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Market Update 26th May '23

Prices for both arabica and Robusta contracts both continued to climb until the start of this week when short term speculators began to take profit. Prices were also pressured by the rising US Dollar Index as investors look for safe havens. The fall in price was further encouraged by a sharp correction in crude oil prices as OPEC announced it would maintain current production rates, causing the Brazilian Real and Colombian Peso to weaken, encouraging origin selling.


The arabica KNC23 July contract fell sharply overnight to settle around 600 points lower at 181.95 USC/lb overnight in New York. Selling was triggered across the board as prices broke below the recent consolidation around the 188 USC/lb level. Commercial activity was light as most of the action was driven by traders.


Robusta prices followed those for arabica contracts as fresh projections for production in Vietnam rose by 5% to 31.3 million bags. This reset the moderate gains experienced after the early week sell-off triggered as prices hit a new high above 2,650 USD/ton. The drop off was much less drastic however as the RMN23 July contract only fell by around 20 USD/ton. Prices were still down by 125 USD/ton (~4.5%) over the course of week however, with the RMN23 July contract closing at 2,551 USD/ton overnight in London.

Market Indicators

Global coffee prices continue to find support as projections of a deficit for the 2022/23 market continue to find support. The USDA has reduced its global coffee production and ending stocks estimates, mainly due to drought affecting Brazil's coffee output. The International Coffee Organization (ICO) has also projected a widening deficit in the global coffee market. The likelihood of an El Nino weather pattern emerging has also increased, which could impact global coffee production.


  • The USDA's Foreign Agriculture Service (FAS) projects a 2% increase in Colombia's 2023/24 coffee production, which is the world's second-largest arabica bean producer.

  • ICE arabica coffee inventories have decreased steadily over the past three months, reaching a 5-1/2 month low.

  • Global coffee supplies have tightened as global coffee exports have declined, with significant decreases reported in Colombia and Brazil.

  • Conab has reduced its Brazil 2023 coffee crop estimate to 54.74 million bags, with Robusta production down by 7.6%


  • Vietnam's 2023/24 coffee production is projected to increase by 5%, putting pressure on robusta coffee prices.

  • ICE monitored robusta coffee inventories have reached a 5-1/2 month high.

  • Excessive rain in Indonesia is expected to cause a 20% decline in 2023/24 Indonesian robusta coffee production.

  • Fund buying of robusta coffee futures is currently high and supprting price increases. Buying is driven by speculation due to tightness in global robusta coffee supplies for the 2023/24 harvest.


The information contained in this blog is intended to be general in nature and should not be taken as constituting professional financial advice. It does not take into account your objectives, financial situation or needs. We recommend seeking independent financial advice before acting on any of the information contained within.

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