MILAN – It was a consolidation session for the coffee markets after the sharp declines in the middle of the week. Yesterday, Thursday 12th December, both exchanges returned to the uptrend and made some gains. In New York, the main contract closed up 105 points at 321.25 cents, after a session characterised by a much narrower trading range than in previous days.
In London, the March contract was up 1% (+$51), recovering from early losses.
Meanwhile, more details emerged on the report published this week by Neumann Gruppe GmbH, which helped move the coffee markets yesterday, mainly due to an estimate of Brazil’s next arabica crop, that was much less pessimistic than the one published by Volcafe in previous days.
It should be noted, however, that Neumann is far from optimistic about the outlook for the world coffee markets
According to the German giant, consumption is unlikely to pick up in 2024/25 as very high raw material costs will continue to weigh on prices.
“We believe that global demand is facing significant headwinds, despite a very lagged and slow pass-through of green coffee prices to consumers,” Neumann said in the report.
“The current price level will necessitate further consumer price increases and reinforces our view.”
In 2024/25, global demand will remain below 170 million bags, roughly the same as in 2023/24, the German trader added. This implies a supply deficit of 2 million bags on the global coffee markets, compared with a surplus of 2.6 million bags at the end of 2023/24.
According to the report, global consumption fell for the first time during the pandemic. While emerging markets have recovered, demand in mature markets in Europe and North America remains below pre-pandemic levels.
With regard to Brazil, Neumann writes, “observations to date support our long-held view that the Arabica cherry set will be subpar,” with a crop of around 40 million bags.
Looking ahead to 2025/26, Neumann continues, current indications “point more to a global balance than another consecutive (possibly untenable) global deficit for 2025-26.”
Instead, the Volcafe report predicts an unprecedented fifth year of deficit of as much as 8.5 million bags in 2025/26.
A bitter Cafezinho for Brazilian consumers
Coffee is getting bitter for Brazilian consumers, too, with the main competitors in the market announcing steep increases.
3Corações – a joint venture between the Strauss Group and local company São Miguel – will hike prices by 11% in January after raising them by 10% in December, reports Reuters.
Melitta announced price increases of 25%, following a recent 12% increase. The world’s number one pure player in the coffee and tea market, JDE Peet’s, is set to raise prices by an average 30% next year, according to sources quoted by Reuters.
Brazil is the world’s second largest consumer market for coffee after the US, with consumption estimated at 21.68 million bags by 2022/23 (Abic data).
New figures from Vicofa
New figures on Vietnam have been released these days by the influential Vietnam’s Coffee and Cocoa Association (Vicofa). The Association predicts that this year’s crop (2024/25) will be between 26.67 and 28.33 million bags, below the median of 28.5 million bags that has been forecast by various independent analysts.
Exports, again according to Vicofa, will increase by 9% to around 23 million. Vicofa is also optimistic about consumption, which the Association expects to be between 4.5 and 5 million bags this year.
