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Another month has passed and unsurprisingly, the famed “C” market has given us more to discuss. Price volatility continues to be the norm for the coffee futures market with production, weather and macro-economic factors at play. The coffee stock market price in the first week of May saw prices trade lower as the non-commercial trader (specs and funds) liquidated long futures positions. This sell-off sent prices to a 6 month low of 2.0230 on May 10. The next day prices jumped $.15 cents higher as cold weather was forecast for some of Brazil’s coffee growing regions.
The cold weather forecast sparked the fear of frost, a weather event experienced twice last year which damaged coffee trees, and has helped to keep futures prices above $2.00 all year. These low temperatures are happening earlier than usual in Brazil and will certainly mean that price volatility may continue in the near term.
Also in Brazil, the long awaited harvest is in full swing. For the past year, exporters, importers, traders, coops and government agro-agencies have all taken their best guess at what the yield will be and the true impact of the frost damage from last year. CONAB, a public company under the Brazil Ministry of Agriculture, reported on May 19 its coffee crop estimate for Brazil’s 2022-2023 season. The total number of 53.4 million bags (35.7 arabica, 17.7 conilon) is in the lower range of estimates we have seen to date.
So far, the market hasn’t had a reaction to this estimate. For us, tracking export data is a good metric for monitoring the outbound flow of coffee into consuming countries. Cecafe (Council of Coffee Exporters of Brazil) reported that Brazil’s April coffee exports were down -24% y/y at 2,808,573 bags. However, this number is only 8% lower than April’s current 5 year avg (3,048,020). The monthly export data for July/August’22 and forward will be worthwhile to watch.
In other origin news, the Colombian Coffee Federation also reported the country’s coffee production for the current Oct’21-Sept’22 coffee year may fall by 13.8% from earlier estimates of 14.5 million bags. Excessive rainfall is the main reason for this decline in production. We will wait and if this has an influence on the market, it’s too early to tell.
Great coffees are arriving every day! New crop centrals, highlighted by Costa Rica, Guatemala and Honduras, have been trickling in with much more to come. New crop Ethiopian’s, both Washed and Natural, are coming in weekly.
There have also been some very impressive scores around the cupping table. The highlight of the week was a micro lot from Huila, Colombia we cupped on Friday. A 20 bag lot of Anerobic Natural from Finca Monte Frio delivered complex and intense fruit in the cup, Blackberry Jam, Black Cherry and Blood Orange… Shop RNY # 50585 Here
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