As anticipated coffee prices came under pressure throughout the first part of the week, rallied on Wednesday and Thursday, only to fall back again on Friday. Somewhat surprisingly arabica coffee prices finished the week virtually unchanged losing just 0.40 cents/lb, with the second position (September 24) closing at 224.50 cents/lb. The robusta market followed a very similar path finishing the week down US$73/ton (3.30 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will be unchanged from what they were last week.
The drop in robusta prices was a bit of a surprise given that there are very real concerns about supplies coming out of Vietnam with the Vietnam Customs Authority reporting this week that Vietnam’s coffee exports totalled 1.322 million bags in May, a fall of around 48% from that exported in April and lower than the initial estimate of 1.58 million bags. However, Brazil’s CeCafe reported this week that Brazil exported 4 million bags of green coffee in May, up a whopping 90% from the 2.12 million bags exported during the same month last year. Arabica exports totalled 3.16 million bags, while conillon (robusta) exports totalled 868,270 60-kg bags, five times higher than the quantity exported in the same month last year. Sucden Financial forecast this week that global coffee production for 2023/24 should total 164.2 million bags, while demand is put at 168.4 million bags, suggesting a supply deficit of 4.2 million bags. Brazil’s output is put at 66 million bags while Vietnam’s is estimated at 27 million bags and although the company did not publish a global forecast for next year, they did forecast Brazil’s 2024/25 crop higher at 69 million bags, but Vietnam’s lower at 24 million bags. The USDA published its latest attaché report this week putting Kenya’s upcoming crop at 750,000 bags, 6.3% lower than last year. The country’s domestic coffee consumption is put slightly higher at 58,000 bags, the increase being attributed to an increase seen in Kenya’s tourism and hospitality sectors.
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 been relatively stable again this week. Brazilian 3/4’s continue at minus 14; Honduras HG’s remain at plus 9; while Kenya AB FAQ’s, are unmoved at between plus 40 and plus 55; Colombian UGQ’s are also steady at plus 15. Without any regular updates on PNG Y1’s I can only guess that they too might also be steady at around plus 3. Therefore, had an exporter fixed on Friday in New York for October delivery he may have been able to secure a price somewhere between 225.65 cents/lb and 230.65 cents/lb.
The New York market will be closed on Wednesday for a public holiday, but this is unlikely to have that much impact on the development of prices next week. The weather forecast for Brazil suggests that the weather will be fine and temperatures well above freezing for at least the next ten days, so again unlikely to have any impact on the development of the markets next week. What may be of more significance however, is the reports that suggest that coffee beans being harvested in Brazil are smaller than usual and are showing signs of irregular maturations. Thus, the outlook is rather mixed but given this week’s pattern of price movement, it would not be surprising to see prices go ever so slightly lower next week.
Source:
Mick Wheeler, UK.