Coffee Market Report
The International Coffee Organisation ICO have reported that the global coffee exports for the month of August were 1.90% lower than the same month in the previous year, at a total of 9.90 million bags. This they say, has contributed to the cumulative global coffee exports for the first eleven months of the October 2021 to September 2022 coffee year to be 0.30% lower than the same period in the previous year, at a total of 118.86 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 167.17 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 grow by 3.30% from the previous year to reach a total of 170.29 million bags.
The ICO reported a decrease in exports from Brazil, who have registered a 27.20% decline in exports when compared to the first eleven 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.
There was a decrease in exports from Asia as Vietnam, India and Indonesia cumulatively registered a 1.50% decrease in exports, when compared to the same eleven months of the previous coffee year to total 40.86 million bags. Within the ICO report, exports for the first eleven months of the current October 2021 to September 2022 coffee year were seen to have decreased by 19.17% year on year from Africa to a total 12.48 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 first eleven months of the current October 2021 to September 2022 coffee year that exports were 13.00% lower than the same period in the previous year to total 15.07 million bags. Coffee exports for this traditional quality washed arabica Central American bloc reported a 7.40% drop in exports for the month of August when compared to the same month in the previous year. With the region’s largest producer Honduras reporting a sharp 41.30% drop in exports during August this year when compared to the previous year.”
The Brazilian National Statistics Agency IBGE, with the new crop harvest complete has come forth with a revised estimate for the current July 2022 to June 2023 Brazil coffee crop, to revise their forecast for the biennially bearing 22/23 coffee crop lower by 1.88%, from last month’s estimate, to total 52.20 million bags. In this report the IBGE has likewise revised their 2022 arabica coffee crop estimate lower by 3.70% at a total 33.80 million bags and likewise that the 2022 Conilon robusta crop lower by 0.70% at a total of 18.40 million bags. The IBGE is traditionally very conservative in terms of their figures and are usually considered to be between 5% and 10% below reality. The forecast would therefore be seen to be at the lower end of independent local and international surveys, the majority of these forecasting an estimated Arabica at a median of 39 million bags and Conilon Robusta crop in the region of 23 million bags.
The November 2022 to December 2022 contract arbitrage between the London and New York narrowed yesterday to register this at 120.64 usc/Lb. This equates to 55.42% price discount for the London Robusta coffee market. This wide arbitrage may 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 remain decrease by 300 bags yesterday, to register these stocks at 417,006 bags, with 86.99% of these certified stocks being held in Europe at a total of 362,749 bags and the remaining 13.01% being held in the USA at a total 54,257. Of this, a total 259,643 bags, or 62.26% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 30.21% of these certified coffees, originating from Honduras. There was meanwhile a 3,436 bags increase to the number of bags pending grading to the exchange; to register 4,076 bags pending grading on the day.
It was a mixed but overall softer day on the commodity markets yesterday, with the US Dollar gaining further ground against a basket of other currencies ahead of key US jobs data due that could influence the US Federal Reserve’s interest rate projections. The Sugar, Cocoa, Platinum and Palladium markets ended the day on a positive note, while the Coffee, Corn, Wheat, Soybean, Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.118 Sterling, at 0.981 the Euro and with the US Dollar buying 5.198 Brazil Real.
The New York and London markets started the day yesterday trading on a modest firmer note, the markets attracted some selling pressure which saw both the New York and the London markets trend in a softer direction. The mid-morning session saw the markets briefly recover the early losses to trend back towards par, this was however short lived. As the afternoon progressed, both the New York and the London markets would be pressured by the late morning resistance to drop back from the modest highs of the morning and see the market trend in a softer direction for the remainder of the day. The later afternoon session saw some degree of long liquidation pressure on the markets to push both the New York and the London markets lower. The markets were seen to settle on a soft note, near to the lows of the day at the close.
The London market ended the day on a negative note with 84.62% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 87.97% of the earlier losses of the day intact. This softer close for the markets and with both the New York and the London 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.
NOV 2140 – 33 DEC 217.70 – 6.95
JAN 2139 – 28 MAR 207.65 – 7.00
MAR 2118 – 26 MAY 203.30 – 6.60
MAY 2105 – 24 JUL 200.55 – 6.25
JUL 2097 – 23 SEP 198.75 – 5.90
SEP 2090 – 22 DEC 198.05 – 5.45
NOV 2073 – 25 MAR 197.80 – 5.05
JAN 2065 – 25 MAY 197.30 – 4.75
