Coffee Market Report

The dry season is underway in Vietnam, the sixth month of their October 2021 to September 2022 coffee year, with the main coffee districts in the central highlands of Vietnam experiencing relatively drier weather, with the rain season due to start during April, to seasonally continue until early October, ahead of the new crop 2022/23 harvest. In the meantime, and with farmers still holding stocks from their recent harvest there is some degree of price resistance within the internal market in Vietnam. There still remains the challenges of logistics, limited equipment and stalled shipments, while within the country, there is news this week that Vietnam has removed the most stringent Covid19 related travel restrictions, to fully reopen borders, which will encourage overland cross border and international air travel movement.

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of February were 115,246 bags or 20.43% lower than the same month last year, at a total of 448,957 bags. Uganda Robusta exports registered a 29.91% decrease when compared to the same month last year, to total 351,944 bags and Arabica exports registered a comparative increase by 56.28% to a total 97,013 bags exported in February this year. The UCDA likewise report that the cumulative exports for the first five months of the current October 2021 to September 2022 coffee year to be 110,873 bags or 4.85% higher than the same period in the previous year, at a total of 2,398,637 bags. The UCDA have reported that the drop in Robusta exports during the month of February was mainly attributed to lower yields due to weather related conditions which led to a shorter main harvest season. Conversely, the increase in Arabica exports is reported to be attributed to the biennially bearing nature of the crop and this year being considered an on year in the cycle.

The weather conditions within Brazil meanwhile indicate a reduced rainfall in the first two weeks of this month, in comparison to the first two months of the year. There are forecasts however for a period of increased rainfall towards the end of this month, as this country heads towards the traditionally drier winter months ahead. Internal market trade in Brazil has been relatively lacklustre in recent days, as with the Brazil Real firming against the US Dollar, there is a degree of internal price resistance. There remains a reticence on the part of producers to participate fully in forward sales, due to the prevailing volatility within the New York Coffee futures market.

The May 2022 to May 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 119.08 usc/Lb. This equates to 55.10% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged 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 3,200 bags increase to the number of bags pending grading to the exchange; to register 98,559 bags pending grading on the day.

It was a firmer day on the commodity markets yesterday, as the US Dollar lost ground against a basket of other currencies yesterday, with the leading in influence Oil markets firmer on the day. The Sugar, Wheat, Corn, Soybean, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.315 Sterling, at 1.107 the Euro and with the US Dollar buying 5.040 Brazil Real.

The New York and London markets started the day yesterday trading on a softer note, both markets were seen to be weighed by selling pressure early in the day were set on a softer path. The markets would continue to trend softer throughout the remainder of the morning session before setting a floor to limit the losses for the day. As the afternoon progressed, the New York and London markets were seen to rebound from the lows of the day and recover most of the earlier losses. The markets carried through some degree of momentum to the close which saw both the New York and London markets settle on a modest softer note at the end of the day’s trade.

The London market ended the day on a negative note with 36% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 35% of the earlier losses of the day intact. This softer close, with both the New York and London markets recovering most of the earlier losses of the day might indicate some degree of direction to possibly set the markets for a near to steady start due for early trade today, against the prices set yesterday, as follows:

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

MAY 2139 – 9                                            MAY 216.10 – 1.40
JUL 2113 – 8                                              JUL 216.00 – 1.25
SEP 2100 – 6                                              SEP 215.20 – 1.10
NOV 2087 – 6                                            DEC 213.40 – 0.75
JAN 2079 – 8                                             MAR 211.15 – 0.55
MAR 2077 – 7                                           MAY 209.45 – 0.45
MAY 2076 – 6                                           JUL 207.15 – 0.35
JUL 2079 – 6                                             SEP 204.40 – 0.35