Weather reports coming forth from Brazil indicate a continuation of the seasonal rains that have been reported across the vast areas of the Brazil arabica coffee growing regions. The rains are forecast to intensify over the next 5 days across the coffee growing areas of Southern Bahia, Parana, Sao Paulo and Minas Gerais.

The U.S. Governments National Weather Service’s Climate Prediction Centre have updated their forecast to report that La Niña climatic conditions have developed and that there is now a 87% chance for a La Niña phenomenon weather pattern to continue through December to February 2022. The La Niña weather phenomenon is characterised by unusually cold temperatures in the equatorial Pacific Ocean and historically brings with it excessive rains for the Pacific Rim countries and in terms of coffee, having an impact upon the climatic conditions within Colombia, Indonesia and Peru, while it can also influence dry conditions for the arabica coffee districts in Southeast Brazil.

The November-to-December contract arbitrage between the London and New York markets widened yesterday to register this at 112.41 usc/Lb. This equates to 53.72% 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 9,526 bags yesterday, to register these stocks at 1,921,804 bags, with 95.34% of these certified stocks being held in Europe at a total of 1,832,332 bags and the remaining 4.66% being held in the USA at a total 89,472 bags. Of this, a total 1,046,690 bags, or 54.46% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.45% of these certified coffees, originating from Honduras. There was meanwhile a decrease of 15,987 bags to the number of bags pending grading to the exchange; to register 36,913 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, the US Dollar lost ground against a basket of other currencies. A weaker US Dollar is seen to be a bullish factor for many of the US Dollar based commodity markets when trading in other currencies, this spurred by a dip in U.S Bond Yields. The Coffee, Wheat, Soybean, Corn, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Sugar and Cocoa markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.369 Sterling, at 1.161 the Euro and with the US Dollar buying 5.513 Brazil Real.

The New York and London markets started the day yesterday trading on a firmer note. The markets continued to oscillate around par for the remainder of the early morning session before attracting a large degree of buying support to see the markets trend firmer. As the afternoon progressed the markets would continue on their firmer path before hitting a ceiling limiting the gains for the day. both the New York and the London markets would drop back from the highs of the day to trend in a negative direction. The markets rebounded from the lows, late in the day to recover some of days losses, this would see the New York and London markets settle on a modest near to unchanged firmer note at the close.

The London market ended the day on a close to par positive note and with 8.70% of the gains of the day intact, while the New York market ended the day on a likewise near to unchanged positive note and with 15% of the gains of the day intact. This near to unchanged but marginally firmer close does little to indicate direction, with both the New York and the London markets dropping back from the highs of the day’s trade, one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

NOV 2135 + 2                                                         DEC 209.25 + 0.60
JAN 2145 + 2                                                          MAR 212.15 + 0.55
MAR 2100 + 4                                                        M AY 213.15 + 0.60
MAY 2076 + 4                                                        JUL 213.65 + 0.55
JUL 2072 + 4                                                          SEP 213.90 + 0.55
SEP 2075 + 5                                                          DEC 213.95 + 0.50
NOV 2080 + 6                                                        MAR 214.05 + 0.40
JAN 2087 + 7                                                         MAY 214.25 + 0.35