Coffee Market Report
The Northern Hemisphere coffee consumer markets are currently in their traditionally higher coffee consumption months of winter, mostly while navigating through Covid19 related restrictions. Within these coffee consumer markets, there have been pandemic related regulatory differences country by country and now with some markets having registered a surge of new Covid-19 cases has raised concerns surrounding the potential for slowdowns and closures in the out of home, hotel, restaurant and catering sector. This is anticipated to continue to have some impact upon coffee consumption in coffee consumer pattern, preference and volume terms. The severity of lockdown strategies continues to vary, from complete easing of restrictions in Great Britain, to work from home rotations in North-West Europe and hard lock down situations that are prevalent elsewhere.
As reported by the International Coffee Organisation (ICO) Global coffee consumption is estimated to have increased by 1.93% during the October 2020 to September 2021 coffee year, to total 167.25 million bags, this increase in global consumption when compared to the previous 19/20 year attributed to the adaptation of global economies to pandemic related restrictions. One might think that global coffee consumption may show signs of slight growth during the October 2021 to September 2022 coffee year, as globally economies continue to grapple with the various easing of restrictions and lockdowns.
The March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this 132.67 usc/Lb. This equates to 57.17% 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 23,545 bags yesterday, to register these stocks at 1,288,344 bags, with 95.31% of these certified stocks being held in Europe at a total of 1,227,878 bags and the remaining 4.69% being held in the USA at a total 60,466. Of this, a total 540,128 bags, or 41.92% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 50.10% of these certified coffees, originating from Honduras. There was meanwhile a 9,948 bags decrease to the number of bags pending grading to the exchange; to register 29,669 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, weighed by the US Dollar which gained ground against a basket of other currencies. A stronger US Dollar is seen to be a bearish factor for many of the US Dollar based commodity markets when trading in other currencies. The Soybean and Palladium markets ended the day on a firmer note, while the Sugar, Cocoa, Coffee, Corn, Wheat, Gold, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.341 Sterling, at 1.115 the Euro and with the US Dollar buying 5.431 Brazil Real.
The New York and London markets started the day yesterday trading on a softer note from the outset. Both markets would steady on a modest negative trend for the remainder of the morning session, before attracting a degree of selling pressure during the late morning session. As the afternoon progressed the New York and London markets would be pressured by further selling to accentuate the losses for the day.
The markets were pressured by long liquidation selling to see both the New York and the London markets continue to slip back from the mid-morning highs. The New York market was seen to settle on a very negative note, near to the lows of the day at the close, while the London market was seen to follow suit albeit in a more sedate manner to also settle on a softer note at the close.
The London market ended the day on negative note with 84.38% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 93.20% of the earlier losses of the day intact. This softer close does little to indicate direction nor does it inspire confidence, with both markets settling near to the lows of the day, 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.
MAR 2191 – 27 MAR 232.05 – 6.85
MAY 2174 – 17 MAY 232.65 – 6.60
JUL 2164 – 17 JUL 231.95 – 6.50
SEP 2161 – 17 SEP 230.95 – 6.50
NOV 2157 – 18 DEC 229.15 – 6.45
JAN 2155 – 18 MAR 228.05 – 6.50
MAR 2154 – 18 MAY 226.85 – 6.60
MAY 2149 – 18 JUL 225.10 – 6.60
