May arabica coffee (KCK23) this morning is down -1.20 (-0.65%), and May ICE robusta coffee (RMK23) is not trading today, with markets in the UK closed for the Easter holiday.
Arabica coffee this morning fell back from a 6-week high and is moderately lower. Coffee prices gave up an early advance today after Safras projected Brazil's coffee crop this year will increase +13% y/y to 66.65 mln bags and that Brazil's 2023/24 coffee exports will climb by +21% y/y, given a projected surplus of 45 mln bags.
Ample rainfall in Brazil should boost coffee yields and is negative for coffee prices. Somar Meteorologia reported today that Brazil's Minas Gerais region received 29.8 mm of rain in the week ended April 9, or 148% of the historical average. Minas Gerais accounts for about 30% of Brazil's arabica crop.
Coffee prices Monday initially rallied to a 6-week high on carryover support from last Wednesday when the International Coffee Organization (ICO) reported global coffee exports from Oct-Feb fell -8.7% y/y to 48.66 mln bags.
A bearish factor for robusta coffee was today's report from Vietnam's General Department of Customs Statistics Office that showed Vietnam's Mar coffee exports rose +5.2% m/m to 210,372 MT. However, total Q1 coffee exports are down -5% y/y at 552,613 MT. Vietnam is the world's largest producer of robusta beans.
Tighter ICE arabica stockpiles are supportive of coffee prices after ICE monitored arabica coffee inventories last Thursday fell to a 3-3/4 month low of 730,659 bags.
Robusta has support on global supply concerns after coffee trader Volcafe forecasted the global 2023/24 robusta coffee market would see a record deficit of 5.6 mln bags. In addition, the Association of Indonesian Coffee Exporters and Industries said that Indonesia, the world's third-largest robusta producer, will see its 2023 coffee production fall -20% y/y to 9.6 mln bags due to damage from excessive rainfall across its growing regions.
In a bearish factor for robusta coffee, ICE robusta coffee inventories rose to a 3-1/2 month high at 7,712 lots on March 23.
A bullish factor for arabica prices was the projection from the National Federation of Coffee Growers on March 3 that coffee output in Colombia, the world's second-largest producer of arabica coffee, will drop -4.8% y/y to 5 mln bags in the first half of 2023 as excessive rain and cloudy days hurt yields.
Smaller global coffee exports are providing support for coffee prices. Guatemala, the second-largest coffee producer in Central America, reported its coffee exports fell -8% y/y in January to 172,439 bags. On March 13, the Colombia Coffee Growers Federation reported Colombia Feb coffee exports fell -6% y/y to 928,000 bags. Brazil's Feb green coffee exports dropped -35.8% y/y to 2.11 mln bags. By contrast, Honduran Mar coffee exports rose +14% y/y to 1.097 million bags. Honduras is Central America's biggest exporter of arabica beans.
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. ICO projects that 2022/23 global coffee production will increase +1.7% y/y to 171.27 mln bags and 2022/23 global coffee consumption will increase +1.7% y/y 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 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.
Arabica Moderately Higher On Expectations For A Bigger Global Coffee Deficit
Arabica Prices Firm On Tighter Global Supplies
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
