Now that the new year is nearly upon us, we’ve already begun looking towards a new coffee season in 2017. We here at Vournas Coffee are once again surveying the C-Market landscape to share with you our perspective on where we are, and what the coffee market trends will be in 2017 and beyond. If you haven’t already settled into a tall mug of your origin of choice from Dr. Java, now would be a good time to top off while we give you the rundown.
Dollar Rising, Coffee Dropping
At present we’re sitting on a 13-year high for the U.S. Dollar index as well as all-time highs for the S&P500, the NASDAQ and the Russell 2000. Investors are on the move, and energy and steel sectors are going up, but coffee is on a sudden decline along with several other major commodities. Robusta prices are the exception as noted in our previous C Market wrap. They are on the rise due to inclement weather patterns in Southeast Asia and have resulted in delays in Vietnam and low-output in Indonesia, which is upping pressure on Brazil to deliver big in 2017, and to infinity and beyond!
FY 2016 Coffee Market Trends
In the last 3 weeks alone the C Market fell from a year-high 1.71 down to 1.45. Investor funds are holding firm in their mid-to-long core positions, but trading volumes (read activity) is down in Brazil following the price drop. By all appearances the industry players in Brazil have met their year-end goals and producers have received their just payments; in some instances contracts are already being extended into the next season as well. Publications of 2017–2018 forecasts range anywhere from 45 to 54 million bags. Rains in November have saturated Brazil, eliminating all that drought banter, but this will have little effect on the overall numbers, which we do not expect to see substantially change.
Good Export Numbers
Aside from Indonesia, all the major origin countries are still posting healthy numbers, indicating the likelihood that stateside green inventories will be replenished. Indonesia however will post a sharp decline in output, (somewhere in the ballpark of 3 million bags) from this season to next. As a result, in December we expect to see increased short sell pressure, but a strong dollar and the perception that future U.S. GDP numbers will continue improving, may persuade investors to remain secure enough to resist. Likewise when it comes to the Brazilian currency, the Real, any down adjustments versus the dollar would also deflect these kinds of investor urges and influence.
So trusted readers, what does it all mean? With 2016 bringing so many changes, we’re much happier seeing the year-end numbers closer to where they began than not. Above all else we’re fans of stability in the marketplace; spikes and drops in pricing offer opportunities for some, but it’s often the farmers who get stuck here. Overall we see the 2017 and 2018 numbers continuing to climb, but hopefully at a reasonable clip.
Happy Roasting,
Andrew
Visit Us In Westlake Village
There’s always an open invitation waiting for you to join us at our cupping table in Westlake Village. To view a full listing of our coffees please visit our coffee offerings page. Feel free to email us anytime or call to speak with our friendly staff M-F, 8AM – 4:30PM PST about our current stock of coffees, coffee market trends and how we can help improve your roasting business. 800.761.JAVA
