Coffee prices rise after heavy rainfall in Brazil
Coffee prices are edging slightly higher this week on concerns that excessive rain in Brazil’s coffee growing areas will delay the completion of the coffee harvest. Somar Meteorologia reported on Monday that Brazil’s Minas Gerais region received 22.8 mm of rain in the past week, equivalent to 308 percent of the historical average. Minas Gerais accounts for about 30 percent of Brazil’s arabica crop.
Falling coffee stocks also support prices. ICE-monitored arabica coffee stocks fell this week to the lowest level in more than nine months, to 467,919 bags. In addition, ICE-monitored stocks of robusta coffee fell to a record low of 3,374 bags. For robusta, there is only data history back to 2016, although these stocks recovered slightly.
Another price driver for robusta coffee is Vietnam’s coffee exports. On Tuesday, Vietnam’s General Department of Customs reported that in the period from January to August 2023, the country’s coffee exports fell by 4.9 percent. Moreover, Vietnam’s coffee harvest this year is expected to fall by more than 7 percent to 1.67 million tons, the smallest crop in four years, according to a Bloomberg survey of exporters and traders released on May 3. Vietnam is the world’s largest producer of robusta coffee beans.
A report by the International Coffee Organization (ICO) on August 3, 2023, predicts that global coffee exports from Oct-June declined 6.2 percent year-on-year to 93.44 million bags. In addition, the Colombian Coffee Growers Federation reported on August 9 that Colombian coffee exports in July fell by 17 percent year-on-year to 846,000 bags. Colombia is the second largest producer of Arabica coffee beans in the world. Honduras, the largest coffee producing country in Central America, reported on July 31 that its coffee exports increased by 63 percent in July to 828,499 bags.
The U.S. Climate Prediction Center declared an El Niño weather event on June 8, which is likely to support coffee prices. The U.S. Climate Prediction Center said sea surface temperatures over the equatorial Pacific Ocean had risen 0.5 degrees Celsius above normal, and wind patterns have changed to the point where El Niño criteria have been met. An El Niño pattern usually brings heavy rains in Brazil and drought in India, which negatively affects the production of coffee crops. The El Niño event could lead to drought in Vietnam’s coffee areas later this year and in early 2024, according to an official from Vietnam’s Institute of Meteorology, Hydrology and Climate Change.
The USDA Foreign Agricultural Service projected in its June semiannual report, released on June 22, that world coffee production in 2023/24 will increase by 2.5 percent year-on-year to 174.3 million bags, with a +6.9 percent increase in arabica production to 96.3 million bags, and a -2.4 percent decrease in robusta production to 78.0 million bags. USDA FAS forecasts that in 2023/24 Brazilian coffee production will increase by 14.5 percent to 67.9 million bags, while Vietnam’s production in 2023/24 will fall 3.5 percent to 30.2 million bags. USDA FAS forecasts that ending stocks in 2023/24 will rise by 0.8 percent to 31.8 million bags from 31.6 bags in 2022/23.
Illustrating a narrow view of coffee supply in 2022/23, the ICO said the global coffee market deficit in 2022/23 increased to 7.3 million bags from a deficit of 7.1 million bags in 2021/22. The ICO reported that global coffee production in 2022/23 increased by 1.7 percent year-on-year to 171.27 million bags, but that global coffee consumption in 2022/23 increased by 1.7 percent year-on-year to 178.53 million bags.
Coffee price
Source: Vikingen.se
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