Informist, Friday, Sep 6, 2024

NEW DELHI – Global coffee prices rose 1% from a month ago to 238.92 cents a pound in August, according to the International Coffee Organization's composite indicator of prices. During the month, the composite indicator followed a consistent uptrend and moved between 222.58 and 254.12 cents a pound, with a median value of 239.84 cents a pound, the organisation said in a report. Higher cost of borrowing, persisting geopolitical West Asia tensions, and tight supply pulled up prices, it added.

The price of Colombian Milds increased 2.3% to 263.76 cents a pound in August, and that of Other Milds rose 1.7% to 261.44 cents a pound. Brazilian Naturals also appreciated, increasing by 1.0% to 242.19 cents a pound, while Robustas remained stable, averaging 214.68 cents a pound. The arbitrage between the London and New York futures markets climbed 1.7% to 41.37 cents a pound in August, the report said.

Higher borrowing costs have limited the possibility of carrying large stocks at relatively cheap rates, pushing buyers to go for hand-to-mouth purchases, the report said. "This applies positive price pressure on the short-term pricing of coffee as demand remains high for a somewhat constricted supply," it added.

With the central banks of Europe and England having started to lower their benchmark interest rates, market participants will be able to enjoy the benefits of leveraged finance, marking a potential decline in just-in-time coffee buying, the report said. Theoretically, lower interest rates and reduced-frequency buying implies downward pressure on the composite indicator price. However, lower cost of finance could also result in a surge in buying activity, which supports prices, it added.

Global green beans exports in July rose 9.6% on year to 10.03 mln bags (1 bag = 60 kg). Green beans exports of Robustas rose 3.3% on year to 3.7 mln bags in July. Green beans exports of Brazilian Naturals and Colombian Milds rose 18?ch on year to 3.13 mln bags and 1.05 mln bags, respectively. "The sharp growth rate stems from the 13.7% and 63.3% increases in exports from Brazil and Ethiopia," the report said.

Green beans exports of Other Milds rose 6.3% on year to 2.14 mln bags in July, the report said. Total exports of soluble coffee increased 38.8% on year to 1.2 mln bags in July from 860,000 bags. Brazil was the largest exporter of soluble coffee in July, shipping 400,000 bags, the report said.

Exports from South America rose 26% on year to 5.24 mln bags in July, amid good harvests in Brazil, the report said. African exports rose 34.7% on year to 1.9 mln bags. Exports from Mexico and Central America declined 7.1% to 1.4 mln bags. Also, exports from Asia and Oceania fell 8.1% on year to 2.7 mln bags in July.

Global coffee production in the ongoing 2023-24 (Oct-Sep) is expected to increase to 178 mln bags, up from 168.2 mln bags the previous year, the report said. Consumption of coffee in 2023-24 is expected to rise 2.2% on year to 177 mln bags. The world coffee market is likely to see a year of surplus supply in 2023-24, of 1 mln bags, the report said. End

US$1 = 83.92 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Afra Abubacker

Edited by Deepshikha Bhardwaj

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