Arabica Coffee Slips on Larger Supplies From Brazil

Coffee prices today are mixed, with arabica coffee falling to a 1-week low and robusta coffee moving higher after ICE-monitored robusta coffee inventories fell to a record low. Brazil’s Minas Gerais region received 30.9 mm of rainfall in the past week, which accounts for about 30% of Brazil’s arabica crop. Low coffee inventories are bullish for coffee prices, with ICE-monitored robusta coffee inventories falling to a 24-year low of 224,066 bags on November 30, although they recovered moderately to a 2-month high on Monday at 281,455 bags.

An increase in Vietnam’s coffee exports is bearish for robusta prices, as Vietnam’s General Statistics Office reported that its Jan coffee exports rose +47.6% y/y to 210,000 MT. Coffee buyers are shunning robusta bean purchases from Vietnam due to increased shipping costs and delivery times due to Houthi rebel attacks on commercial ships in the Red Sea.

Tight robusta coffee supplies are bullish for prices, with Vietnam’s General Department of Customs reporting that Vietnam’s 2023 (Jan-Dec) coffee exports fell -8.7% y/y to 1.62 MMT. The Vietnam Coffee Association projected that 2023/24 Vietnam coffee production would fall to 1.6 MMT-1.7 MMT, down from 1.78 MMT a year earlier.

A bearish factor for arabica is increased coffee exports from Brazil, with Exporter group Cecafe reporting Brazil’s Dec green coffee exports jumped +31% y/y to 3.78 million bags and Brazil’s Trade Ministry reporting Brazil’s Dec coffee exports (not roasted) jumped +33.7% y/y to 244 MMT.

An increase in global coffee exports is negative for prices, with the International Coffee Organization (ICO) reporting that Nov global coffee exports rose +4.1% y/y to 10.61 million bags and Oct-Nov coffee exports rose +3.1% y/y at 20.25 million bags. This year’s El Nino weather event is bullish for coffee prices, as it typically brings heavy rains to Brazil and drought to India, negatively impacting coffee crop production.

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