Coffee Market Report
The International Coffee Organisation ICO have come forth to maintain their earlier forecast for global coffee supply and demand for the current October 2020 to September 2021 coffee year, to report that against an estimated global coffee supply of 171.89 million bags, global coffee consumption is estimated at approximately 166.62 million bags. This indicating that the global coffee markets will be in a surplus supply of 5.26 million bags for the October 2020 to September 2021 coffee year.
Within the ICO report, total global exports for the first four months of the seasonal coffee year October 2020 to September 2021 are seen to have decreased by 13% year on year from Africa, to a total 3.81 million bags, this caused by a large decrease in exports from leading arabica producer Ethiopia, as well as Kenya. Uganda however has comparatively seen a 6.80% increase in exports over the first four months of the current October 2020 to September 2021 coffee year. There was likewise, a decline in exports from Asia as the largest robusta producer, Vietnam, registered a 10.40% decline in exports, when compared to the same four months of the previous coffee year. This, balanced in part by increased exports from Indonesia, as this country which traditionally produces 80:20 Robusta: Arabica, recorded improved year on year production, assisted by conducive weather during crop development.
The ICO report similarly includes within the total global exports, the cumulative export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report that the first four months of the cumulative coffee year posted a decrease of 17.50% to a total 2.62 million bags. This as parts of these regions were severely affected by hurricanes Iota and Eta. Exports from Honduras, the region's largest producer fell by 40% to total 744,000 bags, while exports from Nicaragua fell by 20.20% to total 450,000 bags. Guatemala exports also decreased by 15.70% to total 461,000 bags for the four-month period. In contrast Mexico recorded an increase in exports for the first four months of the current October 2020 to September 2021 coffee year of 22.80% to total 798,000 bags.
The quality washed arabica countries of Colombia, Central America, Mexico and Peru are collectively the largest washed arabica exporter bloc to consumer markets, were to some degree anticipated to reflect some impact as a result of the perpetual year on year soft reference prices of the coffee terminal markets. The negative financial impact upon coffee farmers to inevitably result in low farm inputs ahead of the new coffee crops, to affect overall potential yield, as well as during harvest, less cyclical harvest rounds reducing the potential quality of harvested coffee.
The May-to-May contract arbitrage between the London and New York markets widened yesterday: to register this at 68.12 usc/Lb. This equates to 51.29% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,861 bags yesterday, to register these stocks at 1,790,051 bags, with 94.6% of these certified stocks being held in Europe at a total of 1,693,905 bags and the remaining 5.4% being held in the USA at a total 96,146 bags. There was meanwhile a larger in number 4,135 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 65,027 bags.
The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 10,833 bags over the weeks of trade leading up to Monday 1st. March, to see these stocks registered at 2,403,833 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 Cocoa market ended the day on a positive note, while the Sugar and Coffee markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.65% lower; to see this index registered 494.78. The day starts with the U.S. Dollar, trading at 1.395 Sterling, at 1.205 the Euro and with the US Dollar buying 5.619 Real.
The New York and London markets started the day yesterday trading on a modest firmer note, both markets continued to trade either side of par for the remainder of the morning session. As the afternoon progressed the New York and London markets came under a degree of selling pressure to see the markets drop back from the highs of the day and to see the markets set on softer track for the day. The New York and London markets hit a floor limiting the gains for the afternoon session to see the markets settle on a softer note for the day.
The London market ended the day on a modest negative note with 82.76% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 58.33% of the earlier losses of the day intact. This softer close, does little to inspire confidence nor does it indicate direction and one might think that the markets are due for little better than a hesitant steady start for early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1426 – 24 MAY 132.80 – 1.05
JUL 1446 – 24 JUL 134.75 – 1.05
SEP 1459 – 25 SEP 136.50 – 1.00
NOV 1472 – 26 DEC 138.10 – 1.00
JAN 1485 – 25 MAR 139.45 – 1.00
MAR 1501 – 25 MAY 140.10 – 0.95
MAY 1517 – 25 JUL 140.60 – 0.95
JUL 1533 – 25 SEP 141.00 – 0.95
