Weekly Market Report 18th June 2023

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Weekly Market Report 18th June 2023

As anticipated arabica coffee prices came under pressure earlier on in the week, recovered a bit mid-week, but ended the week on a negative note.  The improved weather outlook in Brazil appears to have been the dominant factor but also the threat of higher interest rates played a role.  The second position for Arabica closed the week at 182.95 down 3.70 cents/lb. Robusta coffee prices followed a similar path but managed to finish the week gaining $55/ton (2.45 cents/lb).  In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week, will probably be between 20 and 25 toea/kg lower than what they were last week.

Brazil’s IBGE has revised its’ forecast for Brazil’s 2023/24 coffee crop to 55.4 million bags, a 0.3% increase from last month’s estimate and a 5.9% increase on last year’s crop.  The average yield has been estimated at 1,744 kg/ha.  Arabica production was estimated at 38.5 million bags, while robusta (conillon) production is forecast at 16.9 million bags. The latest data from the Brazil Coffee Export Association (CeCafe) showed that Brazil exported 2.1 million bags of green coffee in May, down 20.4% from the 2.7 million bags exported in May last year.  Arabica exports totalled 2 million bags, down 21.4% from the 2.5 million bags exported in May 2022. Robusta exports totalled 131,689 bags, down just 0.1% from the 131,806 bags exported last year.  2023 calendar year exports now total 11.5 million bags, a 21.5% decline from the 15.3 million bags exported over the same period last year.  The latest USDA attaché report issued this week has estimated that Honduras will produce 7.20 million bags this year and 7.92 million bags in 2023/24.  This year’s crop is 31% higher than last year and the increase is put down to the fact that coffee leaf rust has not been such a big problem this year and that the weather has been favourable. 

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 come under pressure this week.  Brazilian 3/4’s are lower at minus 14; Honduras HG’s, however are steady at plus 17; as are Kenya AB FAQ’s at between plus 45 and plus 70; but Colombian UGQ’s are ever so slightly lower at plus 45/70.  Without any update on PNG Y1’s, I would guess that they might be around plus 7, but I need to emphasise that 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 187.10 cents/lb and 190.75 cents/lb. The weather outlook has certainly improved but the temperature in the coffee growing regions of Brazil is going to get colder next week.  No real threat of a frost but in some areas the temperatures will fall below 5 degrees. Market traders will keep a close eye on things but New York will be closed on Monday for a public holiday.  Both markets will probably be very volatile next week but with luck prices might remain very close to where they are now.

Source:
Mick Wheeler, UK.

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