Coffee Market Report
| The respected Brazil analysts Safras & Mercado have come forth with their estimate for the July 2020 to June 2021 Brazil crop to be 68.10 million bags, further estimating that farmers had harvested 23% of the total planted area of the crop at 2nd June, to an estimated total 15.50 million bags of coffee. This is around 7% lower than the progress of the lower biennial bearing crop that had been harvested by the same time last year. This forecast estimates that 17% of the primarily natural arabica crop has been harvested at a total of 8 million bags and in the Conilon areas, which are traditionally the first areas to start harvest, around April/May each year, that approximately 37% of the Conilon robusta crop is estimated to have been harvested by that date, at a total of 7.5 million bags. Safras & Mercado have reported that the slower pace in harvest can be attributed to the biennial larger crop this July 2020 to June 2021 coffee year, as well as the strict COVID-19 protocols that have been implemented to curb the spread of the virus.
Weather conditions in Brazil have been reported to be dry across much of the coffee growing districts for the first days of June. There are reports of a wet cold front that is due to reach the coffee growing regions in the South East of the coffee belt in the next few days however the North East parts of the Coffee belt are forecast to remain dry. Meanwhile with a softer US Dollar in play and the related firming of the Brazil Real, reports indicate that internal market new crop trade has slowed, with some degree of price resistance as well as the impact of COVID-19 on global demand being the main hinderance to selling activity. In the northern hemisphere meanwhile, the mature coffee consumer markets in Europe, Japan, Canada and the United States, are heading into their traditionally slower coffee roasting activity summer months, and are already encountering slow demand, that has been pronounced by the slowdown in sales experienced through the coronavirus covid-19 related closure of the hospitality, tourism (hotels, restaurants, catering) and institutional (corporate offices, airports) sector of these consumer markets. The effect of the downturn in overall coffee consumption as a result of the lack of access to the out of home sector, has seen increased uptake to some extent in the retail and supermarket space, as well as online sales. Although analysts are pointing toward the likelihood that there will be an overall lower coffee consumption forecast for this year, within these mature markets. The Brazil Real remains firmer to the US Dollar, this attributing to the lower prices being seen in Brazil this week when compared to levels last week. The Coffee Terminal markets have offered no support and the Bearish trend the prevailing soft nature of the terminal markets is well illustrated The July to July contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 43.90 usc/Lb. This equates to 44.73% price discount for the London Robusta coffee market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 248 bags yesterday; to register these stocks at 1,745,411 bags, with 91.1% of these certified stocks being held in Europe at a total of 1,588,699 bags and the remaining 8.9% being held in the USA at a total of 156,712. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,489 bags. The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 55,667 bags over the weeks of trade leading up to Monday 1st June, to see these stocks registered at 2,081,500 bags, on the day. The commodity markets were slightly firmer in trade yesterday, to see the overall macro commodity index taking a sideways track for the day. The Sugar, and Cocoa markets ended the day on a positive note, while the Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.4727% higher; to see this index registered at 362.002. The day starts with the U.S. Dollar steady, trading at 1.264 to Sterling, at 1.137 to the Euro and with the US Dollar buying 5.118 Brazilian Real. The London and New York markets started the yesterday trading on modest close to par positive note, both markets continued on a positive track into the early afternoon trade buoyed by buying support. As the afternoon progressed both the New York and the London markets started to attract selling pressure to move onto a negative track for the afternoon trade. The London market bounced back from the lows of the day to settle on a modest close to par negative note. While the New York market also bounced back from lows of the day to also settle on a soft note for the day. The London market ended the day on a negative note and with 54.55% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note 33.33% of the earlier losses of the day intact. This softer close does little to inspire confidence, albeit that the New York market did manage to recover late in the day to bounce off the lows and settle on a relatively modest soft note, one might expect the markets are due for a hesitant steady start to early trade today, against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1196 – 6 JUL 98.15 – 0.95 |
