Coffee Market Report
The Agriculture Ministry in Brazil have announced that the national agricultural funding plan, the "Safra” plan will be increased by 27% in value this year, this forms part of the subsidised farm loan schemes in the national agriculture funding plan, that is aimed at driving economic development. The “Safra Plan” is targeted to provide 364.20 billion Reais (US$ 76 billion) in financing to support medium to large sized agricultural producers in Brazil. The national farm funding plan is considered a key element in boosting production and fostering close relationships with the agricultural sector, which plays a role in the growth of the country's gross domestic product. The funding will also encourage strengthening of environmentally friendly sustainable agronomy practices by offering reduced interest rates for producers who have adopted more sustainable agricultural practices, according to the Agriculture Ministry.
The new arabica crop harvest is underway throughout the vast regions of Brazil coffee growing areas, and reports continue to indicate conducive weather, with a cold front due to come to the region early next week, there is no indication of unusually low temperatures in the forecasts. The developments within Brazil meanwhile with the economic situation showing signs of stability, has encouraged a renewed investor confidence in the Brazil Real, and this currency has appreciated against the US Dollar by 8.97% since the start of 2023, and a change of political leadership at that time.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,602 bags yesterday, to register these stocks at 549,252 bags, with 98.75% of these certified stocks being held in, Europe at a total of 542,381 bags and the remaining 1.25% being held in the USA at a total 6,871. Of this, a total 168,085 bags, or 30.60% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 64.67% of these certified coffees, originating from Honduras. There was meanwhile a 3,260 bags decrease to the number of bags pending grading to the exchange; to register 3,989 bags pending grading on the day.
The September 2023 to September 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 43.80 usc/Lb. This equates to 26.24% price discount for the London Robusta coffee market.
It was a softer day on the commodity markets yesterday, the recently strong economic data released during the month of June in the U.S.A., pending further data due to be released on Thursday this week. The Coffee, Cocoa and Silver markets ended the day on a positive note, while the Corn, Soybean, Sugar, Wheat, Gold, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.272 Sterling, at 1.095 the Euro and with the US Dollar buying 4.812 Brazil Real.
The New York and London markets started the day yesterday trading to the north of par on firmer notes respectively. The New York market took a firmer track into the early morning session, while the London market followed suit to likewise trend firmer for the remainder of the morning session. As the afternoon progressed the New York market was capped, limiting the gains for the day, this saw the market drop back from the earlier highs of the day and trend back towards par. The London market with first notice day and prompt month activity hurdled, met with selling pressure to plot a softer path into negative territory as the day drew to a close. The New York market found support near to the lows of the day to stage a late recovery and settle on a firmer note at the close, while the London market continued to trend lower before rebounding from the lows of the day to recover all of the earlier losses and settle near to unchanged for the day.
The London market ended the day on a modest near to unchanged positive note with 10% of the earlier gains of the day intact, while the New York market ended the day on a likewise firmer note with 65.45% of the earlier gains of the day intact. This relatively firmer performance for the New York and London markets, albeit that the markets fell back from the earlier highs of the day, might indicate some degree of confidence and direction to possibly see the markets set 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.
SEP 2715 + 5 SEP 166.95 + 1.80
NOV 2623 – 5 DEC 165.40 + 1.75
JAN 2555 – 1 MAR 165.25 + 1.55
MAR 2525 – 5 MAY 165.85 + 1.40
MAY 2513 – 10 JUL 166.55 + 1.45
JUL 2505 – 10 SEP 167.40 + 1.50
SEP 2499 – 7 DEC 168.60 + 1.65
NOV 2478 – 9 MAR 169.50 + 1.80
