Coffee Market Report

With the month of September complete, the usual round of export reports are coming to the fore, the Indonesian government trade data from Sumatra, the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of September were 276,181 bags or 69.74% lower than the same month last year, at a total of 119,789 bags. This contributes to the islands cumulative robusta coffee exports for the October 2020 to September 2021 coffee year to be 1,452,090 bags or 42.34% lower than the same period in the previous year, at a total of 1,977,538 bags. The current April 2021 to March 2022 Indonesia crop is estimated to reach a total 11.35 million bags, or 2.16% decrease on that of the previous year. The lower exports reported in September can be attributed to a lack of container and shipment availability, as the prevalence of logistical and shipping corridor challenges across the globe, continue to disrupt movement of goods and exports.

Today is International Coffee Day, this day was officially declared by the International Coffee Organisation on the 1st October 2015 and is celebrated throughout the world. The day aims to promote Fairtrade and education in coffee as well as highlight the appreciation for coffee farmers around the globe.

The November-to-December contract arbitrage between the London and New York markets widened yesterday to register this at 97.57 usc/Lb. This equates to 50.29% 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 11,763 bags yesterday, to register these stocks at 2,089,392 bags, with 94.06% of these certified stocks being held in Europe at a total of 1,965,243 bags and the remaining 5.94% being held in the USA at a total 124,149 bags. Of this, a total 1,099,685 bags, or 52.63% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.91% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 7,800 grading stocks on the day.

It was a firmer day on the commodity markets on yesterday, the US Dollar lost ground against a basket of other currencies, on the back of newly released US weekly jobs data. Investors eye indicators that the US Federal Reserve will soon start to taper their economic monetary support policy. The Sugar, Cocoa, Coffee, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Corn and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.345 Sterling, at 1.158 the Euro and with the US Dollar buying 5.443 Brazil Real.

The New York and London markets started the day yesterday trading on a modest softer note. Both the New York and London markets quickly dropped back to see the markets set on a softer path for the remainder of the morning session. As the afternoon progressed the markets gained a degree of buying support which buoyed the markets in a firmer direction. The markets would soon hit a ceiling during the early afternoon session limiting the gains for the day, this would see both the New York and London markets settle near to unchanged for the day on a modest firmer notes respectively.

The London market ended the day on a modest positive note and with 40% of the gains of the day intact, while the New York market ended the day on a likewise modest positive note and with 19.67% of the gains of the day intact. This modest firmer close might inspire some degree of confidence, albeit that the markets dropped back from the highs of the day to settle on a modest firmer note at the close, one might think that the markets are due for little better a follow through hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

NOV 2126 + 10                                                       DEC 194.00 + 0.60
JAN 2119 + 9                                                          MAR 196.80 + 0.55
MAR 2065 + 6                                                        MAY 197.90 + 0.55
MAY 2041 + 5                                                        JUL 198.30 + 0.40
JUL 2035 + 6                                                          SEP 198.50 + 0.30
SEP 2037 + 7                                                          DEC 198.80 + 0.25
NOV 2041 + 7                                                        MAR 199.15 + 0.25
JAN 2047 + 7                                                         MAY 199.45 + 0.20