Coffee Market Report
The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of July were 70,019 bags or 12.16% higher than the same month last year, at a total of 645,832 bags.
Uganda Robusta exports registered a 11.40% increase when compared to the same month last year, to total 586,871 bags and Arabica exports registered a likewise 20.33% increase when compared to the same month last year to total 58,961 bags exported in July 2023. The UCDA also reports that the cumulative exports for the first ten months of the current October 2022 to September 2023 coffee year to be 29,469 bags or 0.61% lower than the same period in the previous year, at a total of 4,817,768 bags. The UCDA have reported that during the month of July, the overall value of coffee exports has been seen to have increased by 25.85% when compared to the same month in the previous year, to total 104.98 million US Dollars.
The mainstream northern hemisphere coffee consumer markets are gradually returning after their traditionally slower summer holiday season, and one might expect an uptick in physical coffee trade. Although, within the context of global coffee consumption, sustained macro-economic pressure such as high inflationary environments continue to take their toll on consumers, which may continue to see some degree of conservative buying activity continue within developed coffee consumer markets.
Within the Coffee futures terminal markets meanwhile, the inversion in New York has developed a sustained correction in structure. This may be received with some relief for holders of inventory along the arabica coffee supply chain. This follows an extended period of an extraordinarily wide and inverted spread between the front months on the New York futures markets. The London robusta market continues to reflect the tight supply in the lack of availability of Vietnam coffee to consumer markets, as well as lower inventory held in consumer markets. While there may be some degree of supply relief from Brazil, Indonesia and Uganda, the next new crop to come from largest robusta producer Vietnam, is anticipated toward the end of the calendar year, thus the inversion in London robusta futures market could likely hold until such time as this largest robusta supplier begins to release new crop coffee.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 92 bags yesterday, to register these stocks at 513,503 bags, with 98.36% of these certified stocks being held in, Europe at a total of 505,070 bags and the remaining 1.64% being held in the USA at a total 8,433. Of this, a total 152,075 bags, or 29.62% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 65.39% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.
The November 2023 to December 2023 contract arbitrage between the London and New York markets narrowed yesterday to register this at 42.37 usc/Lb. This equates to 28.24% price discount for the London Robusta coffee.
It was an overall firmer day on the commodity markets yesterday, as investors look to the US Federal Reserve Jackson Hole symposium due to be held later this week, for cues on the interest rate outlook. While not anticipated to demonstrate any significant policy shift, the five country BRICS summit is being held in Johannesburg, South Africa this week. The London Robusta Coffee, Sugar, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, the Cocoa market remained unchanged on the day, while the New York Arabica Coffee, Corn and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.275 Sterling, at 1.086 the Euro and with the US Dollar buying 4.939 Brazil Real.
The New York market started the day yesterday trading to the north of par on a firmer note, while the London market started the day yesterday trading to the south of par on a modest softer note. The New York market continued to oscillate to either side of par as the morning progressed, slowly building support, while the London market followed suit to likewise trend in a firmer direction as the morning progressed. As the afternoon progressed the London market hit a ceiling to limit the gains for the day, to see the market drop back from the earlier highs and trend back towards par. The New York market was also seen to drop back from the modest highs of the morning session and trend in a softer direction. The late afternoon session saw the London market continue on a softer path before finding support late in the day to see the market settle on a modest firmer note at the close, while the New York market continued on a softer path to settle near to the lows of the day with most of the earlier losses intact.
The London market ended the day on a modest near to unchanged positive note with 20% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 60% of the earlier losses of the day intact. This mixed close for the markets, with the New York market recovering some of the earlier losses of the day to settle on a softer note for the day and the London market settling near to unchanged on the day, does little to indicate direction or inspire confidence and one might think that the markets are due for little better than a follow through hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
NOV 2374 + 8 DEC 150.05 – 0.75
JAN 2305 + 4 MAR 151.55 – 0.85
MAR 2268 + 1 MAY 152.65 – 0.95
MAY 2258 + 2 JUL 153.45 – 1.00
JUL 2256 + 4 SEP 154.25 – 1.00
SEP 2257 + 7 DEC 155.40 – 0.90
NOV 2257 + 9 MAR 156.40 – 0.85
JAN 2251 + 9 MAY 157.55 – 0.80
