Coffee Market Report
The U.S. Department of Agriculture (USDA) Foreign Agricultural Services have forecast global coffee production for the current October 2022 to September 2023 coffee year to reach 172.80 million bags, 3.97% higher than the previous year. This, due primarily to the biennially bearing nature of the Brazil coffee crop and the coming year considered an on year in the cycle. In this respect, the USDA have forecast an estimated production output in Brazil for the July 2022 to June 2023 coffee year to be 4.50 million bags or 7.75% larger than the previous coffee year, at a total of 62.60 million bags in 2022/23.
The USDA have revised their figures for ending stocks in Brazil at the end of the June 2021 to July 2022 Coffee year lower by 991,000 bags since their last estimate in June this year to now be recorded at 4,120,000 bags, heading into the new July 2022 to June 2023 biennially bearing larger Brazil arabica coffee crop year. These carryover stocks to provide some supplement and fuel supplies into Brazil’s strong domestic coffee consumption, as well as consumer markets for the months leading into the next anticipated biennial bearing smaller crop to come, in the July 2023 to June 2024 coffee year.
The USDA have forecast that global coffee demand for the current October 2022 to September 2023 coffee year will possibly reach 167.90 million bags, up 0.48% from the previous year. Their latest forecast would indicate the potential for a global surplus coffee supply of 4.90 million bags.
The March 2023 to March 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 83.07 usc/Lb. This equates to 49.51% 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 seen to increase by 10,073 bags yesterday, to register these stocks at 775,656 bags, with 93.38% of these certified stocks being held in Europe at a total of 724,338 bags and the remaining 6.62% being held in the USA at a total 51,318. Of this, a total 441,277 bags, or 56.89% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.90% of these certified coffees, originating from Honduras. There was meanwhile a 9,326 bags decrease to the number of bags pending grading to the exchange; to register 289,816 bags pending grading on the day.
It was a firmer day on the commodity markets yesterday, with the US Dollar losing ground against a basket of other currencies as the speculative focus remains firmly on the US Federal Reserve’s interest rate policy. The Coffee, Cocoa, Corn, Soybean, Sugar, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note. The day starts with the U.S. Dollar trading at 1.217 Sterling, at 1.061 the Euro and with the US Dollar buying 5.200 Brazil Real.
The New York and London markets started the day yesterday trading north of par on a modest firmer note. The markets continued to trade to oscillate to either side of par for the remainder of the early morning session. The New York market rebounded off the modest lows of the early morning session, to gain support and trend firmer. This saw the market track upward as speculative buying support returned to the floor. As the afternoon progressed, the New York and London markets continued to gain momentum to rally late in the day around the opening of business day in the Americas’, under limited volumes of trade, both markets continued to move in a firmer direction. The upward momentum brought sellers back to the floor at the top of the day, and both New York and London markets hit a ceiling late in the day to limit the sessions gains. The New York market settled near to the highs of the day on a firm note, while the London market followed suit albeit in a more sedate manner to also settle on a firmer note at the close.
The London market ended the day on a positive note with 66.67% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 65.42% of the earlier gains of the day intact. This relatively firmer performance in the markets, which were seen to gain momentum throughout the day to settle on a firmer note at the close, might indicate some degree of confidence and direction to possibly see the markets set for a follow through steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 1868 + 10 MAR 167.80 + 3.50
MAY 1832 + 8 MAY 167.60 + 3.10
JUL 1818 + 6 JUL 167.45 + 2.70
SEP 1809 + 4 SEP 167.20 + 2.65
NOV 1801 + 4 DEC 166.95 + 2.70
JAN 1799 + 3 MAR 166.75 + 2.65
MAR 1798 + 3 MAY 166.85 + 2.65
MAY 1804 + 3 JUL 166.70 + 2.50
