MILAN – Coffee markets saw a partial consolidation on Friday 7th May. In New York, the May contract lost 275 points to end the week at 384.40 cents. In London, the main contract (May) left $74 on the floor to settle at $5,353. Profit-taking was accelerated by weather reports from Brazil, forecasting several days of showers this week. The Marriott Marquis Houston hosted the 111th convention of the National Coffee Association of USA, from 6th to 8th March.
The event brought to the forefront the difficult situation facing the international coffee trade. During the course of the convention, great concern was expressed not only about rising prices, but also about logistical, supply chain and financial difficulties.
The level of stress upstream in the supply chain is confirmed by statements made to Reuters by a broker present at the event. “Nobody wants to be exposed, nobody is buying for future delivery, it is all hand to mouth,” said the coffee broker, asking not to be identified due to the sensitivity of the issue.
The situation is no better in consumer coffee markets.
Stockpile levels in port warehouses in the United States is very low and roasters are finding it difficult to pass on the higher costs to retailers, who are in turn struggling to cope with consumers’ lower spending.
Preliminary figures released by the Brazilian government show that green coffee exports in February totalled 2,869,500 bags, 20.5% less than in the same month last year.
The sharp decline reflects lower production this year, but also the aforementioned supply chain problems and ongoing logistical difficulties at Brazilian ports.
According to Cecafé, Brazil exported a record 30,147,253 bags of all forms of coffee in the first seven months of the current crop year, an increase of 11.3% over the same period last year.
In other news, Montesanto Tavares, one of Brazil’s largest coffee exporters, has filed for bankruptcy protection with the 2nd Business Court of Belo Horizonte after unsuccessful attempts to renegotiate R$2.13 billion in debt with creditors.
The group comprises Cafebras Comércio de Cafés do Brasil, Atlântica Exportação e Importação, and their parent companies Companhia Mineira de Investimentos em Cafés and Montesanto Tavares Group Participações. It operates units in the Minas Gerais municipalities of Varginha, Manhuaçu, Caparaó, Patrocínio, Alto Caparaó, and Belo Horizonte.
