On Monday, coffee prices closed moderately higher, which recovered from last week’s low prices due to lower arabica outputs.
For September delivery, coffee futures increased by 1.04% to $160.65 per metric ton on July 03’s Asian afternoon session.
In June, the ICE-monitored arabica storage fell, hitting a seven-month low. It equated to 541,139 bags but jumped to 544,915 bags last Friday.
Likewise, the robusta beans inventories fell to a 3-1/2-month low last Monday. It hit 7,335 lots but recovered to 7,395 lots last Thursday.
Analysts say coffee prices benefitted from a more extensive 2022/23 deficit forecast. They calculated a deficit of -6.40 million bags to 3.60 million bags cut. The output estimate total was set to 164 million bags.
The lower production consensus was primarily due to weaker production in Brazil and Columbia. On the other hand, a neutral balance in 2023/24 is expected, together with a surplus in arabica and deficit in robusta.
Other traders forecasted the global robusta coffee market would experience a record deficit of 5.60 million bags in 2023/24.
According to experts, Brazil’s Minas Gerais region had 0.10 mm of rain last week, 5.00% of the historical average. The dry weather conditions would positively impact the pace of the crop’s harvest.
Last Wednesday, a coffee export cooperative in Brazil reported that the harvest is 27.80% complete.
Nicaragua Coffee Production Expected to Weaken
Nicaragua coffee production is anticipated to maintain a flat pattern in the 2023/24 market year.
Despite farmers gaining relief from lower fertilizer prices, climate shocks and insufficient support for laborers weigh on production.
According to agency experts, their arabica production would remain flat at 2.46 million 60-kilo bags. It results from years of minimal fertilizer application. Also, estimates would fluctuate due to the El Niño weather conditions.
Besides, climate change is a concerning factor for the Nicaraguan coffee industry. Extreme weather events may occur frequently and severely pressure the crops.
Additionally, the availability of laborers in coffee harvesting is seen as a significant factor in the country’s output.