Coffee Market Report

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of October was 124,000 bags or 12.25% lower than the same month last year, at a total of 888,000 bags. The National Coffee Growers Federation have also reported that the country’s cumulative coffee production for the October 2021 to September 2022 coffee year was 1,711,000 bags or 12.77% lower than the same period in the previous coffee year, at a total of 11,683,000 bags.

The National Coffee Growers Federation in Colombia have reported that the country’s coffee exports for the month of October were 44,000 bags or 4.46% lower than the same month last year, at a total of 942,000 bags. The National Coffee Growers Federation have also reported that the country’s cumulative coffee exports for the October 2021 to September 2022 coffee year were 923,000 bags or 7.19% lower than the same period in the previous coffee year, at a total of 11,909,000 bags.

The prevailing volatility within commodity markets that is reflected in the daily and comparatively wide trading range on the coffee futures markets, particularly so in New York, has seen producer countries for the most part, presently withdrawn from participation. Commercial activity in Brazil is muted. The weather continues to be reported as conducive for the flowering that is underway to set the new 2023/24 crop, with further rains forecast across the expansive coffee growing regions to come. This country’s narrow presidential race and now officially non-contested presidential election result, has seen a week pass with limited reaction to this new political development. The truckers strike which followed the announced results, is by now for the most part disbanded. The Brazil Real has meanwhile had a tumultuous run through the last month in a combination of both internal and externally influenced economic speculative sentiment. This has similarly encouraged a reluctance on the part of producers, to increase selling activity. With forward commitments and sales already in place ahead of the season, likely that for the most part, well financed Brazil coffee producers may continue to take a conservative stance to further selling activity, within the prevailing economic environment and against the lower values that are now reflected in the coffee futures markets.

The December 2022 to January 2023 contract arbitrage between the New York and London markets narrowed yesterday to register this at 88.65 usc/Lb. This equates to 51.48% 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 decrease by 2,100 bags yesterday, to register these stocks at 382,695 bags, with 86.08% of these certified stocks being held in Europe at a total of 329,417 bags and the remaining 13.92% being held in the USA at a total 53,278. Of this, a total 229,557 bags, or 59.98% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 32.50% of these certified coffees, originating from Honduras. There was meanwhile 20,126 bags increase to the number of bags pending grading to the exchange; to register 162,302 bags pending grading on the day.

It was a mixed day for the commodity markets yesterday, following the announcements of the US Federal Reserve, in combination with recessionary data reported from UK., this while Covid19 related lockdown news to come from China, contribute to dampen consumer market sentiment. The Cocoa and Silver markets ended the day on a positive note, the Sugar market remained unchanged on the day, while the Coffee, Corn, Soybean, Wheat, Gold, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.116 Sterling, at 0.976 the Euro and with the US Dollar buying 5.113 Brazil Real.
The New York and London markets started the day yesterday trading on a very soft note, both markets quickly were seen to attract a further degree of selling pressure which saw the markets trend softer during the early morning session. As the afternoon progressed, both the New York and the London came under severe selling pressure in mainly technical trade. The markets continued to project lower with further long liquidation selling to accentuate the losses for the day’s trade. Late in the day both the New York and London markets would hit a floor, before finding support to recover some of arlier losses of the day. This saw both the New York and the London market settle on softer notes respectively at the close.

The London market ended the day on a negative note with 58.83% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 81.89% of the earlier losses of the day intact. This very soft close for the markets and with the New York market settling near to the lows of the day, one might see the markets set 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.

JAN 1842 – 40                                         DEC 172.20 – 9.95
MAR 1827 – 36                                       MAR 168.35 – 8.60
MAY 1816 – 34                                       MAY 166.95 – 8.20
JUL 1811 – 33                                         JUL 165.80 – 8.05
SEP 1805 – 32                                         SEP 164.75 – 7.95
NOV 1797 – 32                                       DEC 163.60 – 7.85
JAN 1805 – 32                                        MAR 163.45 – 7.70
MAR 1813 – 32                                      MAY 163.40 – 7.70