Trade within Vietnam has continued to remain slow over the past week, with dwindling coffee stocks available from the current crop harvest. The dry season is coming to an end in Vietnam, this the seventh month of their October 2021 to September 2022 coffee year. The main coffee districts in the central highlands of Vietnam are reportedly experiencing relatively drier weather than what would historically have been expected for this time of year, albeit that the rain season is shortly due to start, traditionally during the month of April to seasonally continue until early October, ahead of the new crop 2022/23 harvest.

The new April 2022 to March 2023 crop to come from Indonesia is currently in harvest with this country that traditionally produces an average of 85% robusta and 15% arabica coffees from their harvest per annum. This new Robusta harvest has been estimated to be 0.53% lower than the previous coffee year at a steady total of 9.3 million bags, with the new Arabica harvest which has been estimated to remain steady at a total of 1.3 million bags. This will allow this producer to continue to fuel their own strong domestic demand as well as to export over 7 million bags from this harvest to coffee consumer markets in the months to come.

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of March were 93,776 bags or 16.40% lower than the same month last year, at a total of 478,023 bags. Uganda Robusta exports registered a 26.96% decrease when compared to the same month last year, to total 360,229 bags and Arabica exports registered a comparative increase by 49.83% to a total 117,794 bags exported in March this year. The UCDA likewise report that the cumulative exports for the first six months of the current October 2021 to September 2022 coffee year to be 18,552 bags or 0.65% higher than the same period in the previous year, at a total of 2,878,115 bags. The UCDA have reported that the drop in Robusta exports during the month of March was mainly attributed to lower yields due to weather related conditions which led to a shorter main harvest season.

The Brazil market closed due to a public holiday yesterday, as the country celebrated Tiradentes Day. Many taking the opportunity it to make it a long weekend, which will most likely see some internal market players off the field of play for the day today.

The July 2022 to July 2022 contract arbitrage between the London and New York markets increased yesterday to register this at 132.21 usc/Lb. This equates to 57.96% 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 5,839 bags yesterday, to register these stocks at 1,100,116 bags, with 95.46% of these certified stocks being held in Europe at a total of 1,050,007 bags and the remaining 4.54% being held in the USA at a total 50,109. Of this, a total 549,432 bags, or 49.95% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.37% of these certified coffees, originating from Honduras. There was meanwhile a 5,674 bags decrease to the number of bags pending grading to the exchange; to register 37,164 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, as the markets were pressured by rising U.S Treasury Yields as the markets await an expected monetary policy tightening move by the Federal Reserve in the months to come. The Sugar, Coffee and Soybean markets ended the day on a positive note, while the Cocoa, Corn, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.303 Sterling, at 1.085 the Euro and with the US Dollar buying 4.622 Brazil Real.

The New York market started the day trading on a modest near to par softer note, while the London market started the day yesterday trading on a modest firmer note, with the markets would continue to oscillate around par for the remainder of the early morning session. A firmer trend built as activity increased in New York. The arrival of the America’s at the start of their business day pushed New York higher, triggering further buy stops along the way to accentuate the gains for the day. This assisted to trigger speculative short covering which saw the New York market gain ground quickly throughout the afternoon session. The late afternoon session saw the London market follow suit, albeit in a more sedate manner. The New York market continued on its upward momentum path before being capped briefly very late in the day. This saw the New York market settle near to the highs of the day on a very firm note, while the London market followed to also settle on a firmer note at the close.

The London market ended the day on a positive note with 59.46% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 92.51% of the earlier gains of the day intact. This very firmer close, with the markets continuing on a to make gains throughout the day and to settle near to the highs of the day, is likely to provide some degree of direction and momentum and one might think that the markets might be pressured for a follow through steady start to early trade today, against the prices set yesterday, as follows:

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

JUL 2114 + 22                                            JUL 228.10 + 8.65
SEP 2120 + 21                                            SEP 228.15 + 8.60
NOV 2123 + 19                                          DEC 227.60 + 8.50
JAN 2120 + 17                                           MAR 226.50 + 8.45
MAR 2116 + 15                                         MAY 225.30 + 8.45
MAY 2112 + 15                                         JUL 223.35 + 8.55
JUL 2109 + 15                                           SEP 220.75 + 8.55
SEP 2105 + 15                                           DEC 218.15 + 8.60