Jun 14 / Laleska Moda

Coffee Weekly Report - 2024 06 14

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  • Total coffee exports from Brazil continued their growth trend in May, reaching 4.39M bags, up 79.6% year-on-year, according to Cecafe. For green coffee, the growth was 90.2% y/y.

  • Arabica exports reached 3.16M bags in May, up 59.1% from last year, and robusta totaled 868K bags, 7 times higher than May/23, following the trend in recent months.

  • Total revenue in May was also the highest monthly revenue in Cecafe's entire historical series, at US$ 1.017 billion.

  • Meanwhile, Vietnamese exports fell sharply on May, to 1.32M bags of coffee, down 47.8% from April and 47% from a year earlier, reflecting restricted supply in the Asian country.

  • On the macroeconomic front, US CPI data and FED decision to scale back rate cuts in 2024, keeping it unchanged at 5.25%-5.50, will influence the commodities market in the next weeks.

Brazilian exports soar in May; Vietnamese, not so much

Cecafe's latest report showed higher export figures in May, confirming the ongoing trend for Brazilian exports. Total shipments (green, R&G, and soluble coffee) last month reached4.39 M bags, an increase of 79.6% compared to 2023, and up 3.2% from April/24.

Green coffee exports edged even higher: +90.2% YoY, at 4.03M bags. Of these, arabica accounted for 3.16M bags, while conilon accounted for 868K bags, 59.1% and 559% (or 7 times) higher than May/23, respectively. Compared to April/24, arabica showed a slight decline of 2.5%, while robusta was up 26.7%. Increased global demand for robusta has been a key factor in the subsequent growth in exports in the past few months.

May shipments were also responsible for generating the highest monthly revenue in Cecafe's entire historical series, at US$ 1.017 billion. The Council highlights that, with just one month to go until the end of the 23/24 commercial season (Jul-Jun), exports are just 2M bags away from breaking the 20/21 crop record (45.7M bags). Export data reinforces Brazil's role as the main coffee supplier globally and its importance on the robusta side, in light of recent declines in Southeast Asia shipments.

Figure 1: Brazilian Exports - Arabica (M bags)

Source: Cecafe

Figure 2: Brazilian Exports - Conilon ('000 bags)

Source: Cecafe

From the end of 2023, we could see Brazil increasing its exports relative to Indonesia and, in particular, Vietnam. In the first five months of 2024, Brazilian shipments are already 35% higher than Indonesian and Vietnamese exports combined.

In regard to the latter, Vietnam’s government data this week showed that the country exported 1.32M bags of coffee in May, down 47.8% from April and 47% from a year earlier. The figure is also well below the historical average for the month (-43.2%). Even with the high export numbers in December and January, the 23/24 Vietnamese shipments (Oct-May) are still 3.3% below 22/23, a trend that may continue next month given lower production.

This scenario has also helped to halt a deeper price correction following the bearish Brazilian data. The market is closely following the 24/25 crop development in Vietnam, as rainfall in 2024 is below historical levels and could affect production.

Finally, on the macroeconomic side, this week's positive CPI data and the FED's decision to keep rates unchanged at 5.25%-5.50% and to scale back to one rate cut in 2024 could have an impact on commodity prices in the coming days, especially regarding the dollar.

Figure 3: Coffee Exports - Brazil x Vietnam and Indonesia (M bags) 

Source: Cecafe, Refinitiv, Hedgepoint

Figure 4: Vietnam Exports (M bags)

Source: Refinitiv, Hedgepoint

In Summary

Brazilian exports remain strong in May, particularly for green coffee, already 90% higher than last year. While arabica shipments continue to grow – given the growth in use by roasters after following the narrowing of the arbitrage between NY and LN – conilon is the star of the show!

Lower shipments from Indonesia and Vietnam reinforce the demand for Brazilian beans. In the case of Vietnam, May exports sharply decreased, highlighting restricted availability.

Tight supply in Southeast Asia has helped limit price declines in recent days and may continue to influence the market during the Brazilian harvest, as Vietnam is still experiencing historically low rainfall levels. Conversely, the Federal Reserve's decision to implement just one rate cut this year could negatively affect the commodity market.

Weekly Report — Coffee

Written by Laleska Moda


Reviewed by Natália Gandolphi


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