Coffee Market Report

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of May were 56,453 bags or 12.90% higher than the same month last year, at a total of 494,050 bags. Uganda Robusta exports registered a 25.98% increase when compared to the same month last year, to total 429,374 bags, whereas Arabica exports registered a decrease by 33.16% to a total 64,676 bags exported in May this year. The UCDA likewise report that the cumulative exports for the first eight months of the October 2020 to September 2021 coffee year are 521,615 bags or 15.48% higher than the same period in the previous year, at a total of 3,892,141 bags.

The Uganda Coffee Development Authority UCDA, have cited the comparative increase in exports during the month of May to be due to favourable weather conditions and new harvests from maturing coffee plantations that were recently planted, and rehabilitated within the context of the ongoing fifteen-year, government supportive initiative Coffee Roadmap program. There has meanwhile been a drawdown of existing stocks from this primarily robusta coffee producer, in line with the improved value to be had against the London robusta futures market, as well as some degree of replacement in the context of the restrictive shipping environment within largest robusta producer, Vietnam.

In Uganda meanwhile, the country is in a state of lockdown and stricter curfew measures subsequent to the rapid increase of Covid19 infections, announced late last week. These early stages of stricter measures in a coffee context, are unlikely to impact harvesting that is currently underway, while mitigation measures already learned and implemented on previous lockdowns may assist to maintain a steady pace in coffee dry mill processing. The first impact that may be experienced within these new lockdown regulations is heightened restrictions on movement of both people and goods. This would indicate within the declared 42 days of new lockdown restrictions, possible bottlenecks in the export supply chain, in combination with inherent logistical challenges that may arise.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday; to register this at 79.66 usc/Lb. This equates to 52.37% 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 5,790 bags yesterday, to register these stocks at 2,168,547 bags, with 93.54% of these certified stocks being held in Europe at a total of 2,028,412 bags and the remaining 6.46% being held in the USA at a total 140,135 bags. Of this, a total 1,151,076 bags, or 53.08% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 38.99% of these certified coffees, originating from Honduras. There was meanwhile a smaller in number 3,683 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 43,412 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 25,333 bags over the weeks of trade leading up to Monday 21st. June, to see these stocks registered at 2,544,833 bags, on the day.

It was a softer day on the commodity markets yesterday, the leading in influence Oil markets slipped back during trade yesterday, as the markets react to continued speculation regarding the possibility of the Federal Reserve Bank USA., increasing interest rates at an underdetermined point in the future for this largest consumer economy. The Cocoa, Wheat and Platinum markets ended the day on a positive note, while the Sugar, Coffee, Corn, Soybean, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.393 Sterling, at 1.192 the Euro and with the US Dollar buying 4.957 Brazil Real.

The New York and London markets started the day yesterday trading close to par on a modest firmer note, the markets soon attracted a degree of selling pressure which would see the markets trend softer for the remainder of the day. As the afternoon progressed both the New York and the London markets dropped back further accentuating the losses for the day, the markets would hit a floor late in the day limiting the losses for the afternoon session. The New York market was seen to settle on a negative note at the close, while the London market followed suit to also settle on a softer note at the close.

The London market ended the day on a negative note and with 62.50% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 75% of the losses of the day intact. This softer close, with both the New York and the London market recovering some of the losses from the day’s trade might see the markets set for a hesitant start to early trade today, against the prices set yesterday, as follows, as follows:

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

SEP 1597 – 20                                                         SEP 152.10 – 1.95
NOV 1619 – 20                                                       DEC 155.00 – 1.95
JAN 1633 – 19                                                        MAR 157.65 – 2.00
MAR 1643 – 21                                                      MAY 159.00 – 2.05
MAY 1655 – 21                                                      JUL 160.15 – 2.00
JUL 1669 – 22                                                        SEP 161.10 – 2.00
SEP 1681 – 22                                                         DEC 162.30 – 1.95
NOV 1693 – 22                                                      MAR 163.45 – 2.00