Coffee Market Report

The weather conditions within Brazil meanwhile have been reported to have seen marginally higher than average rainfall during the month of April. The forecasts are for dry conditions expected to prevail over the coming days, this seen to be seasonally normal, as Brazil head towards the traditionally drier winter months ahead. The Conilon harvest has been reported to have been slightly delayed by later than expected rainfall during the first half of April and is expected to pick up pace during the weeks to come, followed later in the year by the Arabica producing areas. Meanwhile, the Monetary Policy Committee from The Central Bank continues to be under pressure to reduce the high Selic rate of 13.75%, after recently released economic data has shown inflation is cooling and at its lowest point since 2020.

Monday is the Labour Day public holiday in more than 160 countries and including most of the major European consumer countries and along with, most of the main of the coffee producer countries. This, to include Brazil, Vietnam, Colombia, the Central American countries, Indonesia, India, the African coffee producers. This shall see the London Robusta coffee market closed on the day, while this does not include the U.S.A, the New York Arabica coffee terminal market shall remain active, though it is unlikely that there shall be much excitement for the day.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 11,216 bags yesterday, to register these stocks at 687,652 bags, with 96.73% of these certified stocks being held in, Europe at a total of 665,175 bags and the remaining 3.27% being held in the USA at a total 22,477. Of this, a total 292,624 bags, or 42.55% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 53.89% of these certified coffees, originating from Honduras. There was meanwhile a no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The July 2023 to July 2023 contract arbitrage between the London and New York markets narrowed yesterday to register this at 79.11 usc/Lb. This equates to 42.04% 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 on the commodity markets yesterday, with newly released US Gross Domestic Product Data indicating slower than expected growth during the last quarter, this however offset by a firmer US Dollar on the day. The Sugar and Silver markets ended the day on a positive note, while the Coffee, Cocoa, Corn, Soybean, Wheat, Gold, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.248 Sterling, at 1.100 the Euro and with the US Dollar buying 4.977 Brazil Real.
The New York and London markets started the day yesterday trading to the south of par on softer notes respectively. The markets oscillated to either side of 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. As the afternoon progressed, speculative selling returned in mainly technical trade to the New York floor to trigger stops along the way, the London followed suit. The mid-afternoon session, saw the markets gain support to rebound from the earlier lows and trend towards par. This support was short lived, as the markets encountered resistance to drop back from the highs and trend softer towards the close. The selling activity started to wane toward the end of the days’ trade, to see the New York market narrowly recover some of the earlier losses of the day, while the London market recovered most of the earlier losses of the day. This saw both the New York and the London market settle in negative territory although above the lows on the day, in both markets.
The London market ended the day on a modest near to unchanged negative note with 22.22% of the earlier losses of the intact, while the New York market ended the day on a likewise negative note with 78.16% of the earlier losses of the day intact. This softer close for the markets and with the New York market retaining most of the losses of the day during a relatively light-trade volume day, which 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.

JUL     2405 – 8                                        JUL     188.20 – 3.40
SEP     2383 – 5                                        SEP     185.40 – 3.15
NOV   2352 – 4                                        DEC    182.90 – 3.05
JAN    2326 – 5                                        MAR   182.50 – 3.00
MAR  2307 – 7                                        MAY   182.80 – 3.00
MAY  2295 – 7                                        JUL     183.25 – 2.95
JUL    2288 – 7                                        SEP     183.95 – 2.90
SEP    2282 – 7                                        DEC    183.90 – 2.85