By Nelson Mandela Muhoozi
The global coffee market experienced a significant downturn this past week, with prices falling across major exchanges.
The London International Financial Futures and Options Exchange (LIFFE) saw Robusta coffee futures close lower on Friday, while the Intercontinental Exchange (ICE) reported similar declines in Arabica coffee futures on Monday.
These declines were largely attributed to improved weather conditions in Brazil and a surge in coffee exports from the country.
On the LIFFE, Robusta coffee futures took a hit, with the November position closing at $4,162 per tonne, a decrease of $91 from the previous closing.
The January position also followed suit, closing at $4,019 per tonne, a loss of $94. These losses were mirrored in the Arabica coffee futures on the ICE, where the December position closed at 230.25 cents per pound, down by 9.10 cents.
The March position also fell, closing at 226.80 cents per pound, a decrease of 8.50 cents.
According to the market analysis, the drop in coffee prices can be primarily attributed to the shift in Brazil’s weather forecasts.
Earlier in the week, concerns had been mounting that a cold snap could bring freezing temperatures, which posed a significant threat to coffee crops.
These fears were fueled by Rural Clima, a Brazilian weather forecasting company, which predicted that temperatures could drop to near-freezing levels.
Such conditions could have led to frost, potentially damaging coffee trees and reducing future supply.
However, as the week progressed, the forecast shifted to warmer temperatures, reducing the likelihood of frost and alleviating fears of crop damage.
This change in weather outlook triggered a wave of selling in coffee futures, driving prices down.
Additionally, larger coffee supplies from Brazil further pressured prices. The Brazilian Trade Ministry reported last Wednesday that the country’s coffee exports in July surged by 44% year-over-year, reaching 3.37 million bags.
This increase in supply contributed to the bearish sentiment in the market, as traders anticipated a glut of coffee in the global market.
The combination of warmer weather in Brazil and the substantial increase in coffee exports has created a challenging environment for coffee prices.
As traders continue to monitor Brazil’s weather and crop conditions, the global coffee market remains on edge, with many looking to see if the recent price declines will stabilize or continue into the coming weeks.
Kamuregeya Adnan, a coffee transporter noted that the market situation also impacts the logistics sector, since if the prices are not good, the movement will be slowed and buying impacted.
August 12, 2024, coffee market prices in $ cents per Lb (pound)
Screen 18 205.12
Robusta – Screen 15 200.12
Robusta – Screen 12 197.12
Arabica – Bugisu AA 225.25
Arabica – Bugisu A 224.25
Arabica – Bugisu PB 224.25
Arabica – Bugisu B 222.25
Arabica – Wugar 223.25
Arabica – Drugar 204.25
Price (sh/kilo), Exchange rate (1$=Sh3,721)
Coffee farmgate price range in sh/kilo
| Category of coffee | FAQ (Fair Average Quality) | Kiboko | Arabica parchment | Drugar coffee (clean) |
| Price Range | 10,500-11,500 | 5,500 – 6,000 | 11,500-12,000 | 10,000- 11,000 |
