In W42 in the coffee landscape, Arabica coffee futures on the New York Stock Exchange (NYSE) displayed fluctuations. On Monday, October 16, the Dec-23 contract experienced a 0.48% drop to USD 1.5415 per pound (lb) due to favorable weather conditions in the coffee-growing regions of Brazil, with anticipated rain, that supported coffee growth. On October 17, coffee futures continued to rise, reaching USD 1.5705/lb, driven by a decrease in certified stocks on ICE. These declining stocks, which reached an 11-and-a-half-month low of 432,022 bags, contributed to tight coffee supplies that boosted prices. Arabica futures continued their upward trend through Friday, reaching USD 1.6525/lb, as ICE inventories continued decreasing, with Arabica stocks falling to 421,614 bags. Additionally, global coffee supply is on the decline, as the International Coffee Organization (ICO) reported a 5.7% year-on-year (YoY) decrease in global coffee exports between Oct-22 and Jul-23, totaling 103.74 million bags.
Meanwhile, on October 16, the Nov-23 Robusta coffee contract rose by USD 5 per metric ton (mt) to USD 2,393 /mt, driven by a substantial reduction in inventory on the London floor, which dropped by 5.62% week-on-week (WoW) to a registered level of 39,670 mt. On October 17, Robusta futures continued rising by USD 16/mt to USD 2,409/mt, as London stocks decreased to 636,167 bags, equivalent to 38,170 mt, the lowest level since early Sept-23. The Robusta market benefited from heavy rain in Vietnam's Central Highlands coffee region, which slowed down the harvest of new crops. On Thursday, October 19, Robusta futures experienced a significant increase, rising by USD 76/mt to USD 2,497/mt, and continued to climb on Friday to USD 2,577/mt. This is attributed to decreased Robusta inventories of 1,180 mt, down to 26,280 mt, equivalent to 604,667 bags, marking the lowest level in six weeks.
In Sept-23, Vietnam experienced a significant drop in coffee exports, with a record low of 50.97 thousand mt valued at USD 168.68 million. This represented a drop of 39.8% month-on-month (MoM) in volume and a 34.7% MoM decline in value. It is also a 47.2% year-on-year (YoY) drop in volume and a 28.2% decrease in value compared to Sept-22. However, over the first nine months of 2023, Vietnam's overall coffee exports amounted to 1.25 million metric tons (mmt), valued at USD 3.13 billion. While there was an 8.3% reduction in volume compared to the same period last year, the value increased by 0.7% during that time frame.
In Indonesia, Lampung coffee producers adopted a strategy of restrained production, purchasing coffee from farmers as needed to meet existing orders in India. With the peak coffee harvest season in Lampung concluded, farmer supplies are diminishing, leading to fluctuating prices within higher ranges.
Lastly, following a relaxation of Maximum Residue Limit (MRL) testing levels by Japanese quarantine authorities for Indonesian coffee commodities, Japanese buyers have initiated orders for Robusta coffee beans from Indonesian producers during W42. These buyers exhibit a preference for Robusta coffee from Java over Sumatran Robusta due to the lower risk of rejection at Japanese ports, despite the current limited availability and higher prices. However, both Robusta varieties from Java and Sumatra are facing supply shortages, resulting in elevated prices.
