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Coffee
RNY Market Watch: Volatile Green Coffee Price Changes
Welcome to another edition of Market Watch! Andrew Blyth & Tom McLaughlin are here to provide you with the latest insight into coffee exports, green coffee price changes and more as of May 6th, 2024.
New Month, Same Market Volatility
What a difference a couple of weeks can make! On April 18th, coffee futures prices traded to a high of $2.5370, jumping 70¢ in just one month. Fast-forward just 10 trading days later, and the market has given back most of those gains closing at $2.0075 on Friday, May 3rd.
Right now, you’re probably wondering: What’s the cause of this market volatility? While we unfortunately don’t have a crystal ball, we can use our decades of collective trading experience to keep you informed and help you make smart decisions.
Understanding Green Coffee Price Changes
So, whats the cause of this volitile market? First, it began with a weather-related supply issue in Vietnam, the largest robusta supplier in the world. When news spread of a decreased Vietnam crop, London robusta futures prices traded to 40-year highs. Moreover, arabica prices were dragged higher as certified stocks declined and rumors of tight coffee supplies circulated globally.
The increase in the robusta market caused the NY “C” arabica price to creep higher, triggering the non-commercial commodity funds and speculators to amass a near record long position in coffee futures. This was the primary reason for the huge run up in prices starting 6 weeks ago. 2 weeks after reaching a high of $2.53, prices are on their way back down. As of the morning of May 6th, prices broke below the $2.00 market.
Reports of low certified coffee stocks had been frequently discussed as justification for higher market levels. On February 21st, certified robusta stocks were at all-time lows of 1958 MT stock figures (approximately 325,000 bags). On May 3rd, that number was up to 4059 MT stock figures (approximately 675,000 bags). This significant increase in certified coffee came from larger than average Brazil exports from the last 7 months, shipping out close to 28 million bags. Not only did this help the build-up in robusta warehouse stocks, but it also helped in arabica stocks that are up nearly 500,000 bags this year.
What does this mean for you?
With prices back at almost $2.00/lb., this should provide some relief for industry roasters who were short on fixed coffee heading into this rally. When looking at a long-term chart of the coffee “C” market, a $2.00 market price is not an attractive level. However, the last 3 years tell a different story. Looking at the average market price in a post-COVID-19 world. From January 2021 to today, the market average has been $1.94/lb. That’s not too far from where we are now.
If you were looking at a $2.50 market a couple of weeks ago with concern about your coffee inventory, give us a call. Whatever your coffee needs, we will work with you to develop a short or long-term buying strategy. We will help you navigate this higher market and secure stable pricing and supply.
