May arabica coffee (KCK23) on Thursday closed down -2.30 (-1.30%), and May ICE robusta coffee (RMK23) closed up +9 (+0.42%).
Coffee prices Thursday settled mixed, with arabica sliding to a 3-week low. Signs of robust coffee exports from Honduras, Central America’s biggest exporter of arabica beans, are pressuring coffee prices. Last Thursday, the Honduran Coffee Institute reported that Honduran Feb coffee exports rose +32% y/y to 863,901 bags.
Smaller robusta coffee supplies are bullish for robusta prices after the General Department of Vietnam Customs Thursday reported that Vietnam’s Feb coffee exports were down -34.2% y/y at 122,833 MT and Jan-Feb coffee exports were down -14.7% y/y at 283,339 MT. Vietnam is the world’s largest producer of robusta beans.
An easing of flooding concerns in Brazil is also bearish for coffee prices. The drier conditions should allow farmers in Minas Gerais, Brazil’s largest arabica growing region, back into coffee fields to apply fertilizers and pesticides. Somar Meteorologia reported Monday that Brazil’s Minas Gerais region received 27.8 mm of rain in the week ended March 5, or 47% of the historical average. Minas Gerais accounts for about 30% of Brazil’s arabica crop.
A bearish factor for robusta coffee is a rebound in ICE inventories as robusta inventories Wednesday rose to a 2-3/4 month high at 7,426 lots.
Tighter arabica coffee inventories are bullish for prices after ICE arabica coffee inventories Tuesday fell to a 2-1/2 month low of 763,700 bags. Also, smaller coffee supplies from Colombia, the world’s second-largest producer of arabica coffee beans, are bullish for prices after the Colombia Coffee Growers Federation on Monday reported Colombia Feb coffee exports fell -6% y/y to 928,000 bags.
Global coffee supplies have tightened. The Green Coffee Association on February 15 reported U.S. Jan green coffee inventories fell -1.8% m/m to 6.265 mln bags. Also, robusta coffee inventories have shrunk as ICE-monitored robusta coffee inventories on February 15 declined to 5,933 lots, the lowest since contract rules changed in 2016. However, robusta inventories have recently recovered and rose to a 2-1/2 month high today at 7,374 lots.
Smaller global coffee exports support coffee prices after the International Coffee Organization (ICO) reported on February 2 that Oct-Dec global coffee exports fell -2.8% y/y to 30.27 mln bags. Cecafe reported on February 9 that Brazil Jan green coffee exports fell -18.5% y/y to 2.52 mln bags. Coffee exports from Guatemala, the second-largest coffee producer in Central America, fell -8% y/y in January to 172,439 bags. Coffee exports from Colombia, Vietnam Jan coffee exports sank -27.7% y/y to 142,544 MT.
Robusta has support after coffee trader Volcafe forecasted the global 2023/24 robusta coffee market would see a record deficit of 5.6 mln bags. Volcafe predicts Indonesia, the world’s third-largest robusta producer, will see its 2023/24 robusta coffee production fall to 9.1 mln bags, the smallest robusta crop in 10 years due to damage from excessive rainfall across its growing regions.
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.