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Weekly Market Report – 14th April 2024

As suspected last week, both markets still had some upward movement left in them and despite a shaky start, both markets rallied well throughout the week.  Over the week arabica coffee prices gained 9.45 cents/lb with the second position (July 24) closing at 220.45 cents/lb – an 18-month high, while robusta coffee prices finished the week gaining $173/ton (7.85 cents/lb).  In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 70 and 75 toea/kg higher than what they were last week.

The weather in Brazil has been relatively dry which will have been good for the development of the crop and also for the beginning of the robusta harvest.  The latest data from CeCafe shows that Brazil exported 3.95 million bags of green coffee during March, up 41% from the 2.8 million bags exported during March last year.  Arabica exports totalled 3.1 million bags, while robusta exports totalled 846,735 bags. This has brought green coffee exports during the calendar year to a total of 11 million bags, up 48% from the 7.5 million bags exported in the first three months of 2023.  The Colombian Minister of Finance Ricardo Bonilla has announced that the Colombian coffee price stabilization fund will be activated when local prices of parchment coffee drop below $2.69/kg.  Clearly prices are well above that level at the moment, but it is interesting that the Minister has made the announcement this week following further arguments between the FNC and the Colombian President.  The latest NCA National Coffee Drinking Trends shows that more Americans are drinking coffee than at any other time during in the last two decades.  Specialty coffee consumption is growing at twice the rate of traditional coffee, but both are expanding.  Interestingly the report notes that Out-of-home consumption still hasn’t fully rebounded after the pandemic.  Bureau of Labour statistics suggest that retail coffee prices in the US supermarkets are 4% lower than what they were this time last year at $6.094/lb.

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 physical price differentials have continued to come under pressure this week with Brazilian 3/4’s lower at minus 15; Honduras HG’s are also lower at plus 5; but Kenya AB FAQ’s appear to be steady at between plus 45 and plus 70; while Colombian UGQ’s are lower at plus 14.  Without any regular updates on PNG Y1’s I can only guess that they are at somewhere between plus 2 and plus 4. Therefore, had an exporter fixed on Friday in New York for July/August delivery he may have been able to secure a price somewhere between 217.25 cents/lb and 231.75 cents/lb.

All the evidence indicates that speculators continue to add to their long positions, which suggests that they expect further upward movement in price but after such a sustained run upwards, some sort of correction is inevitable.  However, like last week I am not convinced that the bull run has finished its’ upward course, especially as roasters appear to be sitting on ever shrinking stocks, although certified stocks continue to grow.  Consequently, while prices might take a small dip early on in the week, I would not be surprised to see a further surge upwards towards the end of the week resulting in prices being higher than what they are now but maybe not that much higher.  

Source:
Mick Wheeler, UK.

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