The monthly average of the International Coffee Organisation’s (ICO) composite indicator price reached its highest monthly level since January 2015, according to the ICO’s monthly report.
The daily price increased consistently over the course of the month, up from 136.17 US cents to 150. This is the highest monthly increase since March 2016.
The market has been largely driven by the ongoing concerns over Robusta supply, as well as growing speculation over the size of the next 2017/18 Brazilian crop, as Arabica will be going into an off year in its biennial cycle.
The Brazilian real has also been appreciating against the US dollar, reaching its strongest level for more than a year, which has helped to support the market, the report states.
The strongest performance among the ICO’s group indicators was recorded in Robustas, which increased by 7 per cent compared to September. This is the eighth consecutive monthly increase, with Robusta prices now up by nearly 40 per cent since the beginning of the calendar year, averaging above $1 per pound for the first time since November 2014.
The three ICO Arabica groups also increased by between 1.5 and 2.2 per cent, the report says. The arbitrage between Arabica and Robusta therefore narrowed compared to last month, but remains wider than a year ago.
Total exports in September came to 9 million bags, 1.1 per cent higher than last year.
Shipments from Brazil were down by 21.5 per cent to 2.5 million bags, with exports of green Robusta from Brazil down by over 90 per cent. Brazil’s Robusta production is primarily used to supply the domestic soluble industry, but a lack of rainfall and reduced output have squeezed the market, with local prices of Robusta briefly surpassing Arabica.
In Vietnam, on the other hand, exports increased in September, estimated up by 61.7 per cent to 2 million bags, which would represent the highest September export volume on record, according to the report.
With coffee year 2015/16 now at its end, the ICO says that exports for the year are down by 0.7 per cent to 111.8 million bags.
This is the second consecutive year in which exports have declined, following the record volumes set in each of the four previous years.
Exports of the three Arabica groups all increased year on year, with shipments of Colombian Milds, Other Milds and Brazilian Naturals up by 1.1 per cent, 5.5 per cent and 2.6 per cent respectively. Robusta exports were down by 6.9 per cent to 40.8 million bags.
However, the ICO says that exports of green coffee by the largest Robusta producer, Vietnam, actually increased by 8.1 per cent to 22.3 million bags, though this estimate only covers coffee that has been physically shipped, not coffee that has been customs cleared. This increase by Vietnam was outweighed by lower green Robusta exports from Indonesia, down by over 25 per cent for the coffee year, and Brazil lower by over 72 per cent.
Brazil’s green Arabica exports increased compared to last year by 2.4 per cent to reach 29 million bags, slightly lower than the 2013/14 peak of 29.5 million. Higher shipments were also recorded by several other Arabica producing countries, including Honduras (+2.4 per cent), Guatemala (+4.2 per cent), Ethiopia (+7.1 per cent), Nicaragua (+7 per cent) and India (+21 per cent), while Colombia was mostly unchanged.
The ICO says that the significant increase of 42.9 per cent by Peru suggests that output is starting to recover from the coffee leaf rust outbreak which so affected the last two crops, though green exports from Mexico are down by 3.9 per cent as rust continues to be an issue.