Coffee Market Report

The Brazilian National Statistics Agency IBGE, have come to the fore to forecast that the countries 2023 Brazil coffee crop shall be 5.70% larger than the previous year, at 55.50 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 new Brazil 2023 coffee crop at a median 63 million bags.

The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of January have registered 27.70% lower from the previous month, at 2,375,733 bags. This number is proving to be marginally lower than the 2.66 million bags that had been initially forecast for the month’s coffee exports. This sees the cumulative export performance for the first four months of the current October 2022 to September 2023 coffee year in Vietnam, the largest producer of robusta coffee at 79,016 bags or 0.88% higher than the same period in the previous year, at a total 9,068,933 bags.

This comparatively lower export performance month on month during January from Vietnam can be attributed to the low period of activity within the interior over the festive Tet Lunar New Year, observed in January this year. One might anticipate an increase in coffee exports to flow to the consumer markets during this month as commercial activity gains momentum, after the celebrations.

The General Statistics office of Vietnam have at the same time reported the country’s coffee revenue value for January 2023, is reported at 16.35% lower than the same month in the previous year, at a total of approximately 310 million US Dollars.

The March 2023 to March 2023 contract arbitrage between the London and New York markets narrowed yesterday to register this at 82.02 usc/Lb. This equates to 46.71% 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 4,555 bags yesterday, to register these stocks at 891,933 bags, with 95.21% of these certified stocks being held in, Europe at a total of 849,250 bags and the remaining 4.79% being held in the USA at a total 42,683. Of this, a total 490,586 bags, or 55.01% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.87% of these certified coffees, originating from Honduras. There was meanwhile a 9,100 bags decrease to the number of bags pending grading to the exchange; to register 3,000 bags pending grading on the day.

It was an overall firmer day on the commodity markets yesterday, as investors await key US economic inflation data due to be released next week, which could provide speculative guidance on the Federal Reserves monetary policy stance. The Cocoa, Corn, Sugar, Soybean, Wheat, Gold and Silver markets ended the day on a positive note, the Cocoa market remained unchanged on the day, while the Coffee, Palladium and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.209 Sterling, at 1.073 the Euro and with the US Dollar buying 5.200 Brazil Real.

The New York and London markets started the day yesterday trading to the north of par on a modest firmer note, both markets quickly attracted selling pressure to trend lower during the early morning session. This saw the markets set a low for the morning session, before recovering to trend back towards par during the late morning session. As the afternoon progressed the markets continued to oscillate to either side of par before coming under pressure as the activity begun to increase. The New York market fell back to set a new low for the day during the mid afternoon session, before finding support to recover some of the earlier losses during the late afternoon trade, this saw the market settle on a softer note at the close, while the London market followed suit to likewise settle on a softer note at the close, near to the lows of the day.

The London market ended the day on a negative note with 82.61% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 59.18% of the earlier losses of the day intact. This softer close for the markets, does little to indicate direction albeit that the New York market recovered some of the earlier losses in what was a heavy volume day, one might think that the markets will be pressured for a follow through hesitant start steady to early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT              NEW YORK USC/LB.

MAR   2063 – 19                                      MAR   175.60 – 1.45
MAY   2057 – 18                                      MAY   175.65 – 1.70
JUL     2038 – 11                                      JUL     175.70 – 1.65
SEP     2010 – 5                                        SEP     174.70 – 1.60
NOV   1984 – 2                                        DEC    173.40 – 1.65
JAN    1971 – 3                                        MAR   173.20 – 1.60
MAR  1973 – 2                                        MAY    174.00 – 1.60
MAY  1978 – 2                                        JUL      174.70 – 1.55