THE BENNETTS MONTHLY SEPTEMBER 23'
All things Bennetts and Coffee...
 Welcome to the September Edition of our Coffee Newsletter! NY C movements and the Brazilian Impact August was once again a relatively uneventful month for the Arabica market. Opening the scoring at 164.70 c/lb it moved marginally to the monthly high of 167.50 c/lb a couple of days later, but followed by 8 consecutive trading days of bearishness. The Brazil crop is still progressing well and the other major producing countries are reporting positive news for their upcoming harvests. It touched the monthly low of 147.20 c/lb on the 18th.This increase in physical stocks could be on the way to create a surplus if demand does not grow with it, which encourages speculative selling. So, what is there to push prices up? By the end of the month there was a slight correction from its oversold territory and it closed out August at 154.50 c/lb. Many roasters may be glad to see this weakening in the NY C but right now the benefits are not really being felt. All it is doing is managing to offset the price increases we are seeing in green coffee due to the tumbling Dollar, with reasons given below. Prices in the London Robusta market moved lower, partly as the terminal month switched from September to November. Robusta ended August on 2,489 US$/MT.  August 2023 NY C Graph Arabica certified stocks finished August at just over 512,000 bags about 16,000 bags lower than July. Robusta was just below 34,000 MTs. Commitment Of Traders Report The COT, cut off on the 22nd Aug revealed that the Commercials moved their money further towards level with an overall number of -6,213 lots short. This is up from -20,992 in the last report. The Specs in contrast went shorter reducing their number from -7,079 as reported in the July report, to -25,113 future lots. Could we see a further fall in the NY C? The Wider Macroeconomic Impact August has seen the continuation of the drastic decline in the value of the Aussie dollar against the greenback. Why? I hear you ask. Well, I will explain. Much of Australia’s currency value is built on the back of two factors. The first being that it is a trading nation, ‘’where men plunder’’ sending minerals, food, and energy overseas. When global trade looks like it might slow down and prices of commodities fall, doubts are cast on whether the land of Oz will be able to generate as much income. Sadly, smiling and giving out free vegemite sandwiches does not cut it. China is having major problems with an ageing population, youth unemployment and the property sector in disarray. A slowing Chinese economy means less production and a diminished use of raw materials. The second factor is the long history of high interest rates when compared with other western nations. The reversal of this in recent months is providing little incentive for companies to park their cash in Australian bank accounts. We last saw the Aussie dollar at these levels in January 2022, but some are forecasting that it could go as low as 0.5 US$. A level that low would surely make green coffee quite expensive. ORGANIC AWARNESS MONTH September is all about raising awareness of certified organic products, brands, and businesses by educating consumers about why choosing certified organic is so important, and encouraging them to look for organic certification logos on their purchases. Australian Organic Awareness Month (or AOAM for short) is Australia’s largest campaign promoting the certified organic industry across all categories, including fresh produce, packaged food and beverages, cosmetics and skincare, home and garden products, textiles and even pet food! You may not think twice when you pick up an organic product, but there is a difference between organic and certified organic products in Australia. Certified organic products have been rigorously tested through every step of the process, from the farmer’s field right up to the store shelf. Certified organic products adhere to a strict set of industry standards, such as the National Standard for Organic and Biodynamic Product or the Australian Certified Organic Standard (ACO). Here at Bennetts, we are ACO Certified and that means we can carry a range of Certified Organic coffees, from across the world. Here are some from our extensive list. Keep an eye on our socials for more details:
