The latest coffee market report from the Uganda Coffee Development Authority (UCDA) reveals varied trends in the trading session of July 31, 2024, driven by global weather concerns and market dynamics.
On the London International Financial Futures and Options Exchange (LIFFE), Robusta coffee futures showed a decline. The September contract closed at $4,266 per tonne, marking a slight drop of $1, while the November contract ended at $4,118 per tonne, down by $4. This decrease in Robusta futures reflects market caution, potentially influenced by demand fluctuations and broader economic uncertainties.
Conversely, the Intercontinental Exchange (ICE) saw Arabica coffee futures close higher. The September contract increased by 0.40 cents, reaching 230.80 cents per pound, while the December contract rose by 0.25 cents to close at 229.60 cents per pound. The gains in Arabica prices are attributed to concerns about dry weather in Brazil, a significant player in the global coffee market.
Somar Meteorologia, a Brazilian meteorological agency, reported that Brazil’s primary Arabica-growing region did not receive rain last week. This lack of precipitation is critical as it can adversely affect the flowering phase of coffee plants, potentially reducing yield. Additionally, the Coffee Trading Academy’s recent forecast estimated Brazil’s 2024/25 coffee crop at 67.4 million bags, a reduction from earlier estimates exceeding 70 million bags. This revision has added upward pressure on Arabica prices as traders anticipate a tighter supply.
The mixed results in coffee futures illustrate the complexities of the global coffee market, where weather conditions in major producing countries like Brazil have a significant impact on prices. While Robusta futures experienced a slight decline, Arabica prices demonstrated resilience amid climatic concerns in Brazil.
Bernard Sabit, a coffee producer and exporter at Bask, noted that the mixed trends in the coffee market are influenced by climatic issues in both Vietnam and Brazil, as these countries are major coffee producers. Sabit explained that while Vietnam is experiencing climate issues, recent rains are expected to boost production. Conversely, Brazil’s climate and production problems are impacting the market for Arabica coffee, while Vietnam’s issues affect Robusta coffee prices.
Sabit also highlighted the recent European Union (EU) resolution requiring that all products exported to the EU be deforestation-free. This new regulation could impact Uganda’s coffee market performance. Although the resolution currently affects only coffee and cocoa, Uganda might face an imminent ban on coffee exports to EU countries due to stringent restrictions related to deforestation. With approximately 150 days remaining before the enforcement of this ban, Uganda is in a rush to comply in order to protect its vital coffee export revenue.
Farmers are expressing concern over the potential economic impact of the EU resolution. Dick Dunstan Turinawe, a farmer, compared the current situation to an “Intensive Care Unit” for the tea industry, noting that the coffee sector is facing serious challenges. He questioned the government’s commitment to supporting farmers in light of these difficulties.
Yesterday’s Coffee Market Prices (in $ cents per pound):
| Coffee Type | Price (cents per lb) |
|---|---|
| Screen 18 | 209.84 |
| Robusta – Screen 15 | 204.84 |
| Robusta – Screen 12 | 201.84 |
| Arabica – Bugisu AA | 225.80 |
| Arabica – Bugisu A | 224.80 |
| Arabica – Bugisu PB | 224.80 |
| Arabica – Bugisu B | 222.80 |
| Arabica – Wugar | 223.80 |
| Arabica – Drugar | 204.80 |
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