Weekly Coffee News: Central America

General market situation:

Specialty coffee enthusiasts from around the world convened in Athens for a remarkable World of Coffee event, where farmers, cooperatives, exporters, importers, roasters, and equipment producers congregated in two bustling halls. The occasion was marked by spirited competitions in various categories, such as Baristas, Brewers, and Cup-Tasters, resulting in the crowning of new coffee champions. Drawing a crowd of over 10,000 visitors, the event proved to be a resounding success, evident not only from the hoarseness of our team's voices but also from the overwhelming turnout at our booth. We want to thank you all for making the three-day coffee show truly enlightening and fulfilling.

However, concerns about a potential recession are emerging. Consumption is slowing down in many countries, while inflation remains a persistent issue. Prices of items like eggs and gas may have stabilized, but the cost of other goods and services continues to rise. Compounding the problem is the reduction in output, resulting in a double whammy for consumers, as they not only face higher prices but also receive "smaller portions on their plates".

Key financial authorities, including the US Federal Reserve, the European Central Bank, and the Bank of England, as well as their counterparts in Australia, Austria, Canada, China, Norway, Turkey, and Switzerland, have unequivocally affirmed their commitment to an unwavering hawkish interest rate policy, despite any temporary pauses they may have taken. The fight against inflation remains unresolved, necessitating the implementation of elevated interest rates for the foreseeable future.

In the realm of coffee futures, the previous week witnessed a truncated trading period in New York due to the Juneteenth National Celebrations. This brief hiatus afforded markets, including not just coffee but also other commodities, the opportunity to recalibrate and assimilate the available information. Several significant developments emerged during this period:

Brazil's primary coffee-producing regions did not experience the anticipated cold weather over the long weekend. Consequently, the risk of frost diminished, influencing market dynamics.

Reports of recessionary trends in the United States, Europe, and the United Kingdom have contributed to a slowdown in coffee consumption. Roasters would rather be selling their green coffee stocks instead of adding to their long positions.?The previously existing supply-demand imbalance has eased, leading to an anticipated surplus of available coffee. This surplus is poised to exercise additional downward pressure on Arabica prices and, to a certain extent, also impact the Robusta pricing complex.

Technical effects stemming from the First Notice Day for the July-23 contract added to the market's dynamics.?These developments exerted considerable downward pressure on coffee prices in New York, culminating in an 8.8% drop and a closing price of 164.85 cents per pound at the end of the week. The market's nervousness is evident in the broad trading range of over 20 cents per pound. Notably, New York reached a six-month low at 164.05 cents per pound on Friday.

Conversely, Robusta prices also experienced a retracement, declining by 2.6% to close the week at 2,676 USD per metric ton. Nevertheless, Robusta prices remain at exceptionally high levels.

To stay informed about the ever-changing dynamics of the coffee market, refer to the table below. We diligently update this table on a weekly basis, providing you with the latest insights and updates.

Central America

As the scorching summer heat blankets the northern hemisphere, the undeniable impact of climate change becomes increasingly evident. Record-breaking temperatures scorch Beijing, while Europe and the United States witness dwindling river flows, parched fields, and persistent forest fires. However, it appears that even the tropical paradise of Panama is not immune to the grip of this dry spell, particularly when it comes to the iconic Panama Canal. Authorities have taken the unprecedented step of lowering the maximum draft allowed for vessels navigating the canal, a measure prompted by the driest conditions experienced since 1950.

Normally, this would be a tranquil period for coffee farmers in Central America. The coffee trees laden with cherries slowly mature under the generous sun, aided by the occasional rainfall. At present, the trees appear healthy, and soil moisture levels remain within the usual range. However, a few well-timed showers would undoubtedly facilitate the optimal maturation of these precious cherries.

Yet, coffee farmers face a pressing challenge amidst the anticipation of a bountiful harvest. The rural population, enticed by dreams of a better future, continues to steadily migrate towards the US border. Consequently, searching for a reliable workforce has become an urgent endeavor for these farmers. A diminished labor force raises the cost of cherry picking and threatens the timely collection of the ripe, red cherries. So, who among us is ready for an adventure in Central America, embarking on the noble task of picking coffee cherries?

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