Coffee Market Report

The Vietnam Coffee and Cocoa Association have reported that the primarily Rousta coffee producing nation is likely to produce between 26.67 and 28.33 million bags during the current October 2023 to September 2024 coffee year. The report has reference the lower production figures to be attributed to unfavourable weather conditions during the October 2023 to September 2024 coffee harvests, resulting in lower cherry survival rates as well as the fact that the cultivation area in the Central Highland regions witnessed a downtrend due to crop shifting or intercropping with other profitable fruit crops.

The Vietnam Coffee and Cocoa Association have likewise forecast that exports from the region will be somewhat lower than the previous 22/23 year at a total of 23.33 million bags during the current October 2023 to September 2024 coffee year, citing an increase in local demand and very limited carry over stocks from the 22/23 year as primary reasons for the drop in exports.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday, to register these stocks at 234,699 bags, with 97.90% of these certified stocks being held in, Europe at a total of 229,771 bags and the remaining 2.10% being held in the USA at a total 4,928 Bags. Of this, a total 38,567 bags, or 16.44% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 68.70% of these certified coffees, originating from Honduras. There was meanwhile a 8,433 bags increase to the number of bags pending grading to the exchange; to register 20,858 bags pending grading on the day.

The January 2024 to March 2024 contract arbitrage between the London and New York markets narrowed yesterday to register this at 60.06 Usc/Lb. This equates to 33.84% price discount for the London Robusta coffee.

It was a firmer day on the commodity markets yesterday, as the US Dollar weakened in the run up to key US economic data due out later today. A weaker US Dollar is seen to be a bullish factor for commodities traded in other currencies. The Coffee, Cocoa, Corn, Soybean, Sugar, Wheat, Platinum and Palladium markets ended the day on firmer note, while the Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.259 Sterling, at 1.079 the Euro and with the US Dollar buying 4.912 Brazil Real.

The New York market started the day yesterday trading narrowly to the north of par, while the London market started the day trading on a softer note. Both markets attracted support during the early morning session to track mildly firmer for the remainder of the morning session before gaining momentum, as support was seen to build during the late morning session. As the afternoon progressed the New York market hit a ceiling to limit the gains for the day with sellers returning to the floor. The New York market was weighed lower before finding support late in the day to see the market rally and gain momentum quickly. The London market continued a firmer path carrying upward momentum into the afternoon session. The London market dropped back from the late afternoon highs to settle on a firmer note, while the New York market rally saw the market settle on a firmer note, with more than half of the earlier gains of the day intact.

The London market ended the day on a positive note with 46.30% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 52.94% of the earlier gains of the day intact. This firmer close for the markets, might provide some degree of support and direction, albeit that both the New York and the London markets fell back from the highs of the day during the late session, one might think that the markets are due 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.

JAN     2589 + 25                                        MAR   177.50 + 2.25
MAR   2541 + 29                                        MAY   175.65 + 2.10
MAY   2505 + 31                                        JUL      176.20 + 2.00
JUL     2475 + 37                                        SEP      177.20 + 1.90
SEP     2442 + 41                                        DEC    178.70 + 1.55
NOV   2428 + 44                                        MAR   180.70 + 1.05
JAN    2414 + 43                                        MAY    181.60 + 1.00
MAR  2406 + 42                                        JUL      182.40 + 0.95