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The world of coffee: October 13th-17th

With something of a cloud of uncertainty hanging over the global coffee industry in recent weeks, due to severe droughts affecting the Brazilian bean harvest, political situations affecting currencies and insect infestations, it has been an interesting time indeed to be trading on the market.

Here at DRWakefield, we have of course been keeping our usual close eye on proceedings, publishing a weekly round-up of international coffee market events for the five-day trading period spanning Monday October 13th to Friday October 17th.

So what exactly went on? We've broken our report down to provide you with a little more insight into the recent happenings in the world of coffee.

Currency fluctuations

Ups and downs relating to currency conversion rates were recorded throughout the week, with the announcement that UK inflation has decreased to its lowest level for five years affecting the value of the pound sterling.

Figures from the Office for National Statistics show consumer prices in Britain rose by just 1.2 per cent during the 12 months leading up to September, following a slight increase to 1.5 per cent in August.

This had a knock-on effect on the pound, reducing its conversion rate with the US dollar to $1.5940, but it did climb back up to above $1.60 later on in the week.

The pound to euro rate also decreased, slipping to €1.2452 in light of the inflation news, but these losses were regained as the week continued.

East Africa

However, it is not just the UK, US and Europe that we are concerned with, as a significant number of our coffee farmers are based in more remote, far-off areas – particularly within the East African bean basket.

In Kenya, green coffee beans from this season's main crop are not yet being traded, but the price for its current highest-quality offerings increased by three per cent between the 13th and 17th – something that is partly being put down to supply beginning to dwindle.

A similar price increase was recorded with regard to Tanzania's coffee, again due to a decrease in availability and rising demand.

Yet in Uganda, its coffee was not performing quite as well, with exports falling by seven per cent compared to just one month ago, dropping to 207,927 bags weighing 60 kg each. However, similar patterns have been recorded in other countries, meaning Uganda is not alone in its decreased monthly shipments.

Vietnam

For instance, Vietnam experienced a slight drop in exports during September, with 0.4 per cent fewer bags of beans being shipped overseas compared to August. Despite this, around 97,300 tonnes, or 1.62 million bags, still made their way to foreign traders like ourselves at DRWakefield.

Although Vietnam's September export volumes were below those initially forecast, it is expected they will increase somewhat over the next month.

South America

The goings-on in South America had a big impact on the coffee market throughout the week, with Brazil playing a large part in this. Rain is reportedly finally on its way, but there are concerns this could be too late for the season's harvest, leaving traders around the world waiting to see exactly how much Brazilian coffee they can get their hands on this year.

There have also been worries regarding Colombia's coffee crop, as warmer weather has led to an infestation of coffee bean-attacking insects. However, these do not seem to have had too much of an impact on the harvest, with around eight per cent of crops affected in the worst-hit areas.

Over in Peru, a 60-day emergency was declared for 11 coffee-growing areas due to the spread of the roya fungus, which is expected to result in a 20 per cent decrease in the country's bean harvest this season.

Elsewhere in South America, exports in Guatemala and El Salvador decreased somewhat significantly, falling by 15.6 per cent and 57.5 per cent during the 2013-14 season respectively. El Salvador was among the worst affected by the roya fungus – something that contributed to this decline.

Arabica versus Robusta

Alongside analysing how different coffee-producing countries are performing in comparison to each other, we also like to look at the competition between Arabica and Robusta beans.

The value of the former fell by 11 cents over the week, possibly in part to the weather situation in Brazil.

Robusta-wise, the market was somewhat slow throughout the five-day trading period, with traders arguably more concerned with current Arabica issues.