Arabica Coffee Closes Lower on Increased Supplies from Honduras

Coffee prices were mixed, with robusta coffee climbing to a 1-week high and robusta falling to a 24-year low. Arabica came under pressure after Honduras, the biggest coffee producer in Central America, reported its Feb coffee exports rose +26% y/y to 932,678 bags. Robusta coffee has carryover support from Thursday when Vietnam’s Feb coffee exports fell -20% y/y to 160,000 MT.

Coffee prices on Tuesday posted 5-week lows as concerns about dry conditions in Brazil temporarily eased. Somar Meteorologia reported that Brazil’s Minas Gerais region received 59.5 mm of rainfall in the past week, or 131% of the historical average. Coffee inventories are tight, which is a supportive factor for coffee prices. Last Wednesday, ICE-monitored robusta coffee inventories fell to a record low of 1,958 lots, although they recovered modestly to a 2-week high Wednesday of 2,453 lots.

Larger coffee exports from Brazil are bearish for prices. Cecafe reported that Brazil’s Jan coffee exports jumped +45% y/y to 3.7 million bags. The International Coffee Organization (ICO) reported that Dec global coffee exports rose +13.6% y/y to 12.168 million bags, and from Oct-Dec, global coffee exports rose +6.8% y/y to 32.419 million bags.

A negative factor for coffee was the hike by Safras & Mercado to its 2022/23 Brazil coffee crop estimate to 61.1 million bags from a previous estimate of 58.9 million bags. Brazil exporter group Comexim raised its Brazil 2023/24 coffee export estimate to 44.9 million bags from a previous estimate of 41.5 million bags.

Tight robusta coffee supplies from Vietnam are bullish for robusta prices since Vietnam is the world’s largest producer of robusta coffee beans. Vietnam’s General Statistics Office reported that Vietnam’s Feb coffee exports fell -32.8% m/m and -20.1% y/y to 160,000 MT, although total Jan-Feb coffee exports are up +16.2% y/y at 398,000 MT.

The 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. The International Coffee Organization (ICO) projected that 2023/24 global coffee production would climb +5.8% y/y to 178 million bags due to an exceptional off-biennial crop year.

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