The Market Update explores how this week’s news, weather and other factors are shaping the global coffee trade.
Another period of wild volatility, as 20c-range days are becoming almost normal. Week on week we’ve seen very little change, 363>368, but violent movement in both directions remains a concern.
Positive news is trickling out of Colombia, indicating internal infrastructure is being repaired, and some semblance of normality is returning. This is good news for the coming harvest.
Differentials remain high. Heavy demand for Peru is reflected in prices, as it is the only washed mild available. Colombia prices are higher, and new-crop is slowly being introduced to the market—but shippers are not being aggressive on volumes or prices. Early indications from Honduras and new crop Centrals all point higher, with very few willing to make offers.
Weather concerns are becoming increasingly relevant, with Costa Rica, Honduras and Guatemala appearing most at risk. The potential effects of El Niño are being closely monitored. Hotter weather could shrink the harvest in both volume and bean size. Potentially drier weather could benefit Colombia, but we are still a bit away from knowing whether this scenario will come to fruition.
Looking at Brazil: The harvest is in full swing. Demand for Fine Cups has been huge, with supply only marginally affected by the weather earlier in the year. Likewise, demand has been huge as roasters look for neutral, clean-cupping coffees.
Indonesian buyers have been active locally, as demand in China and the region seems to grow weekly. Prices remain high for G1 TP types.
With the deeper inversion in NY, carrying long stocks continues to be a challenge. This makes careful planning and securing coffee contracts increasingly important. —N.B.
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