Welcome to the 2024 February edition of our monthly newsletter. It has been a busy month here at Bennetts, and we cannot wait to share all our news. We dive into a brief review of our latest Origin Trip to India and Sri Lanka, the latest in the coffee market, and some exciting competition updates. 

So, whether you are a coffee connoisseur or simply a lover of all thing’s coffee, this edition has something for everyone. So, sit back, grab a cup of your favourite brew, and enjoy! 

MARKET REPORT 

If any of these terms in the market report are confusing, I urge you to use Investopedia to make sense of them. I have found it to be a brilliant tool when learning about all things trading, futures and currency. https://www.investopedia.com  

NY C movements and the Brazilian Impact 

The new year opened trading at 188.65 c/lb. Initially we witnessed some downward pressure on the market and the support level of 180 c/lb was broken on a few occasions, most significantly on the 18th of January. The monthly low of 175.55 c/lb tried so hard, but did not get far, and in the end, it does not even matter as it did not take long for it to go up back up.  

The market is comfortably sitting in the 180-200 c/b range despite lots of bearish factors. A promising upcoming Brazil crop, a strengthening US Dollar and higher and y/y global coffee exports. Vietnam's January 24 coffee exports rose +47.6% y/y to 210,000 MT.  

However, Brazil’s dry weather is continuing to persist, as do low inventories in Europe and America. Furthermore, the trouble in the Red Sea is putting pressure on shipping, especially those stocks going to Europe. With inventories already low, it means that longer shipping times from lots of the major Robusta producing nations (India, Uganda, and Vietnam) encourage the bulls. This is creating a climate of stubborn market prices that do not seem to show any inclination of falling. The first month of the year closed out on 194.05 c/lb. 

The Robusta market has been steadily tracking upwards for two months now with higher highs being a regular occurrence. The shipping issues previously mentioned are driving this and farmers are getting wise to this upward trend so are holding back stocks, believing that this will continue. Why would you sell today when you are confident that you can earn $20 more per MT tomorrow?  

Certified Stocks 

At the end of January there were 250,000 bags of Arabica and almost 29,000 MTs of Robusta in certified inventories. This is 9,000 bags and 10,00 MT’s lower than December’s report.  

Commitment Of Traders Report 

The commitment of Traders report released on the 23rd of Jan showed that the commercials stayed static, reducing their net short position to -65,209 future lots and the Specs have extended their net long up to 55,078 future lots. This is the longest they have been since about March 2022. With such a position there must be a lot of belief that the market still has space to push upwards.  

The Wider Macroeconomic Impact 

Over the last month there has been a steady decline in the value of the AUD against the greenback from lofty heights of 0.683, down to 0.655. A driving force of this change have been the hawkish comments from the FED indicating an unlikeness that interest rates will be cut in March-24. Australian rates are still below US levels, and other major economies like the UK and EU (European Union). Escalations in the Middle East will also help to give support to the USD. Rising coffee market levels and falling currency, does not make happy roasters. 

THE RED SEA SHIPPING IMPLICATIONS 

In the wake of the ongoing shipping crisis in the Red Sea, the Australian coffee industry braces for potential disruptions. With shipping routes heavily impacted by geopolitical tensions and logistical challenges, importers face delays and uncertainties in receiving their coffee shipments. This situation raises concerns about supply chain reliability and may lead to increased costs for coffee. As stakeholders navigate these challenges, proactive measures such as diversifying transportation routes and securing alternative suppliers become crucial to mitigate the impact on Australia's coffee market. Stay tuned as we monitor developments and provide insights on how this dynamic landscape affects our coffee industry.  

BRIEF INDIA / SRI LANKA ORIGIN TRIP REVIEW 

Reflecting on our recent expedition to India and Sri Lanka, Georgia and Alex returned enriched with fresh insights into the vibrant world of tea and coffee production. This journey marked a significant return to these origins, deepening our connections with esteemed partners and delving into the intricacies of cultivation and processing. 

India 

Our exploration began in Hassan, where we reunited with Allanasons, our longstanding partner with whom we have fostered a relationship spanning over two decades. The bond between Bennetts and Allanasons has been instrumental in curating our signature Indian Tiger Mountain coffee, a premium blend hand-harvested at the peak of the season. Beyond the cup, our collaboration extends to supporting wildlife conservation efforts through the Wildcats Conservation Alliance. 

Next, we ventured into the picturesque Chikmagalur region, where the Kelagur Heights Coffee and Tea Estate captured our hearts with its four-generation legacy of excellence. Our immersive experience included a stay at the family homestead, allowing us to witness firsthand the dedication to specialty Robusta coffees and innovative processes. The pulped Sundried Honey process unveiled a symphony of flavours, from hazelnuts to dark chocolate, highlighting the estate's commitment to quality. 

Sri Lanka 

Transitioning to Sri Lanka, we immersed ourselves in the legacy of Akbar, a family business dating back to 1969. As the world's largest exporter of Ceylon tea, Akbar's commitment to sustainability, exemplified by their "Carbon Inset" certification, resonated deeply with our ethos. Our partnership, rooted in shared values and generations of collaboration, embodies a dedication to quality and responsibility. 

Exploring the tea fields of Sri Lanka, we covered the timeless methods of CTC and Orthodox production, each contributing to the unique character of Ceylon tea. From withering to rolling, the craftsmanship involved in tea production echoes centuries of tradition, resulting in a diverse range of brews waiting to be savoured. 

Our journey through India and Sri Lanka not only deepened our appreciation for the craft and heritage behind each cup but also reaffirmed our commitment to ethical sourcing and sustainable practices. As we eagerly anticipate sharing more about our expedition, stay tuned to our newsletters for insights into the stories and flavours awaiting discovery. 

UPCOMING COMPETITIONS  

As some of you may know, we have an incredibly talented coffee wizard here at Bennetts. Harry Ko is involved in an ASCA competition this coming month, and we wanted to share some information regarding his involvement. 

Harry will be competing in the next stage of the 2024 ASCA Brewers Cup Championship. Harry has amassed a wealth of knowledge during his time in the coffee industry, with major success in many competitions. He has continued to work on his routine, and perfect his coffee, and we cannot wait to see him on the stage again soon! 

Be sure to keep up to date with our socials, for updates on Harry’s progress! 

Happy Roasting,
The Bennetts Team