Loading the content... Loading depends on your connection speed!

The latest news and views from the Bennetts team

Featuring the latest news on the coffee industry and business insight from senior members of the Bennetts team.

Bennetts > Blog

Industry News.

The declining AUD prompts local prices to rise and a positive trend line emerges in NY market, the latest harvest update from Central America and maintaining the delicate balance of supply and demand in Brazil.

Only two months into the New Year and we have already experienced a great deal of volatility in the coffee market. Whilst the price of coffee on the NY market is currently heading south, the continuing devaluation of the AUD against the US dollar is driving the local price of coffee up.

Despite the recent downtrend of the market, it seems that coffee prices are on the way up. Looking at the movement of the NY market over the last 25 years, throughout the peaks and troughs, a positive trend line is evident. Taking into account an over correction following the sharp spike in 2010/11, highlighted in the chart below, the last 15 years show a clear trend of rising prices. Succeeding the over correction, we are now back on track with the general trend. Prices may be on the decrease now, but they don’t look like they could go much lower in the long term.

Harvest is all but wrapped up in Central America and the producer bloc is projecting an additional 1 million bags of Arabica coffee this season. New crop production in El Salvador is forecast to be more than 30 percent larger than last season with similar predictions expected for neighbouring origins. These increased production estimates are positive signs that the region is beginning to recover from the recent leaf rust outbreak, however unfortunately they do not carry a lot of weight due to the severe yield losses experienced last season.

Forecasts from Costa Rica are less positive, with the origin reporting a short and sharp harvest season that was below expectation. Harvest had already wrapped up when we visited in early February, four weeks earlier than normal.

Guatemala’s new crop is 75 percent harvested in all growing regions with the highest altitude areas of 1500 metres above sea level currently being picked. Coffee flow from the Huehuetenango region has been uncharacteristically slow for this time of year and there is concern among producers that leaf rust may have caused more damage than originally anticipated.

Figures concerning supply and demand of Brazilian coffee over the coming years have suggested the steady depletion of carryover stocks as quickly as 2016, as indicated by the Brazil Coffee Industry Association. If the situation plays out as predicted, Brazil coffee supply will most certainly tighten for the 2016/2017 coffee year. The approaching spring and summer rains will be of particular consideration, as these need to be generous to produce a bumper follow on crop in 2016.

Sources: LuxCafe, I. & M. Smith.

Took 0 milliseconds