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Coffee
RNY Market Watch: August Brings New Market Prices
Welcome to our August edition of Market Watch! Andrew Blyth & Tom McLaughlin are here to provide you with the latest insight into coffee exports and new market prices as of August 2023.
New Market Prices
Brazil’s current crop is almost fully harvested. As that is the case, coffee futures prices recently broke below the $1.55 support level that was established in July. After trading as low as $1.4720 on August 18th, the market has rebounded a bit. While it’s trading back to the support level of $1.55, climbing back up to $1.60 seems to be a bit of a challenge.
The growing conditions for Brazil coffee have been excellent this past year. Even though this is an off-year in the country’s biennial crop cycle, the total output will undoubtably surpass that of the 2022-23 crop. Brazil coffee differentials have been weakened this year. Combined with a lower “C” market price, this suggests that there are ample coffee supplies. July exports totaled 2,991,495 bags, up 18.7% y/y. Honduran coffee exports in July were 635,183 bags, which was higher than July ’22.
Robusta Market Prices Still High
The robusta market has seen prices stay stubbornly high (recently at 15-year highs!). This is due to roasters turning to this less expensive coffee while arabica prices have remained at historically high prices during the last few years. As Indonesian production was down 20% y/y, the robusta market has experienced a large deficit this past production year. Additionally, exports of Brazil conilon robusta were substantially lower, also contributing to the deficit. Domestic usage of the lower quality bean increased in order to export more of the higher priced arabica bean.
Vietnam’s General Dept. of Customs reported that Vietnam coffee exports from Jan-Aug were down 4.9% to 1.207 MMT. Compared to the 1,360,000 bags in early June, exchange robusta stocks have diminished greatly as there are roughly just 570,000 bags in storage today. It will be interesting to see if robusta prices can remain elevated. Brazil exports increased in July (3x higher than July ’22), and August numbers to date have already surpassed July’s. This increase in exports is bringing more robusta to market, creating the potential for a correction to the down side.
What does this mean for you?
Reading about all of these variables, facts, and figures may still leave you wondering what it all means. Well, it means that after 2+ years of supply concerns, higher prices, logistical challenges, etc…the market appears to be stabilizing. There are always external factors that may have short-term influence, but for the big picture? Coffee is steadying just in time for what is typically the busy season here in the US.
If you are an experienced roaster/green buyer, review your positions to ensure adequate coverage while plenty of fresh coffees are still available. Alternatively, if forecasting usage and locking in prices for the future is a newer concept for your business, give us a call! Our knowledgeable trading staff and diverse inventory will help you get the right coffees, in the right quantities, and at the right price to stabilize your green coffee supply and cost of goods.
