Coffee Market Report
12th. June 2020.
The Vietnam Customs Authority has reported that the country has exported 2,171,400 bags in the month of May, or 10.90% lower than the same month last year. This brings cumulative exports for the first five months of this calendar year, to a total of 13.58 million bags, a 4.8% increase on that of the same five months in the previous year. The value of Vietnam coffee exports for this largest robusta producer, for the first five months of the year, is indicated to be around US$ 1.37 billion, an increase of 3.3% on that of the same five months in the year before.
The news coming from importing coffee consumer countries continue to report negative impact for coffee consumption over these past three to four months, in reaction to the varying degrees of market economic and social lockdowns within these countries. The impact immediately felt by the out of home sector, where coffee shops, restaurants, catering, hotel, tourism sectors have been hard hit. These, often small independent family owned establishments forced to close doors and not trade, in the regulated reaction to Covid-19 lockdown in many countries, have continued to incur overhead costs, without turnover, a situation that barring a degree of structured financial support to the sector on the part of individual government institutions, would otherwise be untenable. The northern hemisphere coffee consumer markets are gradually easing social and movement restrictions as these countries move into the summer holiday season, allowing the HORECA sector of their individual economies to gradually reopen for business.
Within the prevailing environment meanwhile, a publicised announcement by Starbucks came to the markets yesterday, to confirm that the organisation will fast track the closure of 400 of their stores in the States, over the next 18 months. This, the organisation has stressed, was already planned within their store transformation strategy to happen over a period of three to five years. At the same time this multinational coffee shop chain has predicted a significant revenue decline that is attributable to the global Covid-19 reaction. Within this announcement, to have similarly confirmed the plan to open 300 new stores in the States, there is an emphasis that a recovery is being experienced as local consumer market permissible trade conditions start to ease.
The September to September contract arbitrage between the London and New York markets widened yesterday; to register this at 42.04 usc/Lb. This equates to 43.03% 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 14,953 bags yesterday; to register these stocks at 1,682,084 bags, with 91.19% of these certified stocks being held in Europe at a total of 1,533,882 bags and the remaining 8.81% being held in the USA at a total of 148,202 bags. There was meanwhile no change in the number of bags pending grading for this exchange; to register these pending grading stocks at 54,344 bags.
It was a softer day overall on the commodity markets yesterday, the overall macro influenced by the decline in all three major US stock indexes, in reaction to the US Federal Reserve bank forecast for slower than anticipated economic recovery ahead, for this largest consumer economy. The US Dollar registered a recovery during the session and a softer day posted for Oil, Cocoa, Coffee, Sugar, Wheat, Gold, Silver, Platinum and Palladium, with Corn mildly positive and Soybean hardly changed on the day. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.511% lower; to see this index registered at 360.04. The day starts with the U.S. Dollar steady, trading at 1.2588 to Sterling, at 1.131 to the Euro and with the US Dollar buying 4.976 Brazilian Real.
The London and New York markets started the day yesterday in softer territory at the outset, both markets maintained this soft track into the middle of the session. The lows tested in New York early on in the session brought underlying buyer support back to the floor, to see this market register upward momentum and push through into positive territory by midsession. London followed in a more muted manner, to register a gradual recovery into the afternoon though still in negative territory. The afternoon session saw both markets progress in a relatively narrow range, and steady toward the end though the emergence of last minute selling activity drove London to close near to the ow on the day, in softer territory. The last days trades in New York similarly lower but with a recovery registered at the end of the day, to see the close in New York, in negative territory though nearer to the day’s highs in this market, to set the prices at the close yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
JUL 1196 – 24 JUL 96.00 – 0.75
SEP 1227 – 26 SEP 97.70 – 0.85
NOV 1245 – 24 DEC 100.00 – 0.80
JAN 1264 – 23 MAR 102.20 – 0.75
MAR 1284 – 22 MAY 103.65 – 0.75
MAY 1305 – 21 JUL 105.05 – 0.80
JUL 1326 – 21 SEP 106.25 – 0.85
SEP 1340 – 21 DEC 108.00 – 0.90
