Coffee Market Report
The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of April have registered 22.10% lower from the previous month, at 2,201,850 bags. This number is proving to be higher than the 1.83 million bags that had been initially forecast for the month’s coffee exports. This sees the cumulative export performance from the largest producer of robusta coffee 14.30% lower than the same period last year at a total 9,749,683 bags in the first four months of the 2021 calendar year. In line with the development of a firmer reference price in London, the report also indicates that the coffee export revenue for the first four months of 2021 calendar year is 7.3% higher than the same period last year at a total of around 1.1 billion US Dollars.
The new April 2021, to March 2022 crop to come from Indonesia is currently in harvest with this country that traditionally produces an average of 85% robusta and 15% arabica coffees from their harvest per annum. This new Robusta harvest has been estimated to be 0.53% lower than the previous coffee year at a steady total of 9.4 million bags, with the new Arabica harvest which has been estimated to be 4% higher than the previous coffee year at a total of 1.3 million bags. This will allow this producer to continue to fuel their own strong domestic demand as well as to export over 7 million bags from this harvest to coffee consumer markets in the months to come.
The National Coffee Growers Federation in Colombia have reported that social unrest and protests against a proposed tax reform, which started around two weeks ago have disrupted the flow of coffee from the interior, with the Mitaca mid-year crop currently in harvest. The Federation has released a statement indicating that the disruptions may have halted the export of over 500,000 bags of coffee by this time, as road blockades around the country are inhibiting exporters from delivering coffee to the ports, particularly Buenaventura which ordinarily sees around 60% of all coffee exports. The unpredictable nature of these protests makes it difficult to judge the extent that these will continue, though the authorities have entered into discussions with the protest leaders in order to find a resolution, however at this stage no agreement has been reached.
The National Coffee Institute of Honduras (IHCAFE) have revised their original estimate for the current October 2020 to September 2021 coffee crop exports to be 8.3% lower than their previous estimate of 5.23 million bags, to now total 4.80 million bags. The Institute has indicated that this drop in production follows as a result of the back-to-back hurricanes Eta and Iota as well as the impact of coffee rust disease on coffee production. This forecast is in line with many independent industry forecasts, the view further supported by the limited improvement in coffee availability from the interior, despite the most recent improvement in value to be seen in the reference prices for New York arabica market.
Today is an Ascension Day public holiday for many countries and in terms of physical trade and with many European coffee consumer markets observing the holiday, likely to be a somewhat muted business day.
The July-to-July contract arbitrage between the London and New York markets narrowed yesterday; to register this at 77.83 usc/Lb. This equates to 53.13% price discount for the London Robusta coffee market. This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 9,646 bags yesterday, to register these stocks at 2,014,770 bags, with 95.47% of these certified stocks being held in Europe at a total of 1,923,436 bags and the remaining 4.53% being held in the USA at a total 91,334 bags. Of this, a total 1,069,216 bags, or 53.07% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.67% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 9,916 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 16,360 bags.
It was a softer day on the commodity markets yesterday, after U.S consumer price data released for April supported growth buoying the Dollar and U.S Treasury yields. The Cocoa and Soybean markets ended the day on a positive note, while the Sugar, Coffee, Corn, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.406 Sterling, at 1.208 the Euro and with the US Dollar buying 5.304 Brazil Real.
The New York and London markets started the day yesterday trading close to par on a modest softer note, the markets would continue to oscillate around par for the remainder of the morning session. As the afternoon progressed both the New York and the London markets started to attract a large degree of selling pressure to see the markets set on a softer path for the afternoon session. Both the New York and London markets settled near to the lows of the day, with most of the earlier in the day losses intact.
The London market ended the day on a negative note and with 94.74% of the losses the day intact, while the New York market ended the day on likewise negative note and with 87.80% of the losses of the day intact. This very soft close with the markets settling near to the lows of the day does little to inspire confidence and one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 1514 – 18 JUL 146.50 – 3.60
SEP 1537 – 19 SEP 148.45 – 3.55
NOV 1554 – 18 DEC 150.85 – 3.55
JAN 1567 – 18 MAR 152.95 – 3.55
MAR 1581 – 18 MAY 153.75 – 3.60
MAY 1595 – 18 JUL 154.15 – 3.60
JUL 1608 – 18 SEP 154.25 – 3.60
SEP 1620 – 18 DEC 154.35 – 3.60
