Global Coffee Exports Plummet: How This Affects Coffee Prices

Global Coffee Exports Plummet

This article will explore the recent rise in coffee prices, specifically Arabica and robusta coffee increases. We’ll delve into the factors supporting higher coffee prices and the pressures on these prices and examine global coffee market projections and statistics. By the end, you’ll have a comprehensive understanding of the current state of the global coffee market.

Introduction

The recent rise in coffee prices

In recent times, coffee prices have been experiencing a sharp increase. Both arabica and robusta coffee have seen significant gains, with arabica posting a 1-week high and robusta reaching a 7-1/2 month nearest-futures high. Various factors have contributed to these price hikes, which we’ll discuss in detail below.

Arabica and robusta price increases

May arabica coffee (KCK23) rose by +5.40 (+3.09%), while May ICE robusta coffee (RMK23) increased by +49 (+2.17%).

Factors supporting higher coffee prices

The decline in global coffee exports

One of the main factors supporting higher coffee prices is the decline in global coffee exports. According to the International Coffee Organization (ICO), exports from October to February fell 8.7% YoY to 48.66 million bags.

Strengthening Brazilian real

The strengthening of the Brazilian real has also played a role in the rise of coffee prices. As the real rallied to a 2-month high against the US dollar, it discouraged export selling from Brazil’s coffee producers, supporting higher prices.

Robusta supply concerns

Robusta coffee, in particular, faces supply concerns. Coffee trader Volcafe has forecasted a record deficit of 5.6 million bags in the global 2023/24 robusta coffee market. Furthermore, the Association of Indonesian Coffee Exporters and Industries expects Indonesia’s coffee production to fall by 20% YoY to 9.6 million bags in 2023 due to excessive rainfall in growing regions.

Tighter ICE arabica stockpiles

Tighter stockpiles of arabica coffee have also contributed to higher prices. ICE monitored Arabica coffee inventories fell to a 3-1/2 month low of 732,533 bags.

Reduced production estimates

Reduced production estimates for arabica and robusta coffee have supported higher prices. Rabobank cut its 2023 Brazil arabica production estimate to 42.7 million bags, down from a February estimate of 44 million bags, citing heavy rains causing diseases to spread. Meanwhile, Colombia’s National Federation of Coffee Growers projected that coffee output would drop by 4.8% YoY to 5 million bags in the first half of 2023 due to excessive rain and cloudy days affecting yields.

Factors putting pressure on coffee prices

Increase in Vietnam’s coffee exports

On the other hand, some factors are putting pressure on coffee prices. Vietnam’s General Statistics Office reported that the country’s coffee exports in March rose 9.2% YoY to 230,000 MT in March. As Vietnam is the world’s largest producer of robusta beans, this export increase could hurt robusta prices.

Reduced flooding concerns in Brazil’s coffee fields

Reduced flooding concerns in Brazil’s coffee fields also contribute to downward price pressure. Drier conditions in Minas Gerais, Brazil’s largest arabica growing region, have allowed farmers to return to their fields and apply fertilizers and pesticides. Somar Meteorologia reported that the region received 12.6 mm of rain in the week ended April 2, or 52% of the historical average.

Rebound in ICE robusta coffee inventories.

A rebound in ICE robusta coffee inventories is another bearish factor for coffee prices. Inventories rose to a 3-1/2 month high at 7,712 lots on March 23. In addition, the Green Coffee Association reported that U.S. Feb green coffee inventories increased by 5.9% YoY to 6.105 million bags.

Global coffee market projections and Statistics

ICO’s deficit projection for the global coffee market

The International Coffee Organization (ICO) projects that the global 2022/23 coffee market will be in deficit for a second consecutive year, following the 4 to 5 million bag deficit in 2021/22, mainly due to arabica crop woes.

USDA’s lowered global coffee production and ending stocks estimates

In its bi-annual report released on December 23, the USDA cut its global 2022/23 coffee production estimate by 1.3% to 172.8 million bags from a June estimate of 175.0 million bags. Additionally, the USDA lowered its 2022/23 global coffee ending stocks estimate by 1.7% to 34.1 million bags from a June estimate of 34.7 million.

Smaller global coffee exports and their impact on coffee prices

Smaller global coffee exports have lent support to coffee prices. Coffee exports from Guatemala, the second-largest coffee producer in Central America, fell by 8% YoY in January to 172,439 bags. The Colombia Coffee Growers Federation reported that Colombia’s February coffee exports dropped by 6% YoY to 928,000 bags. Brazil’s February green coffee exports declined by 35.8% YoY to 2.11 million bags. In contrast, Honduran March coffee exports increased by 14% YoY to 1.097 million bags. Honduras is Central America’s largest exporter of arabica beans.

Conclusion

Summary of key factors influencing coffee prices

In summary, various factors are currently influencing coffee prices. Factors supporting higher prices include declining global coffee exports, a strengthening Brazilian real, robusta supply concerns, tighter ICE arabica stockpiles, and reduced production estimates. Factors putting pressure on coffee prices include increased Vietnam’s coffee exports, reduced flooding concerns in Brazil’s coffee fields, and a rebound in ICE robusta coffee inventories.

Outlook on the global coffee market

As we look ahead, the global coffee market faces a mix of factors that will continue to impact prices. It’s essential to monitor the key factors outlined in this article and how they evolve. In a world where coffee plays a vital role in our everyday lives, staying informed about the coffee market is crucial for consumers and producers.

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