Welcome to our May edition of RNY Market Watch! Andrew Blyth & Tom McLaughlin are here to provide you with the latest insight into the coffee market price as of May 2023.

Low Levels of Volatility in the Coffee Market Price

The month of May has seen Arabica coffee prices exhibit unusually low levels of volatility. Except for a few days where prices temporarily traded above $1.9300, the ICE KCN’23 futures contract has traded within a fairly narrow range between $1.8000 -$1.9000. All eyes are on Brazil as the 2023/24 crop comes to harvest and with the onset of the Brazilian winter. Volatility may increase as the actual size of this crop becomes more certain.

CONAB, a Brazilian government agency, recently cut its Brazil 2023 coffee crop estimate to 54.7 million bags from 54.9 million bags forecast in January. The CONAB estimate is on the lower end of estimates seen so far. Other forecasts reported this year from various sources have been as high 65-68 million bags. We will find out soon enough a more accurate number.

The Robusta Market

The Robusta market has been talked about more so this past month, as prices on the London robusta futures exchange traded to 15 YEAR highs this past week. There are a few explanations for these high prices:

Vietnam exports this past quarter have declined year over year.

With Brazil arabica prices continuing to trade at relatively high historical prices for a sustained period, there has been a shift in internal consumption to the robusta beans to export as much of the higher priced arabica as possible. Robusta exports have been dramatically lower.

Indonesia, which is the 3rd largest producer of robusta, has seen production decline 18% this past year, as heavy rainfall has caused problems with the development of the cherries.

Impact of Crop Estimates on the Coffee Market Price

Cecafe reported Brazil April coffee exports at 2.722 million bags, which was down 10.3% year over year. This was the 3rd month in a row of very low export numbers. With many global economies, especially the US, experiencing weakness this year, lower demand could possibly explain the low export numbers.

The USDA Foreign Agricultural Service(FAS) came out with some coffee crop estimates for some of the other larger producing countries. It predicted Colombian 2023/24 production would climb +3% to 11.6 million bags because of improving weather conditions. Analysts forecast, however, that Indonesian production will decline from 11.9 million bags in 2022/23 to 9.7 million in 2023/24. Additionally, they predict a slight increase year over year for Mexico production at 4.1 million 60k bags. Costa Rican production was also forecast slightly higher.

The opportunity you’ve been waiting for…

As May comes to a close, the market broke the $1.8000 barrier for the first time in over 2 months. On May 30th it traded to a low of $1.7590. For many roasters, this is the opportunity you’ve been waiting for. New crop centrals are arriving daily and cupping to their highest potential.

The relief in the coffee market and all of the fresh coffee on the horizon makes for a busy time of year in our cupping lab. Don’t delay, contact us to discuss our top Latin America arrivals and to receive price quotes while the market gives us this opportunity.