Brazil’s government food supply and statistics agency CONAB have come forth to report that Brazilian Coffee producers are, due to larger biennial bearing factors for the arabica coffee farms, forecast to produce a cumulative total 50.38 million bags for the July 2022 to June 2023 crop year. This estimate is around 20.03% shy of the median average of independent forecasters who have revised their production forecasts though foresee that overall, Brazil coffee production this coffee year is likely to be around 63 million bags. The CONAB report has been revised downwards by 5.71% from their previous estimate of 53.43 million bags released in May this year. The revision by CONAB is cited to be due to adverse climatic conditions during development of the crop, adding that last year’s frost events affected yields. This revised crop estimate figure is 5.62% larger than the previous 2021/2022 downcycle crop year and 20.13% lower than the previous biennially bearing larger record crop seen during the 2020/2021 crop cycle.

CONAB has revised their forecast for the July 2022 to June 2023 arabica coffee crop down by 9.24% for a potential to come in at a total of 32.41 million bags or 3.11% larger than the previous year, while Robusta production has been revised upwards by 1.69% from their previous estimate to total 18.00 million bags for the July 2022 to June 2023, this number 10.57% larger than the previous year. The CONAB forecasts are traditionally conservative, and many would therefore anticipate this as an indication that the new 2022 Brazil coffee crop might reach closer to the 63 million bag mark, in line with the forecasts that are coming to the fore from a number of independent bodies. This, as the Brazil coffee harvest is nearing completion.

The November 2022 to December 2022 contract arbitrage between the London and New York widened yesterday to register this at 123.73 usc/Lb. This equates to 54.95% price discount for the London Robusta coffee market. This wide arbitrage may 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 decrease by 17,384 bags yesterday, to register these stocks at 515,064 bags, with 89.13% of these certified stocks being held in Europe at a total of 459,067 bags and the remaining 10.87% being held in the USA at a total 55,997. Of this, a total 324,977 bags, or 63.09% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 25.92% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 3,120 bags pending grading on the day.

It was a mixed day on the on the commodity markets yesterday, as the US Federal Reserve is expected to maintain their hawkish stance with the markets awaiting the news of a prospective interest rate increase to come, at the conclusion of their two-day summit, today. The Coffee, Sugar, Corn, Soybean, Wheat and Platinum markets ended the day on a positive note, while the Cocoa, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.137 Sterling, at 0.996 the Euro and with the US Dollar buying 5.143 Brazil Real.

The New York and London markets started the day trading on a modest near to par positive note, a continuation through the early morning session oscillating between par and mildly positive in early trade. As the day progressed, 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 buy stops along the way to accentuate the gains for the day, this assisted to trigger speculative covering to see the New York market quicky make gains throughout the afternoon session. The late afternoon session saw the London market follow suit. The New York market continued its upward momentum before being capped briefly very late in the day. The markets settled near to the highs of the day to settle on a firmer note at the close.

The London market ended the day on a positive note with 61.82% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 75.70% of the earlier gains of the day intact. This follow through firmer close for the markets might inspire some degree of follow through momentum to possibly see the markets pressured for a steady start to early trade today, against the prices set yesterday, as follows:

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

NOV   2236 + 34                                     DEC      225.15 + 4.05
JAN    2221 + 32                                     MAR     218.75 + 3.30
MAR  2191 + 30                                     MAY     215.10 + 3.00
MAY  2175 + 26                                     JUL       211.95 + 2.65
JUL    2162 + 22                                     SEP       209.20 + 2.15
SEP    2152 + 19                                     DEC      207.10 + 1.85
NOV  2137 + 13                                     MAR     205.70 + 1.55
JAN    2129 + 8                                      MAY     204.85 + 1.35