Continuing good rains in Brazil combined with a stronger US dollar helped to push arabica coffee prices down again this week. Lower prices in other commodity markets especially crude oil did not help. Over the week arabica coffee prices lost 4.45 cents/lb to settle at 158.15 cents/lb (Mar23). Robusta coffee prices, however, fared much better reflecting concerns about the quality of the Vietnamese robusta harvest which is now 60% complete. Over the week robusta coffee prices gained $18/ton (0.80 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week, will probably be between 35 and 40 toea/kg lower than what they were last week
World coffee exports amounted to 9.69 million bags in October 2022, down 1.8% compared with 9.87 million in October 2021. Exports in the first month of coffee year 22/23 (Oct/Sept) fell by 1.9% to 9.69 million bags compared with 9.87 million bags in the same period in 2021/22. In the 12 months ending October 2022, exports of arabica totalled 80.54 million bags compared with 82.18 million bags last year; whereas robusta exports amounted to 48.26 million bags compared with 47.09 million bags for the previous year. Data from the Vietnam Customs Authority showed that the country exported 124,682 tons (2.08 million bags) of coffee in November, up 56.2% from the previous month. This brought cumulative exports for the first 11 months of the 2022 calendar year to 1.58 million tons, up 12.9% from the same period in 2021. Japanese stocks of green coffee at the end of October totalled 2.82 million bags. This is 2.9% lower than in September but 3.4% higher than at the end of October last year. Similarly, the European Coffee Federation (ECF) has reported that coffee stocks at the end of October in the ports of Antwerp, Hamburg, Le Havre, Barcelona, Trieste, Genoa, Napoli, Tallin, London, Felixstowe and Bremen were lower totalling 13.86 million bags, 145,000 bags lower than in September.
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. Origins continue to be reluctant to sell at these new levels and this is beginning to manifest itself in physical price differentials, all of which are higher. Brazilian 3/4’s are 2 cents/lb higher at minus 7; Honduras HG’s are also higher at plus 37; Kenya AB FAQ’s are steady at between at plus 65 and plus 90; as are Colombian UGQ’s at plus 60. Without any update on PNG Y1’s, I would guess (and it is just a guess) that they might be slightly higher at around plus 3/4. Therefore, had an exporter fixed on Friday in New York for March/April delivery he may have been able to secure a price between 160.05 cents/lb and 163.90 cents/lb.
It is clear that the market remains uncertain about the size of next year’s crop in Brazil with many believing that it will be in the region of 65 million bags plus, but others are not so sure and indeed all the reports emanating from Brazil suggest something much lower. The USDA report is due soon but the figures for Brazil although revised downwards are already known and as always suggest a bigger crop than many other analysts are forecasting. Consequently it is difficult to see where the market might be heading and indeed a push below 150 cents/lb is possible, but unlikely. Overall, the outlook is bearish, but I believe there is the potential for the market to make a very modest gain over the week come.
Source:
Mick Wheeler, UK.