Coffee Market Report
The weather conditions within the two largest coffee producer countries are in focus at this time of year, as the onset of spring and summer rains will assist to set the flowering for the next 2021 Brazil crop to come. The weather forecasters are presenting models for sporadic rainfall across the vast Brazil coffee belt over next week towards the end of September, which would be considered relatively normal for this time of year. In Vietnam meanwhile, the cessation of the rains will soon be required to assist this largest Robusta producer to begin their October 2020 to September 2021 coffee year for the coming harvest to take place with minimal disruption. The weather forecasters predict seasonal rainfall to continue over the next few days, seasonally normal conditions at this time of year.
Mexico, Colombia and Central America meanwhile, the largest washed arabica producer bloc are cumulatively countries that in combination, are shortly due to start their October 2020 to September 2021 coffee harvest. These harvests traditionally start in the lower lying areas, to pick up pace toward peak harvest through November into January each year. The relatively low value offered against the futures markets is a continual concern meanwhile and ahead of the new harvests, one might anticipate that the high costs that are often incurred in these countries through the need to revisit the same fields throughout the season, could lead to reduced harvesting rounds out of necessity with a potentially detrimental effect on both quality and overall yield.
The November to December contract arbitrage between the London and New York markets broadened yesterday; to register this at 49.80 usc/Lb. This equates to 44.83% 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 1,122 bags yesterday to register these stocks at 1,103,566 bags, with 93.70% of these certified stocks being held in Europe at a total of 1,034,178 bags and the remaining 6.30% being held in the USA at a total of 69,388 bags. There was meanwhile a larger in number 2,750 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,436 bags.
It was a marginally firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive sideways track for the day. The Oil, Natural Gas, Sugar, Cocoa, Cotton, Coffee, Wheat, Gold and Silver markets ended the day on a positive note, while the Copper, Orange Juice, Corn and Soybean markets ended the day on a positive note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.1038% higher; to see this index registered at 403.9606. The day starts with the U.S. Dollar steady, trading at 1.276 Sterling, at 1.167 the Euro and with the US Dollar buying 5.509 Brazilian Real.
The New York market started the day yesterday trading on a positive note, while the London market started the day yesterday trading on a softer note. The London market soon gained momentum in the early morning session to see both the London and New York markets trend positive early in the day. As the afternoon progressed both markets came under some selling pressure that saw a degree of narrow range activity brought about to the markets for the afternoon session with the New York market trading both north and south of par. Both markets settled on a modest positive note at the close.
The London market ended the day with on a modest positive note with 15.79% of the earlier gains of the day intact, while the New York market ended the day on a likewise modest positive note with 40.63% of the earlier gains of the day intact. This modest positive close might assist towards some degree of confidence to possibly set the markets for a follow through hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
NOV 1352 + 3 DEC 111.15 + 0.65
JAN 1368 + 3 MAR 112.85 + 0.60
MAR 1380 + 2 MAY 114.30 + 0.60
MAY 1395 + 2 JUL 115.65 + 0.50
JUL 1409 + 1 SEP 116.65 + 0.40
SEP 1425 + 1 DEC 117.70 + 0.20
NOV 1441 + 1 MAR 118.85 + 0.05
JAN 1458 Unch MAY 119.80 – 0.05
