The prices of all varieties rose in January, especially Robusta, which increased by 6% compared to December, reaching the highest monthly level since September 2011.
From a report by the International Coffee Organization:
In January, the coffee market recovered from the fall in prices which was recorded towards the end of last year. While a price increase could be observed across all groups, it was most notable for Robusta. Exports for the first quarter of coffee year 2016/17 were 8.3% higher than last year at 29.8 million bags. Conab has released its first estimates of coffee production in Brazil for the upcoming crop year 2017/18, projecting a reduction of around 10% in crop compared to the current year. Large export volumes and the high levels of stocks in consuming countries seem likely to put pressure on price levels.
Coffee prices increased in January with the monthly average of the ICO composite indicator up by 5.6% to 139.07 US cents/lb compared to 131.70 US cents/lb in December 2016. Although the monthly average of the ICO composite price has significantly improved in January, it remains below the level of 145.82 US cents/lb recorded in November 2016. In view of the steady level of exports and news of more favorable weather conditions in Brazil, the positive trend reversed towards the end of January after the daily price peaked on 23 January at 144.54 US cents/lb.
The most pronounced price increase was for the Robusta group, which rose by 6.4% to 108.32 US cents/lb, the highest monthly level since September 2011. This increase can mainly be attributed to supply shortages stemming from a small conilon crop in Brazil and reduced crop forecasts for Vietnam and Indonesia. Consequently, roasters increasingly substitute other Robusta origins or lower grade Arabica in blends, which unsurprisingly drives up prices of the Arabica groups with Colombian Milds, Other Milds and Brazilian Naturals up by 5.3%, 4.2% and 6.2%, respectively. At the same time, the arbitrage between the London and New York futures markets has increased by 5.3% from 49.38 US cents/lb to 52.00 US cents/lb.
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