Arabica and Robusta prices went in opposite directions this month, with Arabica prices dropping back down after March’s rally, while Robusta increased to the highest monthly average since November, says ICO’s monthly report released yesterday.
Total exports in the first half of coffee year 2015/16 are estimated up by 1.6% to 55.5 million bags, showing that the coffee market continues to be well supplied, although concerns linger over Robusta availability.
The monthly average of the ICO composite indicator was relatively unchanged compared to last month, up 0.1% on 117.93 cents.
Daily prices dropped to a low of 115.23 cents early in April, rising to a high of nearly 121 cents over the next couple of weeks. Overall, prices stayed in a relatively narrow band as the movements in the four group indicators mostly cancelled each other out.
The three Arabica groups all fell slightly after their brief rally in March, but remain above their levels of October through February.
Robustas, on the other hand, jumped by 6.1% to a monthly average of 80.18 US cents/lb as reports of drought in several Robusta growing regions have spurred speculation over potential shortages.
As a result, the Arabica/Robusta arbitrage, as measured on the New York and London futures markets, dropped by over 10%, with the daily differential falling below 50 cents for the first time since November.
Total exports in March are estimated at 10.4 million bags, up 1% compared to March last year, with Arabicas up 3% and Robustas down by 2%.
This brings total exports for the first half of the coffee year (October to March) to 55.5 million bags, a 1.6% increase on 2014/15.
This is the second-highest volume on record, just 14,000 bags less than total shipments in the first half of 2012/13. Exports of Arabica are estimated up by 7.6% to 35.8 million bags, with the highest increase recorded in Colombian Milds, up 13.2%.
Colombia itself exported 6.8 million bags, 14.1% more than last year and its highest volume since 1992/93.
Robustas, on the other hand, are estimated lower by 7.7% to 19.7 million bags, although a slight increase of 0.5% is estimated in Vietnam to 11.5 million bags.
March also signifies the end of crop year 2015/16 in the April to March group of countries, including Brazil, Indonesia and Peru.
In Brazil, exports came to a total of 36.5 million bags, slightly down from 36.9 million bags but still the second highest volume on record.
This impressive export performance has come despite the lower production figures of 43.2 million bags in 2015/16 and 45.6 million in 2014/15.
Domestic consumption in Brazil has maintained a level of between 20 and 20.5 million bags over the last four years. Looking ahead to 2016/17, the initial estimate from Conab suggests a recovery in production to between 49.1 and 51.9 million bags.
In Indonesia, exports for crop year 2015/16 are estimated down by 8.3% to 6.1 million bags, their lowest level since 2010/11, despite an increase in production to an estimated 12.3 million bags.
This can be attributed in large part to increasing domestic consumption, which is reducing export availability. Supply could be further limited in 2016/17 as El Niño results in reduced rainfall.
Prospects in Peru are more positive, with exports for 2015/16 up by over 25% compared to the previous year, when output was severely affected by coffee leaf rust, to reach 3.1 million bags.
A PDF version of the Coffee Market Report is available here.
