On Wednesday, coffee surged as unpredictable weather patterns caused by El Niño led to reduced harvest yields and dwindling inventories.
US coffee C futures for December delivery closed 2.77% higher at ¢175.48 per pound on November 08. Analysts expect an additional 0.27% acceleration to ¢175.97 in the incoming market session.
The rally brought arabica beans to a 4-1/2 month high, buoyed by declining Intercontinental Exchange (ICE) inventories. ICE arabica stockpiles fell to a 24-year low of 337,915.00 bags, while ICE robusta stores slumped to 4,052.00 lots.
Furthermore, the September 14 International Coffee Organization (ICO) report noted a global contraction in global coffee exports. October-July shipments shed 5.70% year-over-year (YoY) at 103.74 million bags.
Meanwhile, Cecafe said on October 11 that Brazilian arabica exports in September plummeted sharply by 20.00% YoY to 2.40 million bags. The reading pointed to the 9th month’s lowest shipments in six years.
Additionally, the General Department of Vietnam Customs (GDVC) posted a 9.50% annualized fall in roast bean freights. The country’s overseas sales of the soft commodity for the first three quarters declined to 1.31 million metric tons (MMT).
Likewise, 2023 Vietnamese coffee bean harvests are expected to dip by over 7.00% compared to last year to 1.67 MMT. The figure is the smallest crop yield in four years for the world’s largest producer of robusta beans.
El Niño Ravages Coffee Crops with Erratic Weather
On June 08, America’s Climate Prediction Center (CPC) declared an El Niño weather event in several regions worldwide. Generally, the climate pattern brings drought to India and heavy rains to Brazil, devastating their coffee farms.
Vietnam’s Institute of Meteorology, Hydrology and Environment (IMHEN) expects El Niño’s effects to linger until early 2024. The Vietnamese Ministry of Agriculture and Rural Development (MARD) said it may implement export restrictions next year if necessary.
In contrast, the US Department of Agriculture (USDA) expects a 2.50% YoY increase in world coffee production to 174.30 million bags. The agency also projected ending stocks to edge 0.80% higher to 31.80 million bags in the 2023-2024 harvest season.
