Coffee prices edged lower this week, with Arabica prices falling to 1-½-week lows. A stronger dollar weighed on most commodity prices yesterday, including coffee. The biggest surprise, though, may be the opposite price movements on the London and New York coffee exchanges. Over the first half of the harvest season, the cost of Robusta coffee in London increased by US$37 per tonne, or 1.73%, while the cost of Arabica coffee in New York decreased by US$885 per ton, or 19.13%.
According to exporters, cocoa arrivals at ports in top grower Ivory Coast reached 1.859 million tons by April 23 since the season start on Oct. 1, down 7.4% YoY. Meanwhile, July New York cocoa, CCc2, fell $17, or 0.6%, to $2,966 a ton. ICE New York cocoa speculators raised their net long position to 37,234 in the week to April 18.
Arabica made its next futures high in 6-½ months (KCK23) last Wednesday April 25 on expectations of lower global coffee shipments. Arabica coffee shipments tightened as stocks of Arabica coffee monitored by ICE fell to a 4-½-month low of 699,508 bags last Thursday. Additionally, on April 12, the Colombian Coffee Growers Federation reported that coffee exports from Colombia's Mar fell -19% YoY to 906,000 bags. Colombia has been the second-largest producer of Arabica coffee in the world.
The recent Robusta coffee (RMK23) rose to an 11-year high on Monday on reduced supply. Vietnam's coffee exports fell -5% YoY to 552,613 tons in Q1. Vietnam has been the world's largest producer of Robusta coffee beans. Weather concerns in Indonesia, the world's third-biggest producer of Robusta coffee, that heavy rains will reduce production have also supported Robusta prices. Additionally, global demand for Robusta has increased as roasters and consumers look for cheaper coffee options to combat high inflation.
Arabica coffee was also supported by heavy rains in Brazil, which could keep farmers away from their fields and delay the coffee harvest. Somar Meteorologia reported on Monday that the Brazilian state of Minas Gerais received 38.9 millimeters of rainfall in the week ended April 23, 469 percent of the historical average. Minas Gerais accounts for about 30 percent of Brazil's Arabica coffee production.
Back on April 5, the International Coffee Organization (ICO) reported global coffee exports during Oct-Feb fell -8.7% YoY to 48.66 mln bags. Also, Cecafe reported last Wednesday that Brazil's Mar green coffee exports dropped -19% YoY to 2.78 mln bags. By contrast, Honduran Mar coffee exports rose +14% YoY to 1.097 million bags. Honduras is Central America's biggest exporter of arabica beans, so the end balance turned out to be slightly positive in this aspect.
Summary
The International Coffee Organization (ICO) projects the global 2022/23 coffee market deficit will widen to -7.3 mln bags from a -7.1 mln bag deficit in 2021/22 crop seasons. ICO projects that 2022/23 global coffee production will increase +1.7% YoY to 171.27 mln bags, and 2022/23 global coffee consumption will increase +1.7% YoY to 178.53 mln bags.
The USDA, in its bi-annual report released on December 23, cut its global 2022/23 coffee production estimate by -1.3% to 172.8 mln bags from a June estimate of 175.0 mln bags. In addition, the USDA cut its 2022/23 global coffee ending stocks estimate by -1.7% to 34.1 mln bags from a June estimate of 34.7 mln bags. Meanwhile, the USDA's Foreign Agriculture Service (FAS) on November 22 cut its Brazil 2022/23 coffee production forecast to decline by -2.6% to 62.6 mln bags from a prior estimate of 64.3 mln bags. This year was supposed to be the higher-yielding year of Brazil's biennial coffee crop, but coffee output this year was slashed by drought.