Welcome to our weekly round-up on the happenings in coffee from around the globe.
Coffee Futures Continue To Climb
Despite bearish indicators from producing countries, arabica futures continued to climb over the week. After initially dropping to their lowest point since May 2021, futures prices continued to climb by a little over 10% to peak at 157 USC/lb before falling slightly to close at just over 155 USC/lb Thursday night in New York. Speculative short-covering by traders has eased but prices continue to find modest support from commercial interests.
Market participants continue to be focused on the developing of the Brazilian 2023 crop, which is now much higher than expected as the weather in Brazil continues to improve, with CONAB releasing their first crop report overnight, indicating a larger than expected 8% increase year-on-year for the Brazil coffee crop to total just under 55 million 60kg bags. Brazil's arabica coffee crop is set to reach 37.43 million bags this year, up 14.4% from 2022, boosted by a rebound in top producing state Minas Gerais. Output of robusta coffee, on the other hand, is expected to drop 3.8% from the record 2022 crop to total 17.51 million bags.
Robusta prices continued to find support on the back of the forecast from CONAB, with Volcafe also forecasting that the global 2023/24 robusta coffee market will see a record deficit of 5.6 million bags as Indonesia, the world's third-largest robusta producer is expected to see the smallest robusta crop in 10 years due to damage from excessive rainfall across its growing regions.
EU Finalises Deforestation Regulations
On December 6, 2022, the European Union completed negotiations on its new Deforestation-Free Supply Chain Regulations. The regulations are currently undergoing legal review but are considered complete and are expected to be formally adopted in the coming months.
To sell any of the covered products in the EU or export them from the EU, business operators will be required to provide extensive information about the product’s origins, including the precise location and general time of production. Products sourced from risk-identified origins must also comply with additional risk assessment and mitigation procedures.
The regulations establish rules for a list of commodities identified as the main drivers of agricultural expansion leading to deforestation and forest degradation: cattle, cocoa, coffee, palm oil, rubber, soy, and wood. Since the conclusion of initial negotiations, the EU has also added a range of products derived from these commodities such as charcoal, tires, printed books, and preserved and prepared meat from cattle to the scope of the Regulation.
Landslides In Colombia’s South
Almost 1 million people in Colombia’s southern regions have been cut off from the rest of the country by a massive landslide. No deaths or injuries have been reported yet, but the landslide has damaged the Via Panamericana highway, the country’s main internal freight route.
The Highway connects not only the south to the rest of the country, but also connects Colombia to Ecuador and the rest of South America. It is estimated that freight vehicles will be unable to access the route for at least a month, with the only other option available being the infamous “Trampoline of Death” road between Pasto and Mocoa.
The landslide has stopped coffee from reaching local cooperatives, but the impact on exports is limited so far as there is currently no coffee production in the Cauca and Nariño provinces.
Top Brazil CoE Lot Earns $43 Per Pound
The 23rd Brazilian Cup of Excellence auction concluded this week, with the top lot earning USD $43/lb and the auction generating nearly a quarter of a million US dollars across the 24 winning lots.
The winning lot was a catuai variety produced by Antonio Rigno de Oliveira Filho of Fazenda Tijuco in Piatã, Chapada Diamantina, Bahia and was scored at 91.41 points.
The top 5 lots in the auction all scored over 90 points and each earned the distinction of being awarded the Presidential Award in recognition of this achievement.
The auction itself lasted for over 5 hours, with more than 1,600 bids being recorded from bidders from across the globe.