A change to the weather forecast predicting that temperatures in Brazil’s coffee growing regions might soar to over 40° C in the next few weeks sent coffee prices on both markets racing upwards with arabica coffee prices finishing the week 12.15 cents/lb higher with the second position (March 24) closing at 189.30 cents/lb. The robusta coffee market followed suit but was also pushed up by news that Vietnamese exports are down sharply. Robusta coffee prices finished the week $299/ton (13.55 cents/lb) higher. In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 90 and 95 toea/kg higher than they were last week.
The latest data from the Brazil Coffee Export Association (CeCafe) showed that Brazil exported 4.1 million bags of green coffee in November, up 18.2% from the 3.5 million bags exported during November last year. Arabica exports totalled 3.24 million bags, while robusta exports totalled 855,879 bags. CONAB released their fourth and final survey of the 2023 coffee crop this week, estimating that total production was 55.1 million bags, up 8.2% on the 2022 crop. Arabica accounted for 38.9 million bags while robusta output was put at 16.2 million bags. The overall increase is attributed to a 6.3% increase in productivity and a 1.8% increase in the area under production, to a total of 1.87 million hectares. A recent survey by Allegra UK suggests that the number of outlets in the East Asian branded coffee shop market grew 24% over the last 12 months to reach 119,221 stores, with six of the largest markets in the region achieving double-digit outlet growth. China has overtaken the US as the largest branded coffee shop market in the world, growing 58% over the last 12 months to reach 49,691 outlets. Starbucks remains the largest branded coffee chain in East Asia, having opened 1,223 net new outlets in the last 12 months to reach 13,524 stores across 15 markets.
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. There appears to have been very little change in physical price differentials this week, but as always the situation is mixed. Brazilian 3/4’s are steady at minus 16; as are Honduras HG’s at plus 5; Kenya AB FAQ’s continued to be unchanged at between plus 60 and plus 75; while Colombian UGQ’s may be slightly lower at plus 11. Without any update on PNG Y1’s, I would guess that they might also be steady at around minus 3, although I must stress this remains just a guess. Therefore, had an exporter fixed on Friday in New York for March/April delivery he may have been able to secure a price somewhere between 184.75 cents/lb and 189.50 cents/lb.
The dry hot weather, although widely predicted earlier on in the year, has been seemingly downplayed until this week, primarily because some rain has been falling for the last 6 weeks. Analysts are now however, suggesting the El Niño event, that is already causing damage to the soybean crops in the central part of Brazil, could, according to the US Climate Prediction centre, become one of the most intense events in history. If this is the case, then prices will certainly go higher. However, it is not always a case of the total amount of rain that falls that determines the size of the crop, but rather the pattern of rainfall and to date some rain has fallen most days. Prices may well therefore go higher next week, but on balance it seems safer to predict that they might stabilise around current levels.
Source:
Mick Wheeler, UK.