Weekly Product Updates

W48 Coffee Update: European Coffee Storage Reaches Lowest Level Since 2017 Due to Low Supply

Raw Common Coffee Bean
Brazil
Market & Price Trends
Published Dec 8, 2023
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European Coffee Storage Hits Lowest Monthly Level Since 2017

Coffee storage in Europe has hit its lowest monthly level since 2017, with only 506 thousand metric tons (mt) in Oct-23. This marks a 9.4% month-on-month (MoM) decrease and a 39% year-on-year (YoY) decline. Robusta had the most significant decrease of 49% MoM. The primary reason behind this drop is the low supply from major exporting countries. Europe is the largest coffee-consuming and importing region globally, accounting for about 33.4% of the global import market share.

Brazilian Coffee Demand Expected to Increase in 2022/23 and 2023/24 Season

Rabobank predicts Brazilian coffee demand in the 2022/23 season will increase by 0.6% YoY, reaching 21.3 million 60-kg bags. The growth is expected to continue in the following season, with an estimated increase of 1.3% YoY, reaching 21.6 million 60-kg bags. The coffee export estimation for the 2023/24 season is between 40 and 42 million 60-kg bags.

Moreover, Rabobank highlights the price gap between Arabica and Robusta starting from the second half of 2023. The price of Arabica coffee fell on the New York Stock Exchange (NYSE) and in Brazil, while Robusta experienced a significant increase on the London Stock Exchange. This difference in pricing can be attributed to the production outlook for the 2023/23 season, with Arabica forecasting a growth of 12% YoY, while Robusta projects a decrease of 1% YoY.

However, short-term challenges, such as low inventories and logistical problems, could cause price volatility. Additionally, the impact of El Niño and the European Regulations to Combat Deforestation (EUDR) could create some uncertainties in the market. Given the anticipation of a decrease in supply, the price in 2024 is expected to remain close to USD 1.5 per pound (lb).

Brazil's Coffee Exports Increase by 8% YoY in Nov-23

According to the Brazil Secretariat of Foreign Trade (Secex), Brazil exported a total of 4.03 million 60-kg bags of coffee (green and processed) in Nov-23, an increase of 8% compared to the same month in 2022 (3.73 million 60-kg bags). However, there was a decrease of 16.1% YoY in foreign exchange revenues from USD 948.09 million to USD 795.28 million. From January to November this year, coffee export volume increased by 1.5% to 33.07 million bags, compared to 32.69 million bags in the same period of 2022. However, foreign exchange revenues fell 17.1% YoY to USD 7.25.

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