Coffee Market Report

The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of July have registered 4.50% lower from the previous month, at 2,038,217 bags. This number is proving to be slightly 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 Vietnam, the largest producer of robusta coffee at 8.10% lower than the same period last year at a total 16,098,050 bags in the first seven months of the 2021 calendar year. The report also indicates that the coffee export revenue for the first seven months of 2021 calendar year is 0.10% lower than the same period last year at a total of around 1.78 billion US Dollars.

One of Brazil’s prominent and respected coffee exporters Comexim has come forth to report that the South Minas region in the Brazil coffee belt has lost an estimated 19% of its crop potential for the next July 2022 to June 2023 Brazil coffee crop to come, due to the frosts experienced in these areas in July this year. Although the damage that has been incurred will continue to be assessed through the coming months, there are several reports that have come to the market since the frost occurrence, though estimates of the potential damage to next year's crop that is still to develop vary greatly, there is an acknowledgement that these frost occurrences have had a negative impact upon the potential yield for this next 2022 crop to come.

The International Coffee Organisation ICO have reported that the global coffee exports for the month of June were 4.10% higher than the same month in the previous year, at a total of 11.20 million bags. This they say, has contributed to the cumulative global coffee exports for the first nine months of the October 2020 to September 2021 coffee year to be 2.50% higher than the same period in the previous year, at a total of 98.55 million bags. The cumulative increase in exports over the nine-month period, fuelled by Brazil which contributed 34% of the total exports to consumer markets.

The International Coffee Organisation ICO have come forth to marginally revise downwards their earlier forecast for global coffee supply and demand for the current October 2020 to September 2021 coffee year, owing to an increase in consumption due to an increase in vaccination programs and the gradual easing of Covid-19 restrictions the world over, to report that against an estimated global coffee supply of 169.60 million bags, global coffee consumption is estimated at approximately 167.58 million bags, up 0.20% from their previous estimate of 167.24 million bags This indicating that the global coffee markets will be in a surplus supply of 2.02 million bags for the October 2020 to September 2021 coffee year.

Within the ICO report, cumulative global exports for the first nine months of the seasonal coffee year October 2020 to September 2021 are seen to have decreased by 3.50% year on year from Africa to a total 9.80 million bags, this caused by a large decrease in exports from leading arabica producer Ethiopia, as well as Ivory Coast. Uganda however has comparatively registered 15.80% increase in exports over the first nine months of the current October 2020 to September 2021 coffee year.

There was likewise, a decline in exports from Asia as the largest robusta producer, Vietnam, registered a 11.30% decline in exports, when compared to the same nine months of the previous coffee year. This, balanced in part by increased exports from Indonesia, which registered a 15.90% increase year on year, as this country which traditionally produces 80:20 Robusta: Arabica, recorded improved year on year production, assisted by conducive weather during crop development.

The ICO report similarly includes within the total global exports, the cumulative export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report that the first nine months of the cumulative coffee year posted a decrease of 1.30% to a total 12.80 million bags. Exports from Honduras, the region's largest producer fell by 6.10%, while exports from Nicaragua fell by 9.40%.

The September-to-September contract arbitrage between the London and New York markets broadened yesterday to register this at 99.53 usc/Lb. This equates to 54..14% 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 2,400 bags yesterday, to register these stocks at 2,158,987 bags, with 94.03% of these certified stocks being held in Europe at a total of 2,030,002 bags and the remaining 5.97% being held in the USA at a total 128,985 bags. Of this, a total 1,145,541 bags, or 53.06% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.23% of these certified coffees, originating from Honduras. There was meanwhile a smaller in number 1,614 bags increase to the number of bags pending grading to the exchange; to register these pending grading stocks at 17,725 bags.

It was a firmer day on the commodity markets yesterday, after newly released U.S consumer price data eased investor concerns that the U.S Federal Reserve would review economic support in the short term. The Cocoa, Coffee, Corn, Soybean, Gold, Silver and Platinum markets ended the day on a positive note, the Wheat market remained unchanged on the day, while the Sugar and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.387 Sterling, at 1.174 the Euro and with the US Dollar buying 5.219 Brazil Real.

The New York and London markets started the day yesterday trading just to the north of par, both markets gained momentum early to see the markets trend on a positive track for the remainder of the morning session. As the afternoon progressed the New York market gained further degree of momentum buoyed by some degree of buying support, while the London market hit a ceiling early in the afternoon to limit the gains for the day. both markets would soon come under selling pressure which would see the markets drop back from the earlier in the day highs. The New York market settled on a positive note at the close, while the London market settled near to unchanged at the close.

The London market ended the day on a modest close to par positive note and with 5.26% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 56.06% of the gains of the day intact. This firmer close might inspire some degree of follow through confidence and momentum, albeit that the New York market dropped back from the earlier highs of the day and the London market settled on a near to unchanged note, one might think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:

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

SEP 1859 + 1                                                          SEP 183.85 + 1.85
NOV 1864 + 1                                                        DEC 187.00 + 1.90
JAN 1859 + 4                                                         MAR 189.80 + 2.00
MAR 1853 + 5                                                       MAY 191.00 + 2.05
MAY 1846 + 4                                                       JUL 191.85 + 2.05
JUL 1841 + 1                                                         SEP 192.55 + 2.10
SEP 1841 Unch                                                      DEC 193.40 + 2.05
NOV 1849 Unch                                                    MAR 194.15 + 2.05