Coffee Market Report
The respected U.S. Department of Agriculture Global Agricultural Network (USDA) have come forth to revise their forecast for the for the July 2022 to June 2023 Brazil coffee crop down by 2.64% from their estimate earlier in the year, to now total of 62.60 million bags. This represents a decrease in production of 10.44% when compared to the previous July 2020 to June 2021 biennially bearing record bumper crop and an increase in production of 7.75% in production when compared to the biennially bearing lower crop of July 2021 to June 2022 coffee year.
The USDA report reflects a 19.92% decrease in primarily natural process arabica coffee production for the July 2022 to June 2023 crop year to total 39.80 million bags, and a 12.80% increase in Conilon Robusta coffee production, to total 22.80 million bags, when compared to the previous biennially bearing record up cycle of July 2020 to June 2021. This further relates to a 9.34% increase in primarily natural process arabica coffee production for the July 2022 to June 2023 crop year and a 5.07% increase in Conilon Robusta coffee production when compared to the previous July 2021 to June 2022 coffee year.
Of this current crop, the USDA forecast Brazil will export 7.24% or 2,576,000 bags less than the previous July 2021 to June 2022 coffee year, estimated to reach a total of 33 million bags of green coffee for this current July 2022 to June 2023 coffee year. The anticipated exports from the current coffee crop foreseen to be around 8.65 million bags lower, than the previous, comparative larger biennial bearing cycle, during the record July 2020 to June 2021 coffee marketing year.
The new Brazil coffee crop to come, is gradually developing and for the most part, weather has continued to be reported as conducive to contribute to the next biennial crop that is to follow in 2023/2024, with the arrival of the spring rains that have assisted to set the flowering for the crop to come. The summer rainfall patterns will continue to be closely monitored through December, and beyond, as will the relative uncertainty of the potential strength of the forecasted La Niña weather phenomenon. The USDA has not provided their estimate for this crop to come in this latest report, but in this respect, early forecasts for this Brazil coffee crop may soon be anticipated to start to filter into the markets.
The respected U.S. Department of Agriculture Global Agricultural Network (USDA) have come forth to revise their early forecast for the October 2022 to September 2023 coffee crop from Colombia, lower by 3.08%, to now total 12.60 million bags. The report further anticipates green coffee exports from this fine washed arabica producing country to reach 11.50 million bags during the October 2022 to September 2023 coffee year, this figure 4.50% higher than the previous 2021/2022 coffee year.
Today is Thanksgiving in the USA, which shall see the New York market closed for the day. Thus, one can expect little excitement for the London market trading solo for the day.
The January 2023 to March 2023 contract arbitrage between the London and New York markets narrowed yesterday to register this at 80.47 usc/Lb. This equates to 49.44% 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 increase by 20,644 bags yesterday, to register these stocks at 550,749 bags, with 90.38% of these certified stocks being held in Europe at a total of 497,791 bags and the remaining 9.62% being held in the USA at a total 52,958. Of this, a total 322,890 bags, or 58.63% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 36.56% of these certified coffees, originating from Honduras. There was meanwhile 22,130 bags decrease to the number of bags pending grading to the exchange; to register 521,382 bags pending grading on the day.
It was a mixed but overall firmer day the commodity markets yesterday, as the US Dollar lost ground against a basket of other currencies, a weaker US Dollar is seen to be a bullish factor for commodities traded in other currencies. While minutes from the US Federal Reserve monetary policy meetings, indicated that there may be slowdowns to interest rate hikes in the months to come. The Corn, Soybean, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Coffee, Cocoa and Sugar markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.211 Sterling, at 1.044 the Euro and with the US Dollar buying 5.359 Brazil Real.
The New York and London markets started the day yesterday, carrying through momentum from the firmer close on Monday to start the day trading to the north of par, both the New York and the London markets continued to trend in a firmer direction as the morning session attracted buying support. This saw both the New York and the London markets hit a ceiling to limit the gains for the day. As the afternoon progressed, both the New York and the London markets dropped back from the highs of the morning session to come under pressure in mainly technical trade. The markets continued to project lower, pressured further by selling in the market to accentuate the losses for the day’s trade. The late afternoon session saw both the New York and the London markets rebound from the earlier lows, to find some degree of support. This support late in the day, saw the New York market settle on a softer note recovering some of the earlier losses, while the London market followed suit to likewise settle on a softer note at the close.
The London market ended the day on a negative note with 54.05% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 48.75% of the earlier losses of the day intact. This softer close for the markets, does little to indicate direction in what would be considered a relatively thin trade volume day, and with the London Robusta market trading solo for the day, one might think the market is due for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 1814 – 20 MAR 162.75 – 1.95
MAR 1790 – 14 MAY 162.95 – 1.45
MAY 1780 – 11 JUL 162.70 – 1.20
JUL 1770 – 12 SEP 162.15 – 1.10
SEP 1764 – 11 DEC 161.65 – 1.05
NOV 1757 – 11 MAR 162.15 – 1.20
JAN 1764 – 11 MAY 162.60 – 1.35
MAR 1773 – 11 JUL 163.05 – 1.45
