Coffee Market Report
In the latest round of independent forecast updates, Rabobank has come forth to report that they foresee that the global coffee balance sheet will record a 6.80 million bag surplus for the 2024/2025 coffee year. This is based on improved production figures that are anticipated to come from both Brazil and Colombia. This follows their summary of the 2023/2024 year, which is estimated at a total global coffee production of 174.80 million bags versus global coffee demand at a steady 173.20 million bags, which global inventories aside, reflects a marginal coffee surplus of 1.60 million bags for the 2023/2024 year.
Following the low and slow registrations of coffee to come to the certified warehouses of the exchange, Reuters have reported that new volumes of arabica coffee are in the pipeline to be delivered to the Intercontinental Exchange (ICE) warehouse in Europe, potentially to be graded and enter the exchanges certified stocks. The report states that a relatively modest total 2,865 bags from Tanzania, Burundi and Honduras appeared as coffee pending grading. This together with a further 4,400 bags of Brazilian coffee is also waiting to be graded.
This total volume of 7,265 bags is modest although considered to be the first potential sign that the most recent rally in New York Arabica Coffee market futures prices may start to drive physical deliveries at the exchange. This as ICE arabica certified stocks fell to the lowest in 24 years, at 297,100 bags.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,135 bags yesterday, to register these stocks at 297,100 bags, with 98.34% of these certified stocks being held in, Europe at a total of 292,172 bags and the remaining 1.66% being held in the USA at a total 4,928 Bags. Of this, a total 55,764 bags, or 18.77% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 73.58% 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.
Within Brazil meanwhile, weather conditions have been uncharacteristically hot over the past three days, with predictions for temperatures to begin to drop and rains to follow in the state of Minas Gerais over the weekend.
Yesterday was the Proclamação da República (Republic Day) holiday in Brazil. This saw most internal market players out of the field of play for the day, with some market players taking an extended bridge holiday to the weekend ahead.
The December 2023 to January 2024 contract arbitrage between the New York and London markets widened yesterday to register this at 65.18 Usc/Lb. This equates to 36.05% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, as newly released data showed that U.S. retail sales fell for the first time in seven months during October, pointing to slowing demand at the start of the fourth quarter, the US Dollar lost ground on the day against a basket of other currencies. The Coffee, Cocoa and Soybean markets ended the day on firmer note, the Sugar and Palladium market remained unchanged on the day, while the Corn, Wheat, Gold, Silver and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.240 Sterling, at 1.084 the Euro and with the US Dollar buying 4.862 Brazil Real.
The New York market started the day yesterday trading to the south of par on a softer note, while the London market started the day yesterday trading to the north of par on firmer note. Both markets attracted buying support during the early morning session to track mildly firmer for the remainder of the morning session to gain momentum, as support was seen to build. As the afternoon progressed the New York market hit a ceiling to limit the gains for the day with sellers returning to the floor. This saw the New York market drop back from the earlier highs and trend back towards par. The London market followed suit albeit to gain momentum late in the day. The markets continued a firmer path carrying upward momentum into the afternoon session. The London market dropped back from the highs of the day late in the session to settle on a firmer note with most of the gains intact, while the New York market settled on a likewise firmer note at the close, albeit back from the highs of the day.
The London market ended the day on a positive note with 96.15% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 79.82% of the earlier gains of the day intact. This firmer close for the markets, might provide some degree of support and direction, albeit that the New York market fell back from the highs of the day during the session, to possibly see the markets set for a follow through steady start to early trade today, ahead of first notice day on the prompt month in New York next week Tuesday, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 2549 + 75 DEC 180.80 + 4.35
MAR 2473 + 58 MAR 175.15 + 3.75
MAY 2449 + 53 MAY 175.00 + 3.40
JUL 2426 + 49 JUL 175.65 + 3.35
SEP 2412 + 47 SEP 176.50+ 3.30
NOV 2401 + 47 DEC 177.90 + 3.35
JAN 2390 + 47 MAR 180.00 + 3.35
MAR 2377 + 47 MAY 181.00 + 3.50
