Weekly Reports

Coffee Weekly Insights – W4 February 2023


tlc coffee weekly report 24 feb 2023 fresh coffee beans red tree

At a glance

“The COT report has not been released for 3 weeks which seriously limits market transparency. However, the reduction in OI suggests that funds may have been covering their short positions during this period. Regarding the global coffee balance sheet, we would like to remind you that there is a consensus among traders that 22/23 will still be a deficit whilst 23/24 should show an excess”.

When it comes to Robusta coffee, it is important to note that the supply chain remains tight, and Robusta differentials are still quite high. While only Vietnamese FOB differentials currently still offer relatively affordable prices, this situation could change quickly. As demonstrated last week, FOB differentials remained steady despite an increase in Robusta prices, indicating that further price hikes could be on the horizon. However, London is not going to skyrocket despite the tight supply simply because the market is absorbing the Vietnamese crop. Indeed farmers are rather happy with a price approaching 50,000 VND.

With regards to differentials, Arabica-certified stocks, particularly those from Brazil, appear to be very attractive and buyers may be willing to stop them soon. Broadly speaking, it appears that there are few viable alternatives for the coffee industry at present, and Brazil’s coffee exports are still highly sought after despite their historically high prices. This strong demand for Brazilian coffee may help to explain the sustained strength of the New York (NY) market.

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