As the new July 2023 to June 2024 coffee crop sets on the trees, the climate in Brazil has remained conducive with the arrival of the spring rains, through October, and the general consensus is that the weather has been conducive to assist to set the flowering for the crop to come. The summer rainfall patterns will continue to be closely monitored through December, while ground moisture levels are reported to be boosted by the rains, which are for the most part reported to be above the average over a five-year period.

Weather conditions within Mexico, Colombia and Central America, have meanwhile been reported to be for the most part conducive for harvest and the drying activities to take place. This producer bloc is, ahead of harvest, forecast to collectively produce 31.50 million bags for the October 2022 to September 2023 coffee year. This harvest is well underway, traditionally to start in the earlier ripening lower altitudes and regions of this collectively largest washed arabica producer bloc.

The harvest of the October 2022 to September 2023 new crop is estimated to be 60% complete and gaining momentum under the now more favourable, drier weather conditions. The harvest had initially been slightly delayed to start due to a continuation of wet weather into the later part of November, while in terms of volume of coffee that is due from this new crop, most of the forecasts vary between 28 million and 29 million bags. Meanwhile, the Vietnamese Central Bank has raised its policy rates by 200 basis points in reaction to inflationary forecasts.

The January 2023 to March 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 76.59 usc/Lb. This equates to 46.84% 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 seen to increase by 11,288 bags yesterday, to register these stocks at 648,648 bags, with 91.99% of these certified stocks being held in Europe at a total of 596,685 bags and the remaining 8.01% being held in the USA at a total 51,963. Of this, a total 387,303 bags, or 59.71% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.01% of these certified coffees, originating from Honduras. There was meanwhile 9,352 bags increase to the number of bags pending grading to the exchange; to register 417,287 bags pending grading on the day.

It was a mixed but overall softer day on the commodity markets yesterday, with the leading in influence Oil markets lower on the day. The Coffee, Cocoa, Soybean and Gold markets ended the day on a positive note, while the Sugar, Corn, Wheat, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.214 Sterling, at 1.047 the Euro and with the US Dollar buying 5.235 Brazil Real.

The New York market started the day yesterday trading to the north of par on a modest firmer note, while the London market started the day trading on a modest softer note. The New York market oscillated around par to trade in modest positive territory for the morning session, while the London market gained momentum to trend in a firmer direction. As the afternoon progressed the New York and London markets gained support to trend firmer. This saw the markets hit a ceiling for the day to limit the gains. The late afternoon session saw the markets drop back from the early afternoon highs pressured by some selling activity in relatively subdued trading volumes, to track back towards par. This saw the London market capped during the late afternoon session to drop back from the highs and settle on a firmer note at the close, while the New York market dropped back from the earlier in the day highs and settle on a firmer note at the close.

The London market ended the day on a positive note with 51.52% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 22.22% of the earlier gains of the day intact. This follow through firmer close might inspire some degree of confidence, albeit that the markets dropped back from the earlier highs of the day to retain only some of the day's gains, one might therefore think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:

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

JAN    1916 + 17                                     MAR   163.50 + 0.90
MAR  1877 + 21                                     MAY   164.10 + 0.85
MAY  1856 + 18                                     JUL     164.50 + 0.80
JUL    1840 + 17                                     SEP     164.50 + 0.80
SEP    1831 + 16                                     DEC    164.55 + 0.75
NOV  1821 + 16                                     MAR   165.35 + 0.75
JAN   1826 + 17                                     MAY   166.10 + 0.75
MAR 1830 + 17                                     JUL     166.80 + 0.75