Both markets saw major falls this week despite the fact that New York was closed on Monday for the national Labour Day celebrations. Most of the damage was done on Friday but prices had been easing downwards throughout the week. It is difficult to pinpoint the catalyst for this reversal but forecasts of rain in some coffee growing areas of Brazil in about 2 weeks’ time, plus better than expected Brazilian exports in August may have been the signal that speculators needed to cash in their profits. Arabica coffee prices finished the week 11.15 cents/lb lower, with the second position (December 24) closing at 232.90 cents/lb. Robusta prices also lost significant ground losing 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 between 85 and 90 toea/kg lower than they were last week.
Preliminary export data from Brazil’s CECAFE for the month of August shows that the country’s coffee exports will be very close to the record numbers seen in July with arabica exports around 2.5 million bags and conillon (robusta) exports at around 800,000 bags. The official figures will be published next week. In Colombia truckers stage a massive strike this week, bringing trade and coffee exports to a near standstill. The truckers were protesting about the removal of a government subsidy for diesel. The strike was resolved towards the end of the week following negotiations which saw the Government agreeing to a phased withdrawal of the subsidy over several months rather than in a single hit. The National Coffee Association of America (NCA) released their National Coffee Data Trends Specialty Coffee Report for 2024 this week showing that total past-day coffee consumption is at a 20-year high. The report also highlighted that specialty coffee drinkers average more cups per day than traditional coffee drinkers. It also showed that both espresso and non-espresso based beverages are growing within the specialty coffee category, but that drip coffee makers remain the most popular coffee preparation method.
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 are largely unchanged this week, with Brazilian 3/4’s remaining at minus 16; Honduras HG’s, continue at plus 10; while Kenya AB FAQ’s, remain at between plus 35 and plus 50; Colombian UGQ’s maybe slightly lower at plus 12. So, my best guess for PNG Y1’s is that they are probably unchanged at around minus 6/7. Thus, had an exporter fixed on Friday in New York for December delivery he may have been able to secure a price somewhere between 228.30 cents/lb and 236.90 cents/lb.
There is a strong chance that Friday’s drop was overdone and that there might be a bit of a bounce early on in the week to come, but there is also a smaller, but nevertheless real, chance that prices will continue their downward spiral. The market should receive support from the fact that the spot market remains very tight especially for robusta coffees with the robusta spot position trading at a $200/ton plus premium over the second position. Furthermore, the forecast for rain in Brazil only really sees rain falling in more southernly coffee growing regions of Brazil and the amounts forecast are relatively small and still over 10 days away. So the outlook is somewhat uncertain, but I suspect that prices may well end the week very close to where they are now or with luck ever so slightly higher.
Source:
Mick Wheeler, UK.