Coffee Market Report
Brazil’s government food supply and statistics agency CONAB have come forth to report that Brazilian Coffee producers due to positive biennial bearing factors for the arabica coffee farms are forecast to produce 61.62 million bags of coffee for the July 2020 to June 2021 crop year. This estimate has been revised upwards by 7.89% from their previous estimate of 57.15 million bags released in January this year. CONAB has projected that arabica coffee production is forecast to be 38.14% higher than last year at a total of 47.37 million bags, while Robusta Production is forecast to be 5% lower than last year at a total of 14.25 million bags. The CONAB forecasts are traditionally very conservative and many would therefore see this as an indication that the 2020 Brazil coffee crop is likely to have come in at around the 70 million bag mark that has already been forecast by independent industry surveys and is, with the harvest now complete, looking to be closer to reality.
The report also assesses that the land under coffee in Brazil increased by 1.4% during 2020 from the previous year, up to 2.16 million hectares, additionally indicating that farmers are utilising resources such as irrigation systems and mechanized harvesting, a combination that should improve yields through increased inputs and lower costs through mechanisation.
The November to December contract arbitrage between the London and New York markets narrowed yesterday; to register this at 49.83 usc/Lb. This equates to 45.03% 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 3,003 bags yesterday to register these stocks at 1,105,788 bags, with 93.60% of these certified stocks being held in Europe at a total of 1,035,300 bags and the remaining 6.40% being held in the USA at a total of 70,488 bags. There was meanwhile a smaller in number 2,199 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,761 bags.
The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 7,500 bags over the weeks of trade leading up to Monday 21st. September, to see these stocks registered at 1,826,000 bags, on the day.
It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Sugar market ended the day on a positive note, while Coffee and Cocoa markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.1748% lower; to see this index registered at 405.9651. The day starts with the U.S. Dollar steady, trading at 1.272 Sterling, at 1.169 the Euro and with the US Dollar buying 5.471 Brazilian Real.
The London and New York markets started the day yesterday trading on a modest positive note, both markets soon came under a degree of selling pressure early in the day however this was sort lived as the markets quickly turned onto a positive track for the remainder of the morning session. As the afternoon progressed both markets fell back off the highs of the day to see the markets settle near to the lows of the day on a negative note.
The London market ended the day with on a modest softer note with 26.47% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 55.55% of the earlier losses of the day intact. This softer close does little to inspire confidence nor does it indicate direction, with both markets settling near to the lows of the day, one might think the markets are due for slightly better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
NOV 1341 – 6 DEC 110.65 – 1.35
JAN 1357 – 5 MAR 112.45 – 1.40
MAR 1371 – 4 MAY 113.95 – 1.40
MAY 1385 – 3 JUL 115.35 – 1.35
JUL 1400 – 2 SEP 116.50 – 1.35
SEP 1416 Unch DEC 117.80 – 1.30
NOV 1433 + 3 MAR 119.15 – 1.20
JAN 1450 + 5 MAY 120.15 – 1.10
