Coffee Market Report
The International Coffee Organisation ICO have reported that the global coffee exports for the month of March were 3.99 % higher than the same month in the previous year, at a total of 13.16 million bags. This they say, has contributed to the cumulative global coffee exports for the first six months of the October 2021 to September 2022 coffee year to be 0.17% higher than the same period in the previous year, at a total of 66.36 million bags.
The International Coffee Organisation ICO have maintained their forecast for global coffee supply at 2.10% lower than the previous year at a total of 167.20 million bags for the October 2021 to September 2022 coffee year. The International Coffee Organisation have likewise maintained their forecast for global consumption for the October 2021 to September 2022 coffee year, to increase by 3.30% from the previous year to reach a total of 170.30 million bags.
The ICO reported a decrease in exports from Brazil, who have registered a 17.53% decline in exports when compared to the first six months of the previous October 2020 to September 2021 coffee year. This due to biennially bearing nature of the Brazil coffee crop and the 2021/22 coffee year, a biennial lower bearing cycle. This along with the contributory factor of heightened logistical challenges for containers, vessel and space, from this key agricultural production exporter to the world.
There was an increase in exports from Asia as Vietnam, India and Indonesia cumulatively registered a 19.40% increase in exports, when compared to the same six months of the previous coffee year to total 22.58 million bags. Within the ICO report, exports for the first six months of the current October 2021 to September 2022 coffee year were seen to have decreased marginally by 1.42% year on year from Africa to a total 6.25 million bags.
The ICO report similarly includes within the total global exports, the export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report for the month of March that coffee exports fell by 10.10% to register at 1.91 million bags. With the region’s largest producer Honduras reporting a drop in exports of 22.00% during March this year when compared to the previous year to register total exports at 630,000 Bags, Mexico reported a 9.30% drop in exports to total 332,000 bags as well as Guatemala who likewise reported a 10.10% drop in exports for the month of March to total 394,000 Bags. This drop in exports for the month of March balanced in part by higher export figures from earlier in the coffee year to report that for the first six months of the current October 2021 to September 2022 coffee year exports posted an increase of 5.60% to a total 6.50 million bags.
The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 120.37 usc/Lb. This equates to 55.40% 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 1,241 bags yesterday, to register these stocks at 1,121,597 bags, with 95.53% of these certified stocks being held in Europe at a total of 1,071,488 bags and the remaining 4.47% being held in the USA at a total 50,109. Of this, a total 573,266 bags, or 51.12% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.54% of these certified coffees, originating from Honduras. There was meanwhile a 2,710 bags increase to the number of bags pending grading to the exchange; to register 25,230 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, with strength in the US Dollar offsetting the expectations of an interest rate hike in the USA. The Sugar, Soybean and Wheat markets ended the day on a positive note, while the Coffee, Cocoa, Corn, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.235 Sterling, at 1.052 the Euro and with the US Dollar buying 5.024 Brazil Real.
The New York and London markets started the day yesterday trading on a modest firmer note, both markets were seen to oscillate around par for the remainder of the morning session before trending in a positive direction during the mid-morning session. As the afternoon progressed the markets dropped back from the morning highs to be set on a softer path, this saw the New York market come under a degree of long liquidation pressure late in the day which saw the market trend in a negative direction with the London market following suit albeit in a more sedate manner. Both the New York and the London markets were seen to settle on softer notes at the close.
The London market ended the day on a modest near to unchanged negative note with 12.50% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 77.53% of the earlier losses of the day intact. This softer close for the markets does little to inspire confidence and with the New York market losing ground late in 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, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 2136 – 1 JUL 217.25 – 3.55
SEP 2131 – 2 SEP 217.20 – 3.55
NOV 2122 – 5 DEC 216.75 – 3.55
JAN 2113 – 7 MAR 215.95 – 3.50
MAR 2105 – 9 MAY 214.95 – 3.55
MAY 2100 – 10 JUL 213.25 – 3.55
JUL 2099 – 10 SEP 210.85 – 3.55
SEP 2094 – 10 DEC 208.35 – 3.60
