December arabica coffee (KCZ22) this morning is up +2.05 (+0.90%), and Nov ICE Robusta coffee (RMX22) is up +46 (+2.07%). Coffee prices this morning are moderately higher. Arabica today recovered from a 2-week low and rallied moderately on reduced coffee supplies from Colombia. The Colombia Coffee Growers Federation reported that Colombia's Aug coffee exports dropped -21% y/y to 872,000 bags. Also, Colombia's Jan-Aug coffee production is down -7% y/y at 7.3 mln bags. Colombia is the world's second-largest producer of arabica beans. Coffee prices also have support from concern that excessive dryness in Brazil will reduce coffee yields and curb global coffee supplies. Somar Meteorologia reported Monday that Minas Gerais had only 0.1 mm of rain in the past week, or 1% of the historical average. Minas Gerais accounts for about 30% of Brazil's arabica crop. Coffee prices today initially saw weakness on the climb in the dollar index to a new 20-year high. Maxar Technologies recently said that La Nina weather conditions are likely to last through the end of the year, which suggests below-normal rain for Brazil through year-end. That would exacerbate drought conditions and further stress Brazil's coffee crops. ICE-monitored arabica coffee inventories are tight and bullish for prices. ICE inventories on Aug 15 fell to a 23-year low of 571,580 bags, although inventories have since recovered moderately to a 1-month high of 672,585 bags last Wednesday.
Robusta coffee has support from smaller global supplies. Vietnam's General Department of Customs reported Monday that Vietnam's coffee exports in Aug fell -12% m/m and -6.2% y/y to 110,000 tons. In the bigger picture, however, Vietnam's exports in the eight months through Aug rose +14.7% y/y to 1.242 million metric tons. Vietnam is the world's biggest producer of robusta coffee beans. The USDA June 7 revised its 2021-22 coffee production estimate for Vietnam upward to 31.58 million bags from 31.1 million bags but said 2022/23 production would fall by -2.2% y/y to 30.9 million bags. Smaller global coffee exports are supportive of coffee prices. The International Coffee Organization (ICO) Wednesday reported that global coffee exports in July fell -6.6% y/y to 10.12 mln bags, and total exports from Oct-July were down -0.3% y/y to 108.8 mln bags. Also, Cecafe reported Aug 10 that Brazil's July coffee exports fell -16% y/y to 2.17 million bags on logistics and harvest delays at the beginning of the harvest season. In addition, Honduras, the world's fourth largest producer of arabica beans, reported on Aug 1 that July coffee exports fell -by 38% y/y to 409,668 bags due to a poor crop. In a bearish factor, the USDA, in its bi-annual report released on June 23, projected that 2022/23 global coffee production would climb +4.7% y/y to 174.95 mln bags, primarily due to Brazil's arabica crop entering the on-year of the biennial production cycle. The USDA projects that 2022/23 global coffee ending stocks will climb +6.3% y/y to 34.704 mln bags.