With New York closed on Thursday for Independence Day it was a relatively quiet week for arabica with prices initially ebbing marginally downwards. Reports of lower than anticipated exports from Vietnam which pushed prices robusta values higher on Thursday galvanised the arabica market into action when it reopened on Friday. As a result, the arabica coffee prices ended the week slightly higher, gaining 2.15 cents/lb, with the second position (September 24) closing at 228.95 cents/lb. Robusta finished the week up US$174/ton (7.90 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be about 20 toea/kg higher than they were last week.
The Vietnam General Statistics Office has estimated that coffee exports for the month of June were approximately 1.4 million bags, this is around 40% lower than were exported in June last year. However, cumulative exports for the first nine months of the 2023/24 coffee year (Oct/Sept) total 25.25 million bag, which is almost 8% higher than for the same period last year. Nevertheless, it clearly shows that the dry weather being experienced in Vietnam is taking its toll. Reports continue to circulate about the size of the beans being picked in Brazil where the harvest is now just over 65% complete. No estimate has yet emerged as to how the smaller beans will affect overall yields, and thus the market remains somewhat perplexed as to how to interpret such a report. Reports suggest that production in Colombia is showing signs of expanding again with the authorities there reporting that in June the country produced 1.172 million bags, 23% higher than in June last year, although it should be noted that production last June was significantly down as a result of the dry spell the country experienced at that time as a result of the El Niño weather phenomenon which encouraged a very early flowering last year. Consumption in China appears to be continuing to expand with reports that imports of coffee into the country increased by almost 30% in May to 225,000 bags.
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 continue to be stable, with Brazilian 3/4’s still quoted at minus 14; Honduras HG’s are unmoved at plus 9; likewise Kenya AB FAQ’s, remain at between plus 40 and plus 55; while Colombian UGQ’s are also steady at plus 15. I continue to be unsure about the differential for PNG Y1’s, which might be as low as minus 6, but this remains just a guess. Therefore, had an exporter fixed on Friday in New York for October delivery he may have been able to secure a price somewhere between 219.35 cents/lb and 227.05 cents/lb.
Although the robusta market appears to be leading the way, there is no doubt that the uncertainty over the potential size of the current crop being harvested in Brail is fuelling the reluctance to allow arabica coffee prices to fall too far and indeed forcing it to chase after escalating robusta prices. With a significant percentage of the crop already harvested however, this situation will not continue for long. The weather outlook remains very favourable for the harvest with dry and relatively warm days forecast for at least the next 10 days, so thing should start to become clearer very soon. The outlook therefore remains somewhat murky, but no large movements either way are foreseen, which suggests that prices should end the week close to where they are now.
Source:
Mick Wheeler, UK.