RNY Market Watch: Coffee Price Forecast 2023

Welcome to our December edition of RNY Market Watch! Andrew Blyth & Tom McLaughlin are here to provide you with the latest insight into the coffee price forecast for 2023.

Factors affecting the coffee price forecast for 2023

Coffee prices, as measured by the ICE KCH’23 futures contract, have slowly risen. This rise comes after they traded to a 16 month low of $1.5405/lb on November 17. Traders looking for clues where prices may be headed have been presented with conflicting data. Cecafe reported that Brazil’s November coffee exports rose 14.2% y/y to 3.673 million bags. This recent flow of coffee from Brazil has helped to allay fears of delays and shortfalls in the coffee industry. This is a primary reason the “C” price stayed above $2 /lb for most of the past 18 months. Not surprisingly, coffee inventories have increased as well recently. The Green Coffee Association reported that November US green coffee inventories rose 1.1% m/m and 9.4% y/y to 6.39 million bags. And ICE warehouse certified arabica coffee stocks jumped to a 5 month high of 775,656 bags, with 289,816 pending certification.

CONAB revised its estimate for the recently harvested 2022/23 Brazil coffee slightly higher to 50.9 million bags from a September estimate of 50.4 million bags.

There are some other metrics, however, that may show the recent gains in price may continue. Colombia’s National Coffee Federation reported that November coffee exports decreased 24.79% y/y to 854,000 bags. Excessive rain has affected both the production and distribution of coffee in Colombia.  Honduran November coffee exports totaled 99,296 bags, which was a 26.76% drop y/y. Other smaller central American countries have been reporting lower export numbers as well, as a lack of laborers and high input costs have affected yields.  And robusta coffee prices traded to an 8 week high as robusta inventories in ICE warehouses declined to a 4 1/2  year low.

So what is the coffee price forecast for 2023?

While we do not have a crystal ball, we expect continued volatility in prices in 2023. This should present opportunities for both roasters and producers alike.

We recommend you stay in contact with your trader, and you can always contact us here. We have great forecasting tools that can help with coffee planning for 2023. Developing a plan for forward needs can help ensure both a steady supply and a stable price for the coffees that matter most in your line up. We’re here to help you navigate both volatility in pricing and the changing harvest and export seasons found around the coffee globe. For now, keep an eye on dwindling supplies of core Centrals as we approach new crop in the spring, make sure you have enough.

Until next time, have a very safe, healthy and merry Holiday Season! Enjoy your time with friends and family and best wishes for a happy and prosperous New Year!