Coffee Market Report
In the latest round of independent Brazil crop forecast updates, the consultancy and commodity broker StoneX has come forth with their report to forecast Brazil coffee production could potentially be around 62.30 million bags the coming July 2023 to June 2024 coffee year, up 4.30% from the current year. The forecast anticipates 40.70 million bags to come from this leading producer of mostly natural arabica coffee, 6.40% higher than the current 22/23, along with an estimated 21.60 million bags Conilon robusta coffee, a fairly stable 0.60% up from the current 22/23 year.
The May 2023 to May 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 89.79 usc/Lb. This equates to 48.92% 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 3,025 bags yesterday, to register these stocks at 870,079 bags, with 95.31% of these certified stocks being held in, Europe at a total of 829,266 bags and the remaining 4.69% being held in the USA at a total 40,813. Of this, a total 469,359 bags, or 53.94% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.92% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register no pending grading on the day.
It was a mixed but softer day overall on the commodity markets yesterday, as the US Dollar lost ground against a basket of other currencies following the release of key consumer price data for January. The Coffee, Sugar and Gold markets ended the day on a positive note, the Cocoa market remained unchanged on the day, while the Sugar, Corn, Soybean, Wheat, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.215 Sterling, at 1.071 the Euro and with the US Dollar buying 5.192 Brazil Real.
The New York and London markets started the day trading on a modest near to par positive note, a continuation through the early morning session oscillating between par and mildly positive in early trade. As the day progressed, a firmer trend built as activity increased in New York. The arrival of the America’s at the start of their business day pushed New York higher, triggering buy stops along the way to accentuate the gains for the day, this assisted to trigger speculative short covering which saw the New York market gain ground quickly throughout the afternoon session, in large volumes of trade. The late afternoon session saw the London market follow suit. The New York market continued the upward momentum before being capped briefly very late in the day. Both the New York and the London markets settled near to the highs of the day, on very firm notes respectively.
The London market ended the day on a positive note with 81.25% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 96.29% of the earlier gains of the day intact. This follow through firmer close for the markets, with both the New York and the London markets settling near to the highs of the day, might indicate some degree of direction to see the markets pressured 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 2067 + 23 MAR 183.55 + 6.50
MAY 2070 + 26 MAY 183.25 + 6.50
JUL 2053 + 25 JUL 182.70 + 6.45
SEP 2028 + 24 SEP 181.35 + 6.25
NOV 2003 + 24 DEC 179.80 + 6.05
JAN 1991 + 24 MAR 179.65 + 5.95
MAR 1992 + 24 MAY 180.45 + 5.75
MAY 1997 + 24 JUL 181.10 + 5.75
