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Coffee Market report 19th May to 23rd May 2014

COFFEE MARKET NEWS 19th May – 23rd May 2014


Coffee Prices, Futures and Currency close levels:







NY Jul-14 c/lb






Lon Jul-14 $/t













Futures Markets:

Arabica: NYC saw a substantially less volatile week compared to some recent performances, though still offered over a 10 US cents range (high/low). Volume traded over the week was also reduced, as many traders retreat waiting significant Buy / Sell signals, and leave much of the action up to light industry activity, and a few purely technical traders.

Currency: On the FX markets, GBP/USD surrendered an element of recent gains following the weak public finances data, slipping to a low of $1.6849. Meanwhile, EUR/USD eased to a low of $1.3643 before stabilising after the PMI release.

Physical Markets:

Brazil: Drought and price swings slowed the sale of Brazil's coffee that will be harvested in coming months, coffee specialist Gil Barabach for Safras e Mercado analysts said on Monday. Barabach estimated that 18 percent of the 47 million to 48 million bag coffee crop has already been sold by producers, even though harvesting will not pick up speed until June. On average, producers have sold 20 percent of the coming crop by the end of April, he said. "Prices were still pretty bad in December and early January, so producers weren't that interested in selling then. After prices rose from the drought, producers took the opportunity to sell their remaining old crop stocks rather than make forward sales," Barabach said. Reports that Brazil will not auction off 300,000 bags of stockpiled carry-over will fuel speculation that the damage to Brazil’s output will not be as bad as many predict.

Nicaragua: exports from Nicaragua plunged 26.9 percent in April from a year earlier to reach 196,303 60-kg bags, the country's national export association, Cetrex, said on Monday. Exports from Nicaragua, Central America's No. 3 coffee exporter after Honduras and Guatemala, were down 33.1 percent at 726,805 60-kg bags for the first seven months of the 2013/14 season from a year earlier.

El Salvador: production is expected to drop to 507,000 sixty-kg bags in 2013/14 (October 2013 – September 2014), a 59 percent decrease from 2012/2013. Primarily caused by a severe coffee leaf rust outbreak, this is the lowest production for the past 80 years. The Salvadoran government is trying to provide some relief, but the government's assistance (providing fungicides and an incentive program to replace old trees) has not been enough to offset the damage. El Salvador continues to promote specialty coffee; which is approximately 30% of total exports. Post estimates the 2014/2015 crop at 675,000 sixty-kg bags. However, this estimate could drop due to the ongoing coffee rust outbreak and an El Niño weather phenomenon could cause a dry spell.

Peru: production in marketing year (MY) 2014/15 (April/March) at 4.5 million bags (60-kilograms per bag), up by 600,000 bags or increasing over 15 percent compared to our MY 2013/14 estimate. Total domestic consumption in MY 2014/15 is forecast at about 192,000 bags, essentially unchanged from MY 2013/14. We forecast Peru’s exports of coffee in MY 2014/15 at roughly 4.3 million bags, up by some 549, 000 bags or 15 percent compared to our MY 2013/14 estimate of 3.7 million bags.

Mexico: is suffering from an outbreak of coffee rust, though the impact is not as drastic as that seen in Central American countries. The Post/New marketing year (MY) 2014/15 coffee production forecast is 3.9 million 60/kg bags. The Post/New MY 2013/14 total production estimate remains 3.8 million 60/kg bags. However, the private sector believes production is lower. Coffee exports for MY 2013/14 and 2014/15 are expected to be lower compared to MY 2012/13, due to rust-related declines in production.

Kenya: The value of coffee sold at Kenya’s auction jumped 24 percent to $83.5 million in the half-year to March, driven by improved global prices and better quality crop, a senior official said on Monday. The east Africa nation, whose high-quality beans are sought by roasters to blend with beans from other producers, sold coffee worth $67.3 million in the first-half of the 2012/13 season that runs October to September. “We had very impressive prices over the first-half and that reflected on the overall earnings. We anticipate this to carry on given the dynamics in the global market,” Daniel Mbithi, the chief executive of the Nairobi Coffee Exchange said.

Ethiopia: production in Marketing Year (MY) 2013/14 has marginally increased at a rate of 0.3 percent. Post also predicts coffee production in MY 2014/15 with increase slightly due to favourable rainfall during the Bulg rainy season (a short rainy season between mid-March and the end of May). During the current MY, Ethiopia exported large volumes of coffee. However, the larger export volume failed to generate a proportionate increase in foreign exchange earnings as a result of a decline in international coffee prices. The Government of Ethiopia (GOE) recently announced a plan to restructure the coffee development sector by designating a specialized institution that can provide technical support to the coffee value chain.

Uganda: Uganda's coffee exports in April rose by 35 percent year-on-year to 336,676 60-kg bags, helped by rising global prices, a source at the state agency said on Monday. "During the month, there was a slight increase in the farm gate coffee prices in tandem with the positive price change on the global markets," UCDA said in a monthly report for April.

Indonesia: production declined 9.5 percent in marketing year (MY) 2013/14 and 6 percent in MY 2014/15 due to excessive precipitation during flowering in the 2013 dry season. Lower production, combined with strong domestic consumption, will reduce exportable coffee supplies by 600,000 bags GBE and raise coffee imports by 55,000 bags in MY 2014/2015. Growing coffee prices are driving down stocks, with MY 2014/15 ending stocks declining to 33,000 bags from 48,000 bags in MY 2013/2014.