Coffee Market Report
The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the current October 2021 to September 2022 coffee year may potentially fall by 13.80% from earlier estimates of 14.50 million bags to now be in the region of 12.00 to 12.50 million bags, this figure is 10.07% lower than production in the previous coffee year. This drop in production due to the persistent excessive rainfall that has been experienced during the cherry development phase as Colombia continues to be impacted by intensive rainfall brought about by a second consecutive year of La Nina weather conditions. Colombia’s Peso currency has lost 19.40% of its value against the US Dollar in the last 18 months, while this country, alike many coffee producer nations continue to grapple with rising inflation which has seen input costs such as fuel and fertiliser increase substantially, all of which are contributing towards higher costs of production.
The National Coffee Growers Federation have likewise reported that coffee exports from this fine washed arabica producer may potentially decline around 7.70% to reach a lower figure of potential exports for the coffee year October 2021, to September 2022, to be between 11.50 and 12.00 million, when compared to the 13.00 million bags exported during the previous coffee year.
The Brazil government have reported preliminary data that illustrates the country’s green coffee exports for the month of April were 20% lower than the same month last year, at a total of 2.76 million bags. The official breakdown of coffee exports by description for April will soon be released and can be anticipated to illustrate this figure more accurately. These figures are reported versus the Brazil bumper crop, that is estimated to have come in at a record 72 million bags in the July 2020 to June 2021 coffee year.
The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 112.67 usc/Lb. This equates to 55.28% 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 11,268 bags yesterday, to register these stocks at 1,105,804 bags, with 95.47% of these certified stocks being held in Europe at a total of 1,055,695 bags and the remaining 4.53% being held in the USA at a total 50,109. Of this, a total 567,603 bags, or 51.33% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.22% of these certified coffees, originating from Honduras. There was meanwhile 4,550 bags increase to the number of bags pending grading to the exchange; to register 29,780 bags pending grading on the day.
It was a softer day on the commodity markets yesterday, to see the overall macro commodity index continuing on a softer trend for the day, while the US Dollar continued to make gains against a basket of other commodities, as investors shift their attention to US inflation data for cues on potential monetary policy shifts in the weeks to come. The Corn, Soybean and Platinum market ended the day on a positive note, the Wheat market remained unchanged on the day, while the Coffee, Cocoa, Sugar, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.234 Sterling, at 1.054 the Euro and with the US Dollar buying 5.132 Brazil Real.
The New York market started the day yesterday trading on a modest softer note while the London market opened trading firmer on the day, both the New York and the London markets were to trend softer during the early morning session, which saw the markets set on a softer track for the day. As the afternoon progressed both the New York and the London markets would continue to be pressured by a degree of selling in the markets which assisted to accentuate the losses for the day, the markets hit a floor to limit the losses late in the day and were seen to recover to a degree. The New York market was seen to settle on a softer note at the close for the fourth consecutive trading day, while the London market followed suit albeit in a more sedate manner.
The London market ended the day on a negative note with 68.75% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 60.53% of the earlier losses of the day intact. This follow through softer close for the fourth consecutive trading day does little to indicate direction, however both the New York and the London markets recovered from the lows, which may assist to a degree to set the markets for a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 2009 – 11 JUL 203.80 – 2.30
SEP 2013 – 7 SEP 203.80 – 2.25
NOV 2011 – 7 DEC 203.45 – 2.20
JAN 2010 – 4 MAR 202.75 – 2.20
MAR 2007 – 5 MAY 201.95 – 2.10
MAY 2003 – 6 JUL 200.60 – 1.95
JUL 2001 – 6 SEP 198.65 – 1.75
SEP 1998 – 6 DEC 196.45 – 1.60
