The International Coffee Organization flagged the potential
for "pressure on" coffee prices from supplies, even amid a fierce debate in
Brazil, the top producer and shipper, over the extent of bean inventories.
The ICO, while noting that month-average coffee prices as
measured by its benchmark index had "significantly improved" last month,
recovering more than half the 9.7% lost in December, they remained well below November
highs reached on concerns over dryness in Brazil and Vietnam.
"In view of the steady level of exports, and news of more
favourable weather conditions in Brazil, the positive [price] trend reversed towards
the end of January," the organisation said.
World coffee exports for the October-to-December period, the
first three months of 2016-17, totalled 29.8m bags, a rise of 8.3% year on
year, led by a 23% surge in shipments of the "other milds" beans shipped from the
likes of Honduras and Peru, but with increases in the other major segments too.
Shipments of robusta beans rose 7.9% to 10.5m bags, defying
worries over poor weather feared to have hit production in major growing
countries, concerns which helped London robusta futures hit a five-year high of
$2,282 a tonne on January 19.
'Pressure on price
The export data - combined with ideas of stockpiling in
importing countries such as the US, where December inventories, at 6.26m bags,
were the largest for the month in 23 years - boded ill for prices, the ICO
"Large export volumes and high levels of stocks in consuming
countries seem likely to put pressure on price levels," the organization said.
The comments chime with those of some other commentators,
such as Judith Ganes-Chase, who raised questions to the market premise "that
supplies would run low following a multitude of production issues the past
Noting continued strength in coffee exports, Ms Ganes-Chase
said that "the "key indicator of supplies starting to be exhausted has not been
"In fact, the opposite has happened," with data showing that
shipments for the first three months of 2016-17 "are up sharply from all types
of coffee and this is keeping consumer warehouses well stocked".
However, the comments also come amid enhanced uncertainty
over supplies in Brazil, which has suffered successive under-par robusta coffee
harvests, even as arabica output last year hit a record high.
While robusta stocks were reported by the Conab bureau to
have dwindled to some 2.1m bags - prompting Blairo Maggi, Brazilian agriculture
minister, last week to flag the likelihood of the country opening up to unprecedented
imports of the variety – a decision on buy-ins was postponed on claims of far
Producers in Espirito Santo, Brazil's top robusta-growing state,
claimed stocks of some 4m bags, saying that the survey by Conab bean-counters
had been incomplete, and not included all warehouses.
Meanwhile, Brazil's Cooxupe, the world's largest coffee co-operative,
on Thursday undermined ideas of ample arabica stocks, saying that tightness in robusta
supplies was prompting many buyers to switch beans.
Supply tightness will reach the arabica market around May,
Cooxupe said, just ahead of the next harvest.
"Almost all Brazilian coffee exporters sold a lot of [arabica]
beans to local industries lately," Cooxupe chief trader Lucio Dias said.
"Domestic consumption is reducing the amount of arabica
available for exports."
Brazil data uncertainty
While respected data on Brazil's coffee exports are readily
available, including from exporters' group Cecafe, statistics on production are
viewed by many investors as less thorough, with Conab viewed as tending to
Conab's initial forecast for 2017-18 foresees an 8-15%
decline in domestic output, to 43.65m-47.50m bags.
"However, some independent sources indicate much higher
figures for the total production of Brazil," the ICO said.
Best-traded arabica futures for May stood at 148.00 cents a
pound in morning deals in New York, a rise of 0.3% on the day.
In London, robusta futures for March, the best-traded lot,
stood down 0.1% at $2,123 a tonne.