Coffee Market Report

The analysts Safras & Mercado have estimated that almost 34% of the new Brazil coffee crop has already been harvested. Based on the forecast for a new crop of 56.50 million bags, the report would indicate that so far approximately 19 million bags of the new crop have been harvested. The coffee made up of around 12 million bags of conilon robusta coffee, which begin harvest earlier in the seasonal year, and approximately 7 million bags of arabica coffee harvested thus far.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday; to register this at 79.12 usc/Lb. This equates to 52.19% 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 8,623 bags yesterday, to register these stocks at 2,154,779 bags, with 93.48% of these certified stocks being held in Europe at a total of 2,014,318 bags and the remaining 6.52% being held in the USA at a total 140,461 bags. Of this, a total 1,147,242 bags, or 53.47% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 38.78% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 9,947 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 51,983 bags.

It was a softer day on the commodity markets yesterday, as the US Federal Reserve announced a potential two quarter points interest rate hike for 2023 buoying the US Dollar to reach a two month high. The Cocoa market ended the day on a positive note, while the Sugar, Coffee, Corn, Wheat, Soybean, Gold, Silver, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.389 Sterling, at 1.190 the Euro and with the US Dollar buying 5.007 Brazil Real.

The New York and London markets started the day yesterday trading on a modest positive note, both markets quickly lost ground to see the markets trend softer for the remainder of the morning session. As the afternoon progressed the New York and London markets came under a further degree of selling pressure to see the markets continue to trend softer into the afternoon session. Late in the day saw sell stops trigger accentuating the losses for the day, with both the New York and the London markets settling near to the lows of the day at the close.

The London market ended the day on a negative note and with 88.57% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 82.80% of the losses of the day intact. The softer close does little to inspire confidence nor does it indicate direction, and with the markets losing ground late in the day to settle near to the lows of the day, one might think the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows, as follows:

LONDON ROBUSTA US$/MT                             NEW YORK USC/LB.

JUL 1569 – 31                                                          JUL 149.55 – 3.80
SEP 1598 – 31                                                          SEP 151.60 – 3.85
NOV 1619 – 29                                                        DEC 154.60 – 3.85
JAN 1632 – 30                                                         MAR 157.30 – 3.80
MAR 1644 – 30                                                        MAY 158.70 – 3.70
MAY 1656 – 30                                                        JUL 159.85 – 3.65
JUL 1671 – 30                                                          SEP 160.80 – 3.60
SEP 1684 – 30                                                          DEC 162.00 – 3.60