Coffee Market Report

With the month of July coming to a close and with the shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month of July shall be registered at the same figure as the same month last year, at a total of approximately 1,833,333 bags. This they say, shall result in the countries coffee exports for the first seven months of this calendar year to be 9.30% lower than the same period last year, at a total of 15,883,333 bags.

In the meantime, coffee exports of the current crop from this largest producer of robusta coffee, remains constrained as the prevailing shipping challenges have similarly contributed toward the lower coffee export report over the course of this year, the resultant congestion and bottlenecks at ports and warehouses holding inventories which are not meeting sailing commitments, while the compounding shipment demands are not being met with equipment and vessel space, and the perpetual constraint is not showing any signs of subsiding in the near future.

The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the first seven months of this year, shall be 1.70% lower than the same period last year, at a total of approximately 1.25 billion US Dollars.

The coffee terminal markets will be keeping a close eye on the weather developments in Brazil over the next few days of trade as varying weather forecasters predict that a cold front is expected to drop into the southern regions of main arabica producing state of Minas Gerais, that in the latest USDA crop survey report estimated to be 66.29% or 23.30 million bags of total Brazil arabica coffee production estimated at 35 million bags, however it remains to be seen whether the risk of frost will materialise, with the cooler weather being preceded by cloud cover which could aid in keeping temperatures in the mid to low single digit figures (degrees Celsius) reducing the risk of any frost developing.

The September-to-September contract arbitrage between the London and New York markets narrowed yesterday to register this at 112.91 usc/Lb. This equates to 56.33% 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 decrease by 990 bags yesterday, to register these stocks at 2,176,091 bags, with 93.73% of these certified stocks being held in Europe at a total of 2,039,706 bags and the remaining 6.27% being held in the USA at a total 136,385 bags. Of this, a total 1,149,116 bags, or 52.81% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.61% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 3,150 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 18,471 bags.

It was a firmer day on the commodity markets yesterday, as the US Federal Reserve flagged potential risk to the economy from the Covid-19 Delta Variant that is being picked up in the USA. The Sugar, London Robusta Coffee, Cocoa, Corn, Wheat, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the New York Arabica Coffee markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.393 Sterling, at 1.186 the Euro and with the US Dollar buying 5.116 Brazil Real.

The New York and London markets started the day on yesterday trading on a modest firmer note. The markets quickly dropped back to be set on a softer track for the remainder of the morning session, this saw the markets hit a floor for the day. As the afternoon progressed the markets rebounded from the morning lows to trend firmer, this momentum was short lived as the markets soon were pressured by a spike in long liquidation selling to set the markets on a softer path and accentuate the losses for the day’s trade. This saw the New York market settle on a softer note at the close and the London market following suit to settle on a near to unchanged modest close to par positive note at the close.

The London market ended the day on a modest close to par positive note and with 12% of the gains of the day intact, while the New York market ended the day on a negative note and with 19.85% of the losses of the day intact. This mixed but overall softer close, might indicate some degree of direction for the markets, but with more uncertainty on the horizon regarding a new cold front imminently due to impact the Brazil Coffee Belt, the markets are likely due for a cautious and hesitant start to early trade today, against the prices set yesterday, as follows:

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

SEP 1930 + 3                                                            SEP 200.45 – 1.30
NOV 1943 + 3                                                          DEC 203.35 – 1.25
JAN 1927 + 4                                                           MAR 205.40 – 1.15
MAR 1919 + 4                                                         MAY 206.10 – 1.10
MAY 1912 + 4                                                         JUL 206.50 – 0.90
JUL 1911 + 4                                                           SEP 206.65 – 0.80
SEP 1910 + 4                                                           DEC 207.10 – 0.70
NOV 1917 + 4                                                         MAR 207.60 – 0.60