Coffee Market Report

In the latest round of independent forecast updates, Hedgepoint Consultancy has come forth to revise their earlier estimate for the Brazil 2023/2024 coffee crop down by 4.63% to now total 63.80 million bags. This figure comprising of 42.30 million bags Arabica coffee and 21.50 million bags Conilon Robusta Coffee. The report makes reference to the good rains that have been seen during the first two months of this calendar year. This, in their opinion is not enough to offset the prolonged dry spell that was seen to impact the Brazil coffee growing regions during the flowering phase last year. Hedgepoint Consultancy have likewise revised their earlier estimate for the Global coffee supply and demand balance for the 2023/2024 year to now reflect a marginal surplus of 0.60 million bags, down from an earlier estimate of 3.70 million bags, primarily due to the revision in the Brazil coffee crop.

The Brazil government have reported preliminary data, although the month is not complete, that illustrates the country’s daily green coffee exports during the month of February have averaged 45.26% lower than the daily export average seen during the same period last year, this at an average of 100,000 bags exported per day compared to 182,667 bags exported per day seen during February 2022. The official breakdown of coffee exports by description for February will soon be released and can be anticipated to illustrate this more accurately, noting that comparative year on year export figures may be impacted by the pandemic related logistical bottlenecks that were experienced throughout the same time.

The CFTC have announced that the Commitment of Traders report from the New York Arabica and London Robusta markets are intended to be published by close of business today, Friday 24th February 2023. The reports will be retrospective, and the first report released to be backdated to the 3rd February 2023, followed by sequential reports until the COT reports are up to date.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,400 bags yesterday, to register these stocks at 809,566 bags, with 95.07% of these certified stocks being held in, Europe at a total of 769,644 bags and the remaining 4.93% being held in the USA at a total 39,922. Of this, a total 411,063 bags, or 50.78% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 45.99% of these certified coffees, originating from Honduras. There was meanwhile a 10,412 bags increase to the number of bags pending grading to the exchange; to register 10,412 bags pending grading on the day.

The May 2023 to May 2023 contract arbitrage between the London and New York markets narrowed yesterday to register this at 91.68 usc/Lb. This equates to 48.33% 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.

It was a softer day overall on the commodity markets yesterday, after newly released US Jobless claims data fell unexpectedly, leading to speculation that the US Federal Reserve would continue to hike interest rates in an effort to control rising inflation. The Sugar and Wheat markets ended the day on a positive note, while the Coffee, Cocoa, Corn, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.202 Sterling, at 1.060 the Euro and with the US Dollar buying 5.137 Brazil Real.

The New York and London markets started the day yesterday trading to the north of par on modest firmer notes respectively. The markets oscillated around par for the remainder of the early morning session. The late morning session saw the New York market attract some degree of selling pressure while the London followed suit albeit in a more sedate manner during the early session. The late morning session saw the markets continue to trend in a softer direction. As the afternoon progressed, speculative selling returned in volume to the New York floor to trigger stops along the way, the London followed suit and the markets continued to project lower with further long liquidation selling to accentuate the losses for the day’s trade. The selling activity started to wane toward the end of the days’ trade, to see both markets narrowly recover some of the earlier losses of the day. This saw both the New York and the London market settle in negative territory but above the lows on the day, in both markets.

The London market ended the day on a negative note with 89.80% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 71.57% of the earlier losses of the day intact. This softer close for the markets and with the New York and London markets retaining most of the losses of the day during a relatively fair-trade volume day, might see the markets due for a hesitant start to trade today, against the prices set yesterday, as follows:

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

MAY   2161 – 44                                     MAY   189.70 – 3.65
JUL     2150 – 38                                     JUL     188.10 – 3.60
SEP     2128 – 34                                     SEP     185.90 – 3.55
NOV   2096 – 32                                     DEC    183.80 – 3.60
JAN    2078 – 28                                     MAR   183.40 – 3.65
MAR  2072 – 28                                     MAY   183.75 – 3.80
MAY  2073 – 28                                     JUL      183.95 – 3.75
JUL    2079 – 28                                     SEP      184.10 – 3.70