Coffee Market Report

The respected U.S. Department of Agriculture Global Agricultural Network (USDA) have come forth to revise their early forecast for the October 2022 to September 2023 coffee crop from Colombia, lower by 10.32%, to now total 11.30 million bags. The report further anticipates green coffee exports from this fine washed arabica producing country to reach 10.80 million bags during the October 2022 to September 2023 coffee year, this figure 1.82% lower than the previous 2021/2022 coffee year. The lower production performance from this leading quality washed arabica producer, reflecting the inclement and excessively wet weather endured across the coffee growing areas through an extended eighteen month La Niña weather phenomenon.

The same report has forecast the new crop to come from Colombia for the forthcoming October 2023 to September 2024 coffee year, at an anticipated marginal 2.65% increase on that of the previous coffee production year, at a total of 11.60 million bags. It is anticipated that Colombia will export marginally more than the current coffee year, during the 2023/2024 coffee year, at a total of 10.90 million bags.

While the forecast for the upcoming year is more positive related to improved weather and a dissipating La Niña weather pattern in Colombia, this is still some way away from this country 's ten year average performance in production of quality washed arabica coffee. Over an average of ten years, production is pegged at 13.20 million bags per annum and, thus one might observe that the forecast for 2023/24 coffee year to come is 17.42% below attainable average, and 25.35% below the peak of 14.60 million bags attained in the 2016/2017 coffee year, with exports during this year, reported at a total of 13.50 million bags to consumer markets.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,859 bags yesterday, to register these stocks at 592,634 bags, with 97.30% of these certified stocks being held in, Europe at a total of 576,655 bags and the remaining 2.70% being held in the USA at a total 15,969. Of this, a total 205,682 bags, or 34.71% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 61.27% 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 60.89 usc/Lb. This equates to 34.38% price discount for the London Robusta coffee market.

It was a softer day on the commodity markets yesterday, with the leading in influence Oil markets lower on the day, pressured by concerns within the macroeconomic environment. The Gold market ended the day on a positive note, while the Coffee, Cocoa, Corn, Soybean, Sugar, Wheat, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.239 Sterling, at 1.069 the Euro and with the US Dollar buying 5.036 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 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 markets continued on a downward trajectory, accentuating the losses along the way. 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. With further news that temperatures within Brazil are reported to be somewhere in the lower teens in degrees Celsius for the next week through full moon.

The London market ended the day on a negative note with 54.54% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 78.95% 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, settling near to the lows of the day does little to inspire confidence and one might think that the markets are due for little better than a follow through hesitant start to trade today, against the prices set yesterday, as follows:

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

JUL     2562 – 12                                     JUL    177.10 – 4.50
SEP     2520 – 8                                       SEP    174.85 – 4.70
NOV   2463 – 6                                       DEC   172.80 – 4.85
JAN    2414 – 7                                       MAR  172.50 – 5.00
MAR  2403 + 1                                       MAY  173.00 – 5.00
MAY  2396 + 4                                       JUL    173.65 – 4.95
JUL    2389 Unch                                    SEP    174.45 – 4.90
SEP    2379 – 3                                        DEC  175.60 – 4.75