March arabica coffee (KCH23) on Wednesday closed up +1.55 (+0.92%), and Jan ICE robusta coffee (RMF23) closed up +20 (+1.02%).
Coffee prices Wednesday posted moderate gains, with robusta climbing to a 1-3/4 month high. Â Coffee prices found support Wednesday after the USDA, in its bi-annual report, cut its global 2022/23 coffee production estimate by -1.3% to 172.8 mln bags from a June estimate of 175.0 mln bags. Â In addition, the USDA also cut its 2022/23 global coffee ending stocks estimate by -1.7% to 34.1 mln bags from a June estimate of 34.7 mln bags. Â
Strength in the Brazilian real (^USDBRL) was also supportive for arabica prices as the real on Wednesday rallied to a 6-week high against the dollar. Â A stronger real discourages export selling from Brazil's coffee producers.
Robusta also has support on ever-tighter coffee inventories as ICE-monitored robusta coffee inventories Monday sank to a 4-1/2 year low of 6,470 lots.
A bullish factor for arabica coffee was slightly drier-than-normal conditions in Brazil last week. Â Somar Meteorologia reported Monday that Brazil's Minas Gerais region received 53.6 mm of rain last week, or 94% of the historical average. Â Minas Gerais accounts for about 30% of Brazil's arabica crop.
A bearish factor for coffee was last Friday's report from the Green Coffee Association that showed U.S. Nov green coffee inventories rose +1.1% m/m and +9.4% y/y to 6.39 mln bags. Â Also, ICE arabica coffee inventories jumped to a 5-1/4 month high of 785,600 bags Wednesday from the 23-year low of 382,695 bags posted on Nov 3.
On the negative side, Conab last Thursday raised its 2022 Brazil coffee production estimate to 50.9 mln bags from a 50.4 mln bag estimate in Sep, up +6.7% y/y.
A bearish factor for coffee prices was last Tuesday's report from Cecafe that showed Brazil's Nov green coffee exports jumped +19.2% y/y to 3.39 mln bags.
A bearish factor for robusta is ample coffee supplies from Vietnam. Â The General Statistics Office of Vietnam reported on Dec 8 that Vietnam's Jan-Nov coffee exports were up +13.4% y/y at 1.58 MMT. Â Vietnam is the world's biggest producer of robusta coffee beans.
The International Coffee Organization (ICO) reported on Dec 2 that global coffee exports in Oct fell -1.9% y/y to 9.87 mln bags. Â Also, the Colombia Coffee Growers Federation last Monday reported that Colombia's Nov coffee exports fell -25% y/y to 854,000 bags. Â Colombia is the world's second-largest producer of arabica beans. Â Meanwhile, Cecafe reported on Nov 17 that Brazil's Oct green coffee exports fell -2.9% y/y to 3.18 mln bags.
In a bullish factor, the USDA's Foreign Agriculture Service (FAS) on Nov 22 cut its Brazil 2022/23 coffee production forecast by -2.6% to 62.6 mln bags from a prior estimate of 64.3 mln bags. Â This year was supposed to be the higher-yielding year of Brazil's biennial coffee crop, but coffee output this year was slashed by drought.
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More Coffee News from Barchart
- Coffee Gains After USDA Cuts its Coffee Production Estimate
- NY Cocoa Sees Downward Pressure from Abundant Ivory Coast Supplies
- Sugar Prices Underpinned by Production Woes in Thailand and India
- Coffee Pushes Higher on Strength in Brazilian Real and Tight Robusta Inventories
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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