• Arabica coffee rose 1.7% in New York, closing at US₵ 183.30/lb
• On the London Stock Exchange, Robusta coffee climbed 3.7% to USD 3143/t
• Cepea indicator for Arabica coffee shows a change of just 0.1%
• Cepea indicator for Robusta coffee up 1.4% to R$ 845.75/bag
• Short-term speculative agents predominated
• Dollar down 0.8% on the week to USDBRL 4.95
• Certified stocks of Arabica rose by 11.2% and Robusta by 5.2%
• Pending stocks for Arabica coffee grading up 23.5%
• Vietnam's coffee exports down 20% in February
• Luckin Coffee sets record profit for 2023 in China
• Reuters poll shows bearish outlook for coffee prices
Last week, coffee futures prices rose higher on the back of a falling dollar. With no major changes in fundamentals, short-term speculative agents dominated the week's movements. The USDBRL pair fell 0.8% to 4.95, reflecting the release of inflation data in Brazil and the US, which reinforced the sentiment of stable interest rates in the US over the coming months. In Brazil, the COPOM is expected to maintain the pace of cuts in the basic rate. Also contributing to this scenario was the release of stable GDP in Brazil for the last quarter of 2023.
In New York, the most active Arabica coffee contract, expiring in May, ended the week up 300 points (1.7%), closing Friday (01) at US₵ 183.30/lb. Following the trend, the Robusta coffee contract due in May ended the week with gains of USD 113/t (3.7%), closing the last session of the week quoted at USD 3143/t.
On the other hand, due to the falling dollar, coffee prices on the Brazilian domestic market ended the week practically stable for Arabica and with a smaller rise for Robusta. The Cepea indicator for the former had a fluctuation of just 0.1%, closing at R$ 996.52/bag. For Robusta, the indicator gained 1.4%, closing at R$ 845.75/bag.
Weekly intraday (most active contract) - February 26 to March 1
One of the main factors that has been weighing down on coffee prices is the increased volume of stocks certified by the exchange. According to data released by ICE, last week, certified stocks of Arabica coffee rose by 11.2% to 369,500 bags. In addition, stocks pending classification increased by 23.5% to 157,400 bags, indicating that further growth in certified stocks of Arabica coffee should be seen in the coming days. For Robusta coffee, certified stocks rose by 5.2% in the week to 403,200 bags. Brazil has been the main origin delivering coffees for certification on the exchange, both for Arabica and Robusta.
Also last week, Vietnam's statistics office released the country's export figures for February. According to the agency, the country exported 160,000 tonnes, or 2.67 million bags of coffee last month, which represents a drop of 20% compared to February 2023. However, in 2024 (Jan. and Feb.), the country exported 398,000 tonnes, or 6.63 million bags, an increase of 16.2% compared to the same period last year.
According to Luckin Coffee's latest financial report, the company saw an 87% increase in revenues in 2023 in China, reflecting a strong operational and financial performance. In 2023, the company opened more than 8,000 new stores, ending 2023 with 16,200 stores in China. In addition, the company's operating margin increased from 8.7% to 12.1%. In the fourth quarter of the year alone, the company's revenue totaled US$ 746.7 million, representing an increase of 85.9% compared to the last quarter of the previous year.
Last Thursday (29), the news agency Reuters released the results of a poll it conducted among coffee market participants. The agency interviewed traders and analysts from various companies with questions about their outlook for coffee prices, production in Brazil and Vietnam, and expectations for the balance of supply and demand in 2024/25.
According to the survey, agents expect Brazilian coffee production in 2024/25 to be 69.5 million bags, representing an increase of 5.1% compared to the previous season, when production was expected to be 66.1 million bags. For Vietnam, agents projected production of 29.5 million bags, which is 7.3% higher than the USDA's projected production of 27.5 million bags in 2023/24. As a result, agents expect a surplus in the global supply and demand balance of 3 million bags in 2024/25 compared to a surplus of 600,000 bags in 23/24.
With regard to prices, the survey indicated that agents believe a 9% drop in Arabica futures prices by the end of the year, to US₵ 165/lb, compared to Wednesday's close (28). For the Robusta coffee market, the expectation is for an even more intense drop until the end of 2024, which, considering Wednesday's close (28), would see losses of 14% to USD 2600/t.
