Coffee Market Report

The analysts Safras & Mercado reported that for the next Brazil July 2022 to June 2023 coffee year, production is expected to be at a level of 61.10 million bags. This figure 8% higher than the current July 2021 to June 2022 coffee year but 12% lower when compared to the last biennially bearing record crop of 20/21. The report forecasts that Arabica production will see an estimated 11% increase to total 38.80 million bags when compared to the previous coffee year and that Conilon Robusta production will see a comparative 3% increase when compared to the previous coffee year, to total 22.30 million bags.

The Green Coffee Association of the U.S.A. have announced a correction to the February figure to report that the country’s port warehouse stocks fell by 30,493 bags or 0.52% during the month of February, to register these stocks at 5,765,390 bags at the end of the month. Of this total, 53,664 bags were registered in the U.S. Certified coffee stock warehouses at the time of reporting. The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 590,000 bags per week, would conservatively have been at least 1.2 million bags.

The May 2022 to May 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 120.07 usc/Lb. This equates to 55.20% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 12,160 bags yesterday, to register these stocks at 1,072,292 bags, with 94.99% of these certified stocks being held in Europe at a total of 1,018,628 bags and the remaining 5.01% being held in the USA at a total 53,664. Of this, a total 495,335 bags, or 46.19% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 44.58% of these certified coffees, originating from Honduras. There were meanwhile a 7,395 bags decrease to the number of bags pending grading to the exchange; to register 95,359 bags pending grading on the day.

It was a mixed day on the commodity markets yesterday, as the US Dollar lost ground against a basket of other currencies yesterday, after the US Federal Reserve raised interest rates in a widely expected move. A weaker US Dollar is seen to be a bullish factor for many of the US Dollar based commodity markets when trading in other currencies. The Coffee, Gold, Silver and Platinum markets ended the day on a positive note, while the Sugar, Cocoa, Wheat, Corn, Soybean and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.316 Sterling, at 1.103 the Euro and with the US Dollar buying 5.077 Brazil Real.

The New York market started the day yesterday trading on a modest firmer note while the London market started the day yesterday trading on a modest softer note. Both the New York and London markets quickly started to build a firmer trend as activity increased in New York. The arrival of the America’s at the start of their business day pushed New York higher, triggering further buy stops along the way to accentuate the gains for the day. The late afternoon session saw the markets continue to trend in a positive direction with the New York market being capped briefly very late in the day. This saw the New York market settle near to the highs of the day on a very firm note, while the London market followed suit to also settle on a firmer note at the close.

The London market ended the day on a positive note with 83.75% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 77.91% of the earlier gains of the day intact. This very firmer close, with the markets rallying late in the day might indicate some degree of consolidation and is likely to provide some degree of momentum to possibly pressure the markets for a follow through steady start to early trade today,, against the prices set yesterday, as follows:

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

MAY 2148 + 67                                          MAY 217.50 + 6.35
JUL 2121 + 68                                            JUL 217.25 + 6.45
SEP 2106 + 60                                            SEP 216.30 + 6.55
NOV 2093 + 52                                          DEC 214.15 + 6.65
JAN 2087 + 49                                           MAR 211.70 + 6.70
MAR 2084 + 48                                         MAY 209.90 + 6.70
MAY 2082 + 44                                         JUL 207.50 + 6.65
JUL 2085 + 46                                           SEP 204.75 + 6.70