A relatively quiet week with arabica coffee prices ebbing slowly downward for most of the week only to recover virtually all that was lost over the week on Friday. Arabica coffee prices finished the week down 0.10 cents/lb with the second position for arabica closing the week at 160.80. It was however a different story for robusta coffee prices which followed arabica downwards but failed to make sort of recovery on Friday. By close of business on Friday robusta coffee prices were down $81/ton (3.70 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week, will probably be very close to what they were last week.
Brazil’s IGE has revised the forecast it made last month for the 2023/24 crop up by 0.3% to 55.4 million bags, arabica output has been estimated at 38.5 million bags up 0.4%, while robusta or conillon output has been put at 16.9 million bags up 0.2%. The latest data from the CeCafe shows that Brazil exported 2.3 million bags of green coffee in June, down 19% from the 2.8 million bags exported during the same month last year. Arabica exports totalled 2 million bags, while robusta exports totalled 230,653 60-kg bags, up 60.5%. Total exports since the start of the 2023 calendar year total 14.3 million bags, which is 21.1% lower than that exported over the same period last year. The weather in Brazil has continued to be favorable for the harvest, with Cooxupe, a large Brazilian coffee coop reporting that so far this year 42.6 % has been harvested, compared with 33 % at the same time last year. The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of June were 6.10% lower than in May at 2,343,450 bags, bringing cumulative exports for the 22/23 coffee year to 23.5 million bags, an increase of 3.74% over the same period last year. In a new report issued this week by Allegra Coffee, it was suggested that while hot coffee remains far more popular in UK branded coffee shops year-round, cold and iced beverages continue to build momentum. The survey found that 19% of UK consumers surveyed drink more cold coffee than hot overall, this is 4% higher than 12 months ago.
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 appear to have steadied this week with Brazilian 3/4’s unchanged at minus 15; Similarly, Honduras HG’s are unmoved at plus 15; Kenya AB FAQ’s, remain at between plus 45 and plus 70; but Colombian UGQ’s are lower at around plus 35. Without any update on PNG Y1’s, I would guess that they might also be steady around plus 3, but this remains just a guess. Therefore, had an exporter fixed on Friday in New York for Sept/Oct delivery he may have been able to secure a price between 160.555 cents/lb and 164.70 cents/lb. The rise seen on Friday may have reflected traders taking out insurance in case the cold front hitting Brazil this weekend is worse than forecast. All indications suggest that temperature will remain above freezing, but forecasts have been known to be wrong. The US dollar weakened over the week and that may also have played a role in Friday’s increase. However without any change in the fundamental outlook, there appears little to support the market going into next week and thus there is a stronger probability that prices will come pressure next week and will end lower, although possibly not that much lower.
Source:
Mick Wheeler, UK.