Coffee Market Report

Trade within Vietnam has remained slow this week, with the harvest due to peak in the coming couple towards the end of November. The harvest is slightly delayed in their seasonal year, due to a continuation of rain through October and the beginning of November across the main coffee growing areas of the Central Highlands. The challenges of logistics, limited equipment and stalled shipments, with exporters competing for resources to meet both container shipment demand and the associated rising freight costs continue to plague the market.

With the arrival of the spring rains in Brazil, reports are conducive through most coffee growing areas, that the rainfall received thus far, has been conducive to set the flowering for the next biennial bearing upcycle crop to come in 2022/23. The summer rainfall patterns will continue to be closely monitored through December, and beyond, as will the relative uncertainty of the arrival and potential strength of the forecast La Nina weather phenomenon which is expected to prevail through to February next year. This latter phenomenon would historically bring drier weather conditions to the south-eastern regions of Brazil.

The January 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 128.82 usc/Lb. This equates to 56.22% 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 1,206 bags yesterday, to register these stocks at 1,794,449 bags, with 96.01% of these certified stocks being held in Europe at a total of 1,722,897 bags and the remaining 3.99% being held in the USA at a total 71,602 bags. Of this, a total 926,574 bags, or 51.63% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.49% of these certified coffees, originating from Honduras. There was meanwhile an increase of 35 bags to the number of bags pending grading to the exchange; to register 4,292 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, as better than expected US jobs data weighed on the possibilities of an earlier than expected interest rate hike. The Sugar, Cocoa and Wheat markets ended the day on a firmer note, while the Coffee, Corn, Soybean, Gold, Silver, Palladium and Platinum market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.349 Sterling, at 1.135 the Euro and with the US Dollar buying 5.558 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. The New York market was seen to attract a degree of buying support early in the day, with the London market following suit albeit in a more sedate manner. As the morning progressed the New York market started to add more value which saw both the New York and the London markets hit a ceiling limiting the gains for the day’s trade.

As the afternoon progressed the New York and London markets hesitantly traded south of par before coming under pressure from long liquidation selling activity to accentuate the losses for the day’s trade. The markets rebounded from the lows of the day to recover late in the days trade, this saw both the New York and London markets settle on softer notes at the close.

The London market ended the day on a negative note and with 61.11% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 68.29% of the earlier losses of the day intact. This softer close does little to indicate direction nor does it inspire confidence, with both markets dropping back from highs of the day trade to settle on a very negative note, with first notice day today 19th November, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:

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

JAN 2212 – 44                                                       MAR 229.15 – 5.60
MAR 2167 – 42                                                     MAY 229.40 – 5.60
MAY 2142 – 42                                                      JUL 229.30 – 5.65
JUL 2137 – 43                                                        SEP 229.20 – 5.65
SEP 2132 – 44                                                        DEC 229.50 – 5.50
NOV 2133 – 44                                                      MAR 229.85 – 5.40
JAN 2140 – 42                                                       MAY 229.95 – 5.40
MAR 2138 – 42                                                      JUL 229.95 – 5.40