Daily Coffee Report 8/11/26
Daily coffee report
StoneX Coffee Team
- Coffee
Sucden Financial Sees Nearly 5 Million Bag Deficit for 22-23 Coffee Year
By: Alexis Rubinstein, Managing Editor - Coffee Network
Sucden Financial Sees Nearly 5 Million Bag Deficit for 22-23 Coffee Year CoffeeNetwork (New York) – Sucden Financial has released their latest market update for the coffee market.
Following a deficit of 11m bags in the 21/22 season, following a revision of the Guatemala crop as exports from this region have been strong; Sucden sees another deficit in 22/23 to the tune of 4.96m bags. This is in the Arabica crop, as a result they expect diffs for Colombia, and Central America to remain strong. The flat price needs to rally to see selling from these origins, and with inventories declining steadily they expect considerable demand for what is left. Demand in the U.S., and Asia is steady, and they see consumption increasing by 1.5%, but the European cost-of-living crisis will test the in-elasticity of demand.
As things stand, Sucden sees a 1.5% increase in global demand for 22/23, with consumption reaching 169.51m bags, up from 167.5m bags. For the coffee season, 21/22 imports into consuming countries have increased from 86.635m bags to 91.266m bags. For May 2022, total imports were 12.028m bags, up from 11.10m bags, and the U.S. imports were down Y/Y to 2.39m bags, from 3.757m bags. However, imports from October to May for the U.S. at 19.959m bags, up from 18.780m bags for the previous year.
A large proportion of the increase came from the European Union as consumption so far has increased from 52m bags to 55.5m bags, but for the next 12 months, we see stagnant growth from the bloc due to the higher cost of living.
China's slowdown has heavily impacted the economy, which will have a ripple effect on coffee demand, which is not very sophisticated. This is evidenced by the decline in sales reported by corporates which have declined significantly.
According to Deloitte, coffee consumption will continue to increase as more citizens have a better education and their disposable income increases, with 10.7m students graduating. Deloitte has indicated that Latte will continue to be the most consumed drink, but brewed coffee will continue to increase as consumers start to prefer coffee which retains flavour. This will continue in the long term as consumers' preferences become sophisticated. We expect independent coffee shops to reach 81% of the market by 2023, totalling 123,884, up from 108,467 in 2020, a CAGR of 5%. The report from Deloitte highlighted the most common reasons consumers changed their freshly brewed coffee brands, 57% will vary due to the emergence of a brand that better meets their costs, 43% which can meet their taste demands, and 41% which meets their convenience. For 'Fast Coffee', 80% of the market was from shops near their office, and 80% of consumed coffee and other products such as baked food, juices and tea, and dine-in meals. The trend suggests that demand for Arabicas from China will only increase as consumption patterns become sophisticated. This will exaggerate the deficit in arabica coffee in the long run, and the Brazil crop would have been above 65m bags consistently to enable this, as well as Colombia producing more than 14m bags. Coffee shops in China would benefit from focusing on the quality of coffee and other drinks without investing too much in baked goods. Young consumers prefer coffee from independent boutique cafes, and 27% of consumers who have drunk coffee for more than 5 years are pursuing better-tasting products, compared to 13% for those drinking less than 1-year.
Sucden sees the potential for another substantial deficit for the 22/23 season due to issues in Brazil. The harvest is finished at the time of writing, and Sucden sees this year's crop at 59m bags for the 22/23 crop. This is comprised of a split of 38m bags Arabica and 21m bags Conilon, coffee. This is lower than the previous estimates, but this highlights the problems in Brazil, which they do not think is priced into the terminal. Producer stocks are either low or sold, exports from Brazil have been strong in recent months, and they expect this will mean that public warehouses have low stock levels. As a result, if our Arabica number is correct, diffs will remain strong, and the flat price will have to rally, along with the spreads for the coffee to be shipped. Colombian and Honduran crops are also lower, and the deficit will be in Arabica.
With inventory at 635,196 at the time of writing, they expect ECF, GCA, and JCA stocks to be depleted sharply, as well as any inventory off-exchange. The flight price needs to rally to catch up with diffs and spreads, but macro noise clouds the outlook.
Sucden previously highlighted that unsold inventory was between 550,00 and 750,000 bags, with stocks at 627,750 bags at the time of writing, they hold firm with the prediction. We have seen a substantial decline in stocks since the beginning of May, as the old crop started to wane, and diffs rallied the industry went for the certs, which have been the cheapest coffee around for some time. Arabica remains about Brazil, and the deficit, combined with high freight costs and bottlenecks, compounded the issue as some roasters scrambled for a product. Pending grading in August has shot up, peaking at 250,000 bags and now stands at 212,056 bags; this is mostly old coffee that was brought in 18 months ago; there are question marks over the quality and appearance of this coffee. The marginal uptick in certs is due to the bags passing, with a small number of bags failing, but the rejected coffee is likely to be still sold OTC; the official pass rate is high, around 80%. The regrading will enable traders to benefit financially if the bags pass as some of this coffee could have received an age penalty, but the passed bags would be priced at the current price. The coffee cannot be carried with the spread at a premium, so we expect this coffee to be pledged to a roaster in the coming months.
They expect this to be the case as the coffee is old. August shipments from Brazil totalled 2.476m bags, the lowest since September 2017, with Arabica at 2.023m bags. This lends itself to more withdrawals from certified stocks. The low exports, in conjunction with high differentials and the market not near tenderable parity, suggests roasters and industry will go for certs in the short term, assuming that they can assure the quality of the product, something that is increasingly hard to do.
Alexis Rubinstein
- Coffee
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Daily Coffee Report 8/10/26
Daily coffee report
StoneX Coffee Team
- Coffee
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