading volumes especially at the beginning of the week were relatively light. In such an environment it is not unusual to see prices move significantly in one direction one day only to be reversed the following day. This would certainly explain the sort of movements seen this week. However, negatively impacting most commodity markets this week was news that the American economy shrunk by 0.3% during the first quarter of 2025. Also adding to the negative overtone seen this week were the financial reports for the first quarter issued by two large roasting companies. Starbucks reported that global comparable store sales fell during the first quarter of the year by 1%, as a result of a 2% decline in comparable transactions, which was partially offset by a 1% increase in average prices. The Kraft Heinz Company also gave their financial results for the quarter but for all their product range rather than just for coffee. The company witnessed a 6.4% decline in net sales suggesting that coffee sales were also down, probably as a result of higher prices. The latest data from the All Japan Coffee Association showed that at the end of March, green coffee stocks in Japan totalled 132,000 tons, or 2.03 million bags. This is 0.2% higher than in February, but 11% lower than in March last year.
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 have steadied a bit this week but the situation is mixed. Brazilian 3/4’s continue to be quoted at minus 14; Honduras HG’s are steady at plus 3, as are Kenya AB FAQ’s at between plus 20 and plus 25; and Colombian UGQ’s are also unmoved at plus 5. I can only assume, therefore, that PNG Y1’s are also the same as last week at around minus 4, but, as always, this is just a guess. Thus, had an exporter fixed on Friday in New York for July/August delivery he may have been able to secure a price somewhere between 377.75 cents/lb and 388.25 cents/lb. One of the notable features of this week’s market was the absence of origin selling, with most exporters opting to stay on the sidelines for the moment. Roasters however have been keen to take advantage of the falling trend although are not yet over committing themselves and are still mainly just buying hand to mouth. The outlook therefore continues to be rather opaque, and thus the possibility of seeing large movements in either direction cannot be ruled out. On balance, however the supply demand balance for the next twelve months looks very tight suggesting that we might see a reversal of this week’s decline with a small rise over the week to come.
Source:
Mick Wheeler, UK.