Another volatile week with prices on the arabica market gaining ground during the first two days of the week only to lose all the gains and more in the latter half of the week. Over the week arabica coffee prices lost 8.90 cents/lb with the second position (July) closing at 376.40 cents/lb. Robusta coffee prices started off on a negative note, but made some ground back on Tuesday only to follow arabica prices down during the last three days of the week. Robusta coffee prices ended the week down $161/ton (7.30 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be between 65 and 70 toea/kg lower than they were last week.
Some of the weakness in coffee prices can be attributed to fluctuations in the value of the dollar but probably of greater significance was the rain which fell during the week. Many analysts believe that the amount that fell will have been sufficient to ease concerns about soil moisture levels. Indeed, it looks as though Brazil’s biggest arabica coffee growing area of Minas Gerais received well above the historical average for this time of the year. Only limited rainfall however is forecast for next week. Recently released data from the Chinese government showed that in February, the country imported 224,297 bags of green coffee, down 15% on imports in January and 37% lower than in February 2024. Rather alarmingly imports for the first two months of the current 2025 calendar year are down 50% from the same period in 2024, possibly showing clear signs of a downturn in consumption there due to high prices. Certified stocks on both markets fell by a relatively small amount over the week. The Strauss Group published its financial statements for the fourth quarter and full year of 2024 this week showing that annual revenues are up 6.2% compared to 2023, but its operating profit was down 13.7% compared to 2023.
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 stabilised a bit this week, but the situation, as always is mixed. Brazilian 3/4’s are lower at minus 13; but Honduras HG’s are steady at plus 1, Kenya AB FAQ’s, however, are slightly higher at between plus 20 and plus 25; while Colombian UGQ’s are unmoved at plus 4. I can only assume, therefore, that PNG Y1’s are probably also steady at around minus 7, but, as always, this is just a guess. Thus, had an exporter fixed on Friday in New York for July delivery he may have been able to secure a price somewhere between 366.70 cents/lb and 374.10 cents/lb. Although a lot of rain fell in Brazil last week, the forecast for the next 10 days suggests dry weather will return to most coffee growing areas. There is rain in the forecast most notably for Minas Gerais, but it is below the amount that would normally fall at this time of the year. Rain is required to swell the developing beans and while last week’s rain will have been beneficial, there has to be a question mark as to whether this will be enough. It is however still too early to call, and things could change dramatically over the next few weeks which could still have a significant impact Brazil’s upcoming crop. The outlook for the week ahead is therefore unclear but it interesting to note that prices did stabilise a bit on Friday and thus it would come as no surprise if prices were to recover some of the ground it lost this week, with prices ending the week slightly higher, although probably not by much.
Source:
Mick Wheeler, UK.