Market Briefing: Coffee – 03 June 2021

Brazil is estimated to produce 48.8 million 60-kg bags of coffee in the upcoming 2021/22
Colombian coffee exports blocked by protests, up to about 500,000 bags delayed
Vietnam’s coffee exports in April down 22.1% from March at 132,111 tonnes

Production

Brazil is estimated to produce 48.8 million 60-kg bags of coffee in the upcoming 2021/22 harvest, down 22.6% from a record 63 million bags produced in 2020/21, according to Conab. If realised, this would be the lowest output since 44.9 million bags in 2017/18. Meanwhile, Safras & Mercado, sees the crop at 56.5 million 60-kg bags cutting its previous forecast of 57.1 million bags. Safras now expects the harvest of arabica beans to reach 34.7 million bags versus 35.2 million bags previously. This would be 31% less than a year ago.

Colombia produced 810,000 60-kg bags of coffee in April 2021, up 9% from 744,000 produced in the same month last year, the National Federation of Coffee Growers (Fedecafe) said. Total output in the first seven months of 2020/21 is up 2.9% at 8.3 million bags from 8.1 million last year.

Demand

Green coffee stocks in US port warehouses rose by 83,405 60-kg bags during April 2021 to reach 5,762,567 bags at the end of the month, according to the Green Coffee Association (GCA). End-April stocks were down 755,300 bags from the year-ago level, the 10th consecutive y/y decline. Stocks in March had been at the lowest level since June 2015, at 5.6 million bags.

Green coffee stocks held in Japanese ports amounted to 2.8 million 60-kg bags at the end of March 2021, up from 2.8 million at the end of the previous month but 49,933 bags below the count at the same time last year, data from the All Japan Coffee Association showed. This was the 12th straight month during which stocks were lower than in the same month last year even though the y/y decline is falling since September.

Trade

Buenaventura, Colombia’s main shipping hub, continues to be blocked by protests which started April 28, with about 500,000 bags delayed in the country, which ships roughly 1 million 60-kg bags a month. About 60% of the nation’s beans are shipped from Buenaventura. US-based coffee importer Caravela told clients on 21 May that shipments of Colombian coffees will be delayed by up to five weeks.

Ugandan coffee exports in April 2021 totalled 537,538 60-kg bags, down slightly from 572,839 in March but up sharply from 359,973 bags in the same month last year. This brought total coffee exports in the first seven months of 2020/21 to 3,398,201 bags, up from 2,932,929 a year ago.

Vietnam’s coffee exports in April were down 22.1% from March at 132,111 tonnes. Volumes were also down from the 165,799 tonnes shipped this time last year. For the first four months of 2021, Vietnam exported 584,981 tonnes of coffee, down 14.3% from a year earlier.

Price

Arabica futures in New York have recently posted strong gains that elevated the benchmark July contract to fresh four-year highs amid worries over poor production in top producer and exporter Brazil in 2021/22 and transportation problems in Colombia. On May 26, the July contract added 5.20 cents to settle at 155.70 cents per pound, having hit a four-year high of 156.75 earlier in the session. By May 27, it reached a 4½-year high of 157.25 cent per pound for the July contract, also early on in the session. However, the market was not able to hold onto the gains and ended slightly lower, down 35 points on the day at 155.35 cents per pound.

In Vietnam, farmers in the Central Highlands offered coffee beans at VND33,400-34,300 (USD1.44-1.49) per kg, up from VND32,800-34,000 last week. In Indonesia, beans were offered at premiums of USD110 per tonne to the July contract.

(IHSmarkit)