Coffee Market Report

The Indonesian government trade data from Sumatra, the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of July were 28,834 bags or 10.26% lower than the same month last year, at a total of 252,226 bags. This contributes to the islands cumulative robusta coffee exports for the first four months of the current April 2023 to March 2024 coffee year to be 144,271 bags or 14.54% lower than the same period in the previous year, and a total 848,059 bags.

Meanwhile, the new crop within Indonesia, continues to flow to the internal to fuel the growing domestic roasting and instant coffee manufacturing demand as well as the export market. The new coffee crop which is around 85% robusta coffee and the balance arabica coffee, has been conservatively forecast to potentially reach a median of 10.30 million bags of which approximately 8.80 million bags will be robusta coffee and 1.50 million bags of Arabica Coffee. This estimated level of production for the 2023/24 coffee year is somewhat lower than the average production of 11.80 million bags seen over the past three coffee years.

Weather conditions within Brazil have been forecast to remain seasonally conducive with temperatures gradually increasing. There are reports that rains have fallen across the main Brazil coffee producing areas of Parana, Sao Paulo and Minas Gerais during the last week, one might comment that these rains are marginally earlier than what would be considered seasonally normal, however this does mark the start of the new spring and summer rain season for Brazil.

The USA will be observing their Labour Day holiday on Monday the 4th September, which will see the New York market closed for the day. Thus, leaving the London market to trade solo on the day.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,001 bags yesterday, to register these stocks at 484,738 bags, with 98.42% of these certified stocks being held in, Europe at a total of 477,100 bags and the remaining 1.58% being held in the USA at a total 7,638. Of this, a total 130,432 bags, or 26.91% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 68.12% 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 widened yesterday to register this at 41.61 usc/Lb. This equates to 26.93% price discount for the London Robusta coffee.

It was softer day on the commodity markets yesterday, with the US Dollar gaining ground against a basket of other currencies, a firmer Dollar is seen to be a bearish factor for commodities traded in other currencies. The Cocoa market ended the day on a positive note, while the Coffee, Corn, Sugar, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.266 Sterling, at 1.084 the Euro and with the US Dollar buying 4.955 Brazil Real.

The New York market started the day yesterday trading on a firmer note, while the London market started the day yesterday trading to the south of par in modest softer territory. The markets oscillated to either side of par for the remainder of the early morning session. The late morning session saw the markets begin to attract some degree of buying support to track firmer into the late morning session. As the afternoon progressed, the markets continued to trend in a firmer direction, before hitting a ceiling to limit the gains for the day. The markets were weighed by selling during the mid-afternoon session which saw both the New York and the London markets trend back towards par. The selling activity started to wane toward the end of the days’ trade, to see the New York and London markets recover some 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 negative note with 46.67% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 36.96% of the earlier losses of the day intact. This softer close for the markets, does little to indicate direction albeit that both the New York and London markets recovered most of the earlier losses of the day, one might think that the markets may possibly be set for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

NOV   2489 – 7                                           DEC    154.50 – 0.85
JAN    2386 + 16                                         MAR   155.65 – 0.70
MAR  2328 + 14                                         MAY    156.60 – 0.65
MAY  2307 + 14                                         JUL      157.15 – 0.65
JUL    2299 + 14                                         SEP      157.60 – 0.75
SEP    2293 + 16                                         DEC     158.60 – 0.75
NOV  2290 + 11                                         MAR    159.70 – 0.60
JAN   2284 + 9                                           MAY    160.80 – 0.60