Welcome to our weekly round-up on the happenings in coffee from around the globe.
Coffee Prices Fall Sharply
Coffee futures fell sharply this week and despite rallying Thursday night in New York, prices closed around 13USC/lb below their high for the week.
Prior to the rally, arabica prices posted a 20-month low. The sharp drop in prices was mainly due to speculators aggressive liquidating positions that had built up in expectation of index fund buying that did not materialise. An abundance of current supply, with ICE warehouse stock sitting at a 6-month high, and US warehouse inventories still at healthy levels, a drop in the value of the Brazilian Real, and positive reports on weather conditions also aided the fall in price.
Robusta prices were contained by positive export reports from Vietnam, with the country reporting a strong year-on-year recovery for the 2022 harvest.
Price rallies at the end of the week were largely fueled by indicators showing that the market is heavily oversold and a weakening US dollar, especially against the Latin American currencies.
Brazil's Congress Attacked
Political tensions in Brazil came to a head on Sunday, local time, as thousands of supporters of ousted president Jair Bolsonaro stormed the national congress, presidential palace, and supreme court. The building were heavily vandalised and looted, with a number of historical artworks and items being looted or destroyed.
The events saw the value of the Brazilian Real fall sharply initially, before recovering and posting a slight gain against the US dollar for the week.
Anger has been building for sometime among Bolsonaro supporters, motivated by a belief that the loss of the 2022 Brazilian general election was as a result of electoral fraud, a dsitrust that Bolsonaro himself fueled during his time in power.
Police have made over 1,300 arrests since the riot, with incumbent president Luiz Inácio Lula da Silva condeming the protestors actions as fascist and barbaric.
Vietnam Exports Rise
Vietnam's General Statistics office has reported on the country's exports for the 2022 calender year. Data shows that 17.2 million tonnes of coffee was exported in 2022, the equivalent of 28.7 million 60kg bags.
This volume represents a 10% increase year-on-year for the 2nd largest producer of robusta coffee in the world, and signifies strong recovery for the country's producers from the covid-impacted harvests of 2021.
The report also highlighted new free-trade agreements signed with more than 80 countries and territories in 2022 and the opportunities that these will create for greater export increases in the future.
Peru's Coffee Exports Rise
According to figures from the National Coffee & Cocoa Chamber and veritrade, Peru , one of the world's top ten growers and the number one exporter of organic coffee, exported a little over 4 million 60kg bags of green coffee in the 2022 calendar year. This was an increase of 24.5% from the 3.2 million bags exported in 2021. Some of the increase was attributed to the export of coffee stockpiles from 2021 but still signifies a positive recovery from the previous year's covid affected harvest.
Liberica A Climate Change Solution?
Reknowned botanist and coffee plant scientist Aaron P. David of the Royal Botanic Gardens, Kew has flagged Coffeea Liberica - in particular the excelsa varietal, as a potential solution to effects of climate change on commercial arabica production.
Davis cites Liberica as having the potential to be the least disruptive, most cost-efficient and most successful climate adaptation strategy for the coffee sector.
The excelsa varietal has been identified as the most likely candidate for production due to its superiority to other liberica strains in terms of sensory attributes, whilst maintaining the species proven pest and disease resistance.
Historically, Coffea Liberica has been overlooked for commercial production, mostly due to quality and flavour issues, but also due to the larger fruits and seeds it produces as well as the much larger size of its trees which creates obstacles for picking and processing at a commercial scale. The excelsa variatel is also noted for its high yields, synchronous ripening of fruit, and strong ability to withstand pruning.
The report notes that large scale change within the industry will be needed within decades, with climate change slated to reduce commercially viable land for coffee by up to 50% by 2050.