Confused Direction

MAY ANALYSIS OF FACTORS CONTRIBUTING TO TRENDING COFFEE PRICES

According to weather reports from Brazil’s main coffee-growing region, Minas Gerais had received only 11.5 mm of rain in the past week, about half of what is typical for this time of year. About 30% of Brazil’s Arabica coffee comes from the Minas Gerais region.

Minas Gerais Modelled Precipitation
Mean Average temperatures and precipitation

Some cooperatives are monitoring the market to determine the likely direction of coffee futures, and their work has been complicated by several conflicting indicators.

The unexpected weather pattern in Brazil is being analysed in conjunction with other anomalies to determine whether coffee prices are likely to rise or fall.

As Rabobank’s regular research summary suggests, a surplus of 1.7 million bags would put downward pressure on prices 

As Rabobank’s regular research summary suggests, a surplus of 1.7 million bags would put downward pressure on prices. The full report is only available to clients. However, we have noted that tight supply from Colombian exports, combined with the absence of rain in Brazil, is likely to reduce this oversupply. 

To make the calculation more difficult, however, according to the Green Coffee Association report, stocks increased by 86,308 bags this month compared to April, an increase of 1.48% in a single month. See table below.

Finally, Vietnam reports spectacular export growth of about 28% due to favourable free trade agreements and improved clearance procedures for customers.

Author

  • Nick 2017 500X500 1

    Nick Baskett is the editor in Chief at Bartalks. He holds a diploma from the Financial Times as a Non Executive Director and works as a consultant across multiple industries. Nick has owned multiple businesses, including an award-winning restaurant and coffee shop in North Macedonia.

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