Coffee Market Report
New crop coffees are flowing to the internal market within Indonesia at this time, as the Indonesia robusta coffee harvest traditionally starts in April each year, and supply of new crop Indonesia robusta coffees has seen increased volumes of green bean flow into the market. There remains an internal price resistance within this third largest robusta producer, spurred by the growing domestic roasting and instant coffee manufacturers who compete within the local market for similar coffees. It is expected that trading volumes may increase over the weeks to come, from this new April 2021 to March 2022 mainly robusta coffee crop that is estimated by private forecasters to be approximately 9.70 million bags of robusta coffee and 1.65 million bags of Arabica Coffee, these figures marginally smaller than the previous April 2020 to March 2021 coffee crop that was seen to be approximately 10 million bags of robusta coffee and 1.60 million bags of arabica coffee.
With much of the past crop robusta coffee stocks within Vietnam sold meanwhile, the internal market is relatively subdued as producers con, the restrictive shipping environment, scarcity of equipment, space and high export demand, which has led to exponential increases in freight rates from the region.
The restrictive shipping environment is worsening on an international scale, no longer is the tightness of supply of containers, equipment, space allocations and route alterations isolated to specific shipping routes or continental regions. With almost all shipping lane routes affected by the shortage of equipment, delays are mounting and will continue to weigh heavily on global supply chains, this to include coffee export shipments to consumer markets worldwide. There is a likelihood in the prevailing conditions that coffee stocks that are being held within the consumer markets will continue to be drawn down and might be viewed within this context as a positive market indicator for the speculative sector of the coffee markets.
The northern hemisphere main consumer markets are meanwhile gradually opening up their economies for business once again, in tandem with strong vaccination rollouts and the summer holiday season. This may in time promote an unravelling of large stores of containers within these consumer markets, however, this may take some time to feed back into the international container availability and shipment supply chain and for the nearby future, there is little to indicate that there will be an alleviation to the prevailing predicament within the international shipment environment.
The Brazil Real currency has shown a degree of muscle against the US Dollar in recent days and has strengthened by 3.51% against the US Dollar over the past two weeks. A stronger Brazil Real traditionally discourages export selling from Brazil’s coffee producers, which could see a continued degree of internal price resistance, slower selling activity, which could manifest in a degree of buoyancy, within the coffee futures markets, should this trend continue.
The September-to-September contract arbitrage between the London and New York markets broadened yesterday; to register this at 80.28 usc/Lb. This equates to 52.16% 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 6,998 bags yesterday, to register these stocks at 2,175,545 bags, with 93.57% of these certified stocks being held in Europe at a total of 2,035,685 bags and the remaining 6.43% being held in the USA at a total 139,860 bags. Of this, a total 1,151,076 bags, or 52.91% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.21% of these certified coffees, originating from Honduras. There was meanwhile a smaller in number 5,963 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 37,449 bags.
It was a firmer day on the commodity markets yesterday, the leading in influence Oil markets gained ground during trade yesterday, as the markets received fresh news to indicate that the American Federal Reserve Bank are unlikely to push forward interest rate increases, for this largest consumer economy. The Sugar, Coffee, Oil, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Cocoa, Corn and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.396 Sterling, at 1.192 the Euro and with the US Dollar buying 4.967 Brazil Real.
The New York market started the day yesterday trading on a modest softer note while the London market started the day yesterday trading on a modest firmer note. Both markets gained buying support early in the day to see the markets trend firmer in the early morning session. As the afternoon progressed the markets trended further into positive territory before coming under a marginal degree of selling pressure late in the afternoon, to see both the New York and the London market drop back from highs of the day, the markets would recover slightly juts before the close to see both the New York and the London market settle on a firmer note.
The London market ended the day on a positive note and with 81.25% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 65.45% of the gains of the day intact. This firmer close might inspire some degree of confidence, with both the New York and the London markets retaining more than half of the earlier in the day gains, one might think that the markets are due for follow through steady start to early trade today, against the prices set yesterday as follows, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
SEP 1623 + 26 SEP 153.90 + 1.80
NOV 1644 + 25 DEC 156.75 + 1.75
JAN 1658 + 25 MAR 159.35 + 1.70
MAR 1667 + 24 MAY 160.70 + 1.70
MAY 1679 + 24 JUL 161.85 + 1.70
JUL 1693 + 24 SEP 162.75 + 1.65
SEP 1706 + 24 DEC 163.85 + 1.55
NOV 1717 + 24 MAR 164.90 + 1.45
