• Arabica futures retreated 590 points (3.2%) on the week to US¢ 180.75/lb.
• Robusta advanced USD 45/t (1.7%) to USD 2747/t.
• Cepea indicator for Arabica ended the week with a drop of 4.2%, to BRL 963.32/bag.
• Cepea indicator for Robusta increased 0.5%, ending Friday quoted at BRL 729.23/bag.
• Dollar Index fell 1.3%, reflecting central bank decisions.
• USDBRL ends the week down by 1.1% at BRL 4.82.
• On Tuesday (20), The CoffeeNetwork will release its global coffee report
• On Thursday (22), the USDA will release its estimates for the global coffee balance.
• USDA adjusts Honduras production estimate by 20% in 2022/23.
• US Department projects Honduran production at 7.9 million bags in 23/24.
• IBGE adjusts its projection for Brazilian production in 2023/24 to 55.4 million bags.
• In May, Brazilian coffee exports completed six consecutive months in decline.
Arabica and Robusta futures ended the week with mixed results, with Arabica retreating nearly 600 points in New York and Robusta advancing USD 45/t in London. For Arabica, the release of the USDA report indicating an increase in production in Honduras and the prospect of an increase in supply in the global balance acted negatively on prices. In London, prices still reflect the scenario of lower availability for the type, especially in Asia, and the condition of higher demand by the industry.
In addition, Arabica prices reflected cooling concerns about falling temperatures in the coffee belt. On the other hand, the dollar depreciation in Brazil and the dollar index decline acted positively for quotes, favoring movements in London and limiting losses in New York.
As presented in the FX Weekly Overview, monetary policy decisions by the central banks of the United States, Europe and Japan strengthened the European single currency against the Japanese and American currencies, resulting in a 1.3% drop in the dollar index for the week. In Brazil, the elevation of the country's credit outlook by the S&P agency, which changed the Brazilian rating from “stable” to “positive,” reinforced the environment of optimism and contributed to the strengthening of the Brazilian currency – the USDBRL pair ended the week with a drop of 1.1% closing Friday (16) at BRL 4.821.
In New York, the most active Arabica contract ended the week 590 points lower (-3.2%), closing Friday's session at US₵ 180.75/lb. In London, the most active contract showed an increase of USD 45/t (1.7%), closing the week at USD 2747/t.
Weekly Intraday (most active contract) - June 12 to 16
In Brazil, domestic prices followed moves seen in New York and London, ending the week with mixed results. The Cepea indicator for Arabica dropped 4.2%, closing at BRL 963.32/bag. For Robusta, the Cepea indicator ended the period quoted at BRL 729.23/bag, representing a gain of 0.5% on the week.
This week, the release of the USDA report with its outlook for the global coffee balance on Thursday (22) will be highlighted. On Tuesday (20) CoffeeNetwork, a StoneX group company, will release its estimates for the balance of global coffee supply and demand in the coming season.
With the adjustment in production, the USDA also updated its expectations for coffee exports. For 2022/23, exports are estimated at 6.23 million bags, representing an increase of 11.3% compared to the previous estimate and 39.8% compared to the previous year. For 2023/24, the country's exports are expected to total 6.85 million bags, which indicates an increase of 10%.
In Brazil, IBGE increased its estimates for the 2023/24 crop by 0.3% to 55.4 million bags, representing an increase of 5.9% compared to the previous crop. Arabica production was estimated at 38.5 million bags, 13.4% higher than the previous crop. Robusta coffee production was estimated at 16.9 million bags, indicating an increase of 8.1% compared to the previous crop.
In May, in the annual comparison, the largest drop in exports occurred with the Arabica type, while exports of Robusta coffee remained almost unchanged. In the month, 1.98 million bags of Arabica coffee were exported, representing a decline of 21.4% compared to May last year. Exports of Robusta totaled 131,7 thousand bags, posting a drop of only 0.1%.
Despite the almost unchanged level in Robusta exports, it is important to remember that they were weakened throughout 2022 due to the strengthened level of differentials. In 2023, Robusta spreads have retreated, indicating that exports will likely advance in the coming months. For Arabica, the scenario is also one of greater optimism with exports, which are expected to advance in the year's second half.
Price Differentials of Type 6 Robusta | ES Robusta - ICE LD (USD/t)
