March arabica coffee (KCH23) this morning is up +1.15 (+0.66%), and Mar ICE robusta coffee (RMH23) is up +6 (+0.29%).
Coffee prices this morning are posting moderate gains. Signs of smaller coffee supplies from Brazil support prices after Cecafe on Thursday reported that Brazil Jan green coffee exports fell -18.5% y/y to 2.52 mln bags.
A bullish factor for robusta coffee is the tightness in global supplies. Vietnam’s General Department of Customs reported Thursday that Vietnam Jan coffee exports sank -27.7% y/y to 142,544 MT. Also, robusta coffee inventories are shrinking as ICE-monitored robusta coffee inventories Thursday fell to 5,955 lots, the fewest since contract rules changed in 2016.
Smaller coffee exports from Colombia are bullish for arabica prices after the Colombia Coffee Growers Federation reported Tuesday that Colombia Jan coffee exports fell -19% y/y to 835,000 bags. Coffee exports from Colombia have declined recently as Colombia’s 2022 coffee exports fell -8% y/y to 11.1 mln bags. Colombia is the world’s second-biggest producer of arabica coffee beans.
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A bearish factor for arabica coffee is the steady increase in ICE arabica coffee inventories. Since falling to a 23-year low of 382,695 bags on November 3, ICE arabica coffee inventories rose to a 7-1/4 month high of 891,933 bags on Wednesday.
Increased coffee exports from Vietnam, the largest robusta producer, are bearish for robusta prices after the General Statistics Office of Vietnam reported last Tuesday that Vietnam’s 2022 coffee exports were estimated at 1.78 MMT, up +14.1% y/y.
A supportive factor for arabica is heavy rain in Minas Gerais, Brazil’s largest arabica growing region, which has kept farmers out of fields and delayed the application of fertilizers and pesticides. Also, the heavy rain has led to an increase in coffee rust in some trees. Somar Meteorologia reported Monday that Brazil’s Minas Gerais region received 81.3 mm of rain last week, or 116% of the historical average. Minas Gerais accounts for about 30% of Brazil’s arabica crop.
Last Wednesday, arabica posted a 3-1/2 month high, and robusta last Tuesday posted a 3-3/4 month high on concern about smaller global coffee supplies. Rabobank cut its global 2023/24 coffee surplus estimate to +1.6 min bags from a November estimate of +4.0 mln bags. Also, Volcafe said because of weak flower blossoms on coffee trees in the Minas Gerais coffee-growing region, it cut its Brazil 2023/24 arabica coffee production estimate to 40.5 mln bags from a July forecast of 49.8 mln bags.
Smaller global coffee supplies are bullish for prices after the International Coffee Organization (ICO) reported last Thursday that Oct-Dec global coffee exports have fallen -2.8% y/y to 30.27 mln bags. Also, Cecafe on January 16 reported that Brazil’s 2022 green coffee exports fell -2.7% y/y to 35.6 mln bags, the lowest in 4 years.
Robusta has support after coffee trader Volcafe forecasted that the global 2023/24 robusta coffee market would see a record deficit of 5.6 mln bags as Indonesia, the world’s third-largest robusta producer is expected to 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.
On the negative side, U.S. green coffee inventories are plentiful after the Green Coffee Association on January 17 reported that U.S. Dec green coffee inventories rose +9.3% y/y to 6.38 mln bags. Also, Conab on January 19 forecasted the 2022/23 Brazil arabica crop would rise +14.4% to 37.4 mln bags.
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.