ORIGIN UPDATE - BRAZIL Happy Roasting,In late July and early August, Scott, Alex, Adrian and Tom left the Bennetts HQ and embarked on a captivating expedition to the heart of Brazil, the quintessential origin of coffee. The mission: to gain firsthand insights into the progress of the 23/24 coffee crop, forge new relationships, reinforce existing partnerships, and glimpse into the future of Brazilian coffee production. As the coffee industry's landscape continues to shift and evolve, we found this expedition to Brazil to be an invaluable opportunity. The team delved into the intricacies of the current crop season, marked by intriguing dynamics. Preceded by estimates of a carry-over inventory of 6 - 7 million (60kg) bags, the current crop season's projections range between 62 and 66 million bags. Clearly, Brazilian coffee is in abundant supply, thanks to two major contributing factors. First, the growth of Conilon (Canephora or Robusta) production has been remarkable, poised to account for 21 – 23 million bags in the 23/24 season. Some experts even anticipate this number to swell to 30 million bags annually within the next 3-5 years. Second, optimal rainfall during the bean-filling phase has yielded an above-average output of larger beans. However, nature's capriciousness played its part during the harvest. An unexpected accumulation of early-season rain (100ml) in June prompted producers to expedite their harvest, causing ripe and under-ripe cherries to dry on trees and transform into what locals call "raisins." This change disrupted the production of pulped natural / semi-washed coffees, with an anticipated 50% reduction in availability from this crop. Despite these challenges, the impact on quality has been surprisingly minimal, with defects and cup profiles largely unaffected. A recurring theme resonating globally is the scarcity of labour at origin, a challenge affecting various aspects of the industry. While Brazilian farmers have encountered these issues as well, their relatively advanced automation infrastructure has helped mitigate the crisis to some extent. The shadow of last season's record coffee prices looms large. With prices now halved from their peak, producers are adopting a cautious approach, selling only what is necessary to cover costs. A notable cooperative shared that merely 20% of delivered coffee has been sold, as producers await price alignment with their expectations. Simultaneously, the pricing gap between different qualities has narrowed, disincentivising meticulous crop care. The amalgamation of Rainforest Alliance (RAC) and UTZ has sparked conversations across Brazil. The merger's aftermath, marked by new regulations and increased auditing costs, has proven challenging for many producers. Small and medium-sized producers have grappled with a 30% drop in RAC certifications over the past year. Compounding this issue are new European regulations aimed at combating deforestation in the coffee industry, compelling Brazilian stakeholders to adopt robust traceability and sustainability practices. In this context, innovative strategies like regenerative agriculture have gained prominence. Embracing biodiversity and productivity, this approach promises improved environmental health for traditionally monoculture-dominated farms. The movement towards sustainability is further echoed in various certification schemes. Looking ahead to the 24/25 season, optimism prevails. Favourable weather conditions have nurtured healthy trees, and the prospect of a bountiful harvest looms large. Some areas are poised for significant production due to efforts in 2021 to rejuvenate frost-affected trees. While the El Niño phenomenon's arrival in Southeast Brazil later this year raises questions about potential outcomes, the trajectory for the next crop remains promising, albeit contingent on the whims of nature. In summation, our trip to Brazil unearthed vibrant conversations and pivotal insights. As the nation's coffee industry continues to navigate change, the direction it is taking is one of resilience, adaptability, and sustainability, with Brazilian coffee's future looking brighter than ever. Rancho São Benedito, Dom Viçoso - Brazil BENNETTS X MICE 2023 EVENT UPDATE A sincere and warm thank you extends to each and every individual who played an integral role in crafting an event that will hold a special significance for us as our first large social event post-Covid. The event served as a beautiful opportunity for us to rekindle old connections, strengthen existing bonds, and forge new friendships. It was truly heartwarming to witness everyone engaging in conversations, swapping stories, and learning new concepts by immersing themselves in the rich world of coffee. It was an incredible opportunity to reconnect, share laughs, and catch up with all thing’s coffee. We hope everyone had an enjoyable evening and we look forward to hosting more events like this in the future. PUBLIC HOLIDAY CLOSURE As the AFL Grand Final public holiday in Victoria is scheduled on Friday the 29th of September 2023, our office will be closed for this day. Therefore, the last dispatch date for orders prior to the public holiday will be on Thursday the 28th of September 2023. Please ensure that you place your order with us prior to 12.30pm on Thursday the 28th, should you require your order to be despatched on the following Monday. Please do not hesitate to contact your Bennetts Account Manager and or our office 03 9853 0328 should you require any further assistance with the above. The Bennetts Team |
