The week started off on a positive note with arabica coffee prices rising by over 4 cents/lb by close of business on Tuesday. However it is obvious that doubts set in and prices then lost most of that over the next 2 days but ended the week climbing, albeit marginally, once again. Arabica coffee prices gained 1.35 cents/lb over the week, with the second position closing at 174.65 cents/lb. Activity on the robusta market closely followed New York and managed to finish the week up but only just, gaining $9/ton (0.65 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week, will probably be around 10 toea/kg higher than what they were last week.
As pointed out last week, we are beginning to see the emergence of various estimates of the upcoming Brazilian crop. Brazil’s IBGE has estimated that coffee production will be in the region of 55.3 million bags, an increase of 5.7% from last year’s crop. Arabica output is put at 38.6 million bags, up 13.7% while robusta (conillon) output is estimated at 16.8 million bags, a fall of 8.9%. By way of contrast Comexim (a Brazil-based coffee trader) has estimated Brazil’s 2023/24 coffee crop will be much larger at 64 million bags, up 10.2% from last year. Arabica coffee production was forecast at 41.3 million bags, a 15.8% increase while robusta output has been put at 22.7 million bags, up 1.3%. In an interesting exercise Reuters has published the results of a recent poll which surveyed 10 traders. The poll showed that expectations are that the 2023/24 coffee year will see a supply surplus of 3.35 million bags, compared to a deficit of 4.15 million bags last year. Brazil’s crop was estimated at 67.1 million bags, whereas Vietnam’s crop is seen at 31 million bags. The latest data from the Brazil Coffee Export Association (CeCafe) showed that Brazil exported 2.5 million bags of green coffee in January, down 18.5% from the 3 million 60-kg bags exported during the same month last year. Arabica exports totalled 2.4 million bags, while robusta exports totalled 87,584 bags. Soluble exports totalled 320,000 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. Not surprisingly Brazilian 3/4’s have lost ground this week falling around 5 cents/lb to be quoted at plus 10, but even this is exceptionally high historically; Honduras HG’s appear to be slightly lower at plus 34; But Kenya AB FAQ’s are steady at between plus 65 and plus 90; while Colombian UGQ’s are lower at plus 58. Without any update on PNG Y1’s, I would guess that given their low availability at the moment they might be steady at plus 4. Therefore, had an exporter fixed on Friday in New York for April/May delivery he may have been able to secure a price between 177.95 cents/lb and 181.10 cents/lb. There can be no doubt that the lower than initially anticipated estimates of the upcoming Brazilian crop have altered the outlook, but the differences between the various entities’ predictions is so large that the market is in fact none the wiser. Given this level of uncertainty it seems fairly obvious that both markets will remain volatile. Other reports are expected to be published this week and much will depend on the growing consensus, but if the Reuters report is anything to go by, then prices might come under pressure this week. But that is by no means certain. The outlook is very uncertain, but prices may end the week unmoved.
Source:
Mick Wheeler, UK.