Coffee Market Report
In the latest round of independent forecast updates, Pine Agronegocios has come forth to revise their earlier estimate for the Brazil 2023/2024 coffee crop up marginally by 1.47% to now total 55.16 million bags. This figure comprising of 34.87 million bags Arabica coffee and 20.29 million bags Conilon Robusta Coffee. The report expects that exports during the 2023/2024 coffee year will reach 35.19 million bags, with local consumption expected to remain steady at a level of 21 million bags. The crop forecast from this independent body is 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.
As the harvest of the biennially bearing new Brazil coffee crop is shortly due to begin in the arabica areas, weather conditions are forecast to remain cool and dry. Forecasts are mostly for low temperatures to be somewhere in the lower teens in degrees Celsius, ahead of the arrival of the next winter full moon, due on 4th June.
The United States Department of Agriculture Global Agricultural Network USDA have reported their forecast for the arabica coffee crop from Nicaragua for the current October 2022 to September 2023 coffee year, to reach an overall 2,600,000 bags, or 9.97% lower than the previous coffee production year in October 2021 to September 2022 production that is reported at 2,888,000 bags.
The same report has forecast the new crop to come from Nicaragua for the forthcoming October 2023 to September 2024 coffee year, at an anticipated marginal 0.80% increase on that of the previous coffee production year, at a total of 2.62 million bags. This new arabica coffee crop from Nicaragua is due to start harvest toward the end of the year and is forecast is that Nicaragua will export 2.50 million bags.
The United States Department of Agriculture USDA Global Agricultural Information Network have revised their estimate for the Costa Rican coffee Arabica coffee crop over the current October 2022 to September 2023 coffee year up by 3.37% to now reach a total of 1.41 million bags.
The report further estimates production to remain steady during the coming October 2023 to September 2024 coffee year, estimated at 1.40 million bags, of which the report goes on to estimate 1.19 million bags will be exported to consumer markets from the coming crop harvest. The year-on-year carryover stocks from the current October 2022 to September 2023 crop into the new October 2023 to September 2024 coffee year are put at a relatively modest 341,000 bags ahead of the new harvest to come.
The USA will observe their Memorial Day holiday on Monday 29th May, and the New York Arabica market will be closed accordingly, whilst the UK will celebrate their Spring Bank Holiday on the same day which shall also see the London Robusta Market closed for the day.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 10,855 bags yesterday, to register these stocks at 609,778 bags, with 97.37% of these certified stocks being held in, Europe at a total of 593,729 bags and the remaining 2.63% being held in the USA at a total 16,049. Of this, a total 219,757 bags, or 36.04% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 60.04% 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 66.90 usc/Lb. This equates to 36.62% 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 an overall softer day on the commodity markets yesterday, with the leading in influence Oil markets softer on the day, while the US Dollar firmed for a second consecutive session. The Cocoa and Palladium markets ended the day on a positive note, while the Coffee, Corn, Soybean, Sugar, Wheat, Gold, Silver and Platinum market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.234 Sterling, at 1.074 the Euro and with the US Dollar buying 4.036 Brazil Real.
The New York and London markets started the day yesterday trading to the north of par on very modest firmer notes respectively, the markets were quickly pressured lower early in the day, to accentuate the losses for the early morning session. The late morning session saw the New York market continue to trend in a softer direction while the London followed suit albeit in a more sedate manner. As the afternoon progressed, speculative selling returned to the New York floor to trigger stops along the way. The London followed suit and the markets continued to project lower with long liquidation pressure to accentuate the losses for the day’s trade. 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 was seen to also settle near to the lows of the day, on a softer note at the close.
The London market ended the day on a negative note with 83.33% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 83.46% of the earlier losses of the day intact. This softer close for the markets and with both the New York and the London markets retaining most of the earlier losses to settle near to the lows of the day, one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 2553 – 20 JUL 182.70 – 5.30
SEP 2508 – 22 SEP 180.65 – 5.10
NOV 2457 – 27 DEC 178.80 – 5.10
JAN 2415 – 31 MAR 178.65 – 5.05
MAR 2398 – 31 MAY 179.15 – 4.95
MAY 2391 – 32 JUL 179.80 – 4.80
JUL 2388 – 32 SEP 180.70 – 4.60
SEP 2381 – 33 DEC 181.75 – 4.50
