The Market Update explores how this week’s news, weather and other factors are shaping the global coffee trade.
Week on week, we see another jump higher, with the NY C showing a 1,700-point gain—and it’s still stronger again today.
The main drivers appear to be the fast harvests, smaller crops and the general lack of availability for washed milds. Colombia’s delayed mitaca, combined with the even slower flow of coffee from Huila, is adding to concerns about nearby S&D. No coffee remains in Honduras, Costa Rica or Guatemala.
What’s happened? In short, differentials have jumped 20 to 30c in Colombia, where offered. This has pushed up differentials in Peru. With any rally in prices, concerns start to appear over late shipments and certified coffees that were sold cheaply in weeks gone by. Will the contracts be honored?
Indonesia coffees continue to be fought over with local buyers paying up—namely China and a well-known brand.
Additionally, concerns over the potential threat an El Niño poses to next year’s Centrals are not helping to lower NY prices or differentials.
On to the positive! (Always end on a good note.) New-crop Brazil will start to flow in July, with early lower-grades shipping in August and Fine Cups in September. The harvest appears to be both large in volume and excellent in quality. We hope this weight of coffee brings some relief to the C market and a look lower.
Stocks remain generally thin. The market remains inverted and bullish in the near term, with a neutral longer-term outlook and a hint of bearishness later in the year. Forward planning remains key. —N.B.
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