The month of August started with the market bouncing around in the range between 210 and 220. Volatility reflected concerns on low certified stocks, valuation of the dollar, and concerns over harvest forecasts in Colombia. As the month progressed, minimal rainfall in Sul de Minas due to La Nina weather conditions, caused concern for the supply of the 2022/2023 harvest. On Monday September 5, Rabobank revised their global supply estimates from a 1.7 million bag surplus to a 1.3 million bag deficit, which is supportive of coffee prices.
Additionally supportive of coffee prices was a recent announcement by the Colombia Federation of Coffee Farmers that reported exports were down 21% year/year for the month of August, with an overall 7% total reduction in production for the period Jan-August (year/year).
The recent strong increases in price lead many speculators to move money into the market on Friday Sept 2. The market is expected to remain tightly tied to weather forecasts for Brazil. There are small showers forecasted for September 12-13, however it is unlikely that any of this precipitation will make its way to the Sul de Minas region. In Central America, concerns over labor shortages for the upcoming year are leading many express concerns over supply of Central milds.
Shipping routes to the west coast have improved in availability. However, shortages of containers in Brazil is again impacting the ability to move coffee out of the country. After a busy harvest season of delivering coffee to the Port of Houston, warehouses in the region are reporting that they are full and unable to accept delivery of containers. Coffee must be rerouted to either the east or west coast, which may result in more expensive ocean freight.
Spot trading is currently occurring in December 22 (KCZ22). Final notice day for December is November 21, at which point all fixations on KCZ22 will need to be finalized and spot pricing will be against March (KCH23).
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