The Guatemalan Coffee Institute, ANACAFE, have reported that coffee exports from the mainly washed arabica coffee producer are expected to fall by 3%, to total 3.1 million bags for the October 2020 to September 2021 coffee year, when compared to the previous coffee year, citing that this modest export decline is due to factors surrounding low farmgate prices, a shortage of labour and erratic rains. Guatemala was hit by the back-to-back hurricanes, Eta and Iota which caused widespread rain and subsequent damage to infrastructure late last year.

The median forecast for this quality washed arabica coffee producer, for the October 2020 to September 2021 coffee year and ahead of the Guatemala crop year, production generally forecast to be 2.86% lower than the previous coffee year at a total of 3.4 million bags. The coffee flow from this country, alike neighbouring Central American smaller producers El Salvador, Nicaragua, Costa Rica and even to some extent from largest of the Central American washed arabica producers, Honduras, has been comparatively slow to come to the markets than in previous years.

These Central American quality washed arabica producer bloc countries have seen reports coming through to be mostly sold out on current crop coffees, earlier than would be considered traditionally normal for the time of year. These sales have mostly been concluded ahead of the more recent improvement in value terms, against the New York futures market. With the internal economic dynamics in these countries aside, and the devastating impact of the two hurricanes which followed one after the other early in the harvesting season last year through Central America, there meanwhile and following four years of low futures coffee price conditions, graduated evidence of lower production and coffee exports to consumer markets year on year, as these higher input cost coffee producers continue to work within extended length of low coffee price conditions. Inevitably, to have to cut back on farm husbandry, inputs ahead of the harvest season and during the harvest season, to reduce the number of rounds of ripe cherry harvesting, all of which has contributed overall to a combination of seasonal year on year lower production, as well as increased percentages in outturn to the lower end, of what is traditionally a fine arabica quality spectrum.

The New York market has recently seen somewhat of a short-term recovery and this has seen the picture look a little different today, these levels will need to be sustained in order to see something of a recovery and increase in production from this quality washed arabica producer bloc.

The July-to-July contract arbitrage between the London and New York markets narrowed yesterday; to register this at 82.82 usc/Lb. This equates to 54.86% price discount for the London Robusta coffee market. This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 10,740 bags yesterday, to register these stocks at 2,028,505 bags, with 95.14% of these certified stocks being held in Europe at a total of 1,930,006 bags and the remaining 4.86% being held in the USA at a total 98,499 bags. Of this, a total 1,085,071 bags, or 53.49% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.42% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 16,496 bags increase to the number of bags pending grading to the exchange; to register these pending grading stocks at 16,496 bags.

It was a softer day on the commodity markets yesterday, with broad based declines in the commodity sector due to fears of rising inflation in the U.S, the world’s largest economy, which may prompt the U.S Federal Reserve to raise interest rates. The Corn market remained unchanged on the day, while the Sugar, Coffee, Cocoa, Wheat, Soybean, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading marginally weaker at 1.411 Sterling, at 1.218 the Euro and with the US Dollar buying 5.310 Brazil Real.

The New York market started the day yesterday trading on a modest close to par softer note, while the London market started the day yesterday trading on a modest close to par positive note. Both markets attracted a degree of selling pressure early in the day to see the markets drop back and set on a softer path for the remainder of the morning session. As the afternoon progressed the New York and London markets consolidated somewhat to recover from the morning and trend back towards par, this was short lived as the markets quickly came under pressure dropping back into softer territory. The New York market hit a floor late in the day limiting the losses for the day, while the London market followed suit to recover slightly from the earlier in the day losses towards the close.

The London market ended the day on a negative note and with 52% of the losses the day intact, while the New York market ended the day on a likewise negative note and with 52.11% of the losses of the day intact. This firm close is a somewhat supportive factor for confidence in the market, there is likely to be some degree of caution and hesitancy for early trade today and thus one might expect to see only a modest follow through support to early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                             NEW YORK USC/LB.

JUL 1502 – 13                                                         JUL 150.95 – 1.85
SEP 1528 – 11                                                         SEP 152.90 – 1.85
NOV 1545 – 11                                                       DEC 155.50 – 1.85
JAN 1556 – 13                                                        MAR 157.80 – 1.75
MAR 1568 – 14                                                      MAY 158.70 – 1.85
MAY 1582 – 14                                                      JUL 159.25 – 1.80
JUL 1596 – 14                                                        SEP 159.45 – 1.80
SEP 1608 – 14                                                        DEC 159.65 – 1.75