As anticipated both coffee markets meandered around this week, but both finished the week higher. The lack of any new fundamental developments meant that it was left to speculators to determine the direction of movements, which for the first three days of the week was upwards, but both retreated a bit on Thursday. Both markets were closed on Friday. Over the week arabica coffee prices gained 4.05 cents/lb with the second position (July 24) closing at 188.05 cents/lb, while robusta coffee prices finished the week gaining $38/ton (1.70 cents/lb). In the absence of local market distortions, roadside parchment coffee prices in Papua New Guinea next week will probably be about 30 toea/kg higher than what they were last week.
The terrible collapse of a bridge at the entrance to the Port of Baltimore should not cause any major disruption to the coffee trade in the US as the port specializes in the export and import of cars and light trucks, although Starbucks is said to use the port for the import and export of some of their products. The latest data from the European Coffee Federation (ECF) on coffee stocks in a selected number of ports in Europe show that in February coffee stocks totalled 6.7 million bags, 41% lower than in February last year and 2.5% less than in January 2024, when coffee stocks totalled 6.9 million bags. A report published this week on the branded coffee market in Europe found that most major markets in Europe, including the UK, Russia, France and Turkey achieved limited but still positive growth in the number of outlets. Remarkably, Ukraine achieved significant growth in the number of outlets despite its war with Russia. However, Germany and Greece saw a decline in store numbers. The report also forecast the total number of branded coffee shops in Europe will exceed 46,600 outlets within 12 months, rising to over 52,800 outlets by March 2029. Illycaffe, the Italy-based coffee roaster has reported this week that the company saw a 67% increase in its net profit in calendar year 2023 and a 6% year-on-year increase in its volume of sales. The report also highlighted that online sales are becoming more important to the company.
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 this week with Brazilian 3/4’s unchanged at minus 12; similarly, Honduras HG’s are unmoved at plus 6; Kenya AB FAQ’s appear to be steady at between plus 45 and plus 70; while Colombian UGQ’s remain at plus 16. So, without any update on PNG Y1’s, I can only guess that they might also be steady at around minus 2. Therefore, had an exporter fixed on Friday in New York for July/August delivery he may have been able to secure a price somewhere between 184.90 cents/lb and 188.20 cents/lb.
This week’s increase was certainly better than expected and suggests that there is still considerable concern over future supplies. However, stocks certified against the New York market continue to increase, rising by 26,582 bags over the week although it is important to note that the rate of increase appears to be slowing. The weather in Brazil is turning drier but rain is still very much evident in the forecasts, nevertheless the drier weather will help with the upcoming harvest. The outlook therefore remains mixed, which suggests that prices will probably end the week not far from where they are now, maybe even slightly higher.
Source:
Mick Wheeler, UK.