Coffee Market Report
The U.S. Department of Agriculture (USDA) Foreign Agricultural Services have forecast global coffee production for the current October 2023 to September 2024 coffee year to reach 171.40 million bags, 4.19% higher than the previous year. This, due primarily to higher output in Brazil, Colombia, and Ethiopia which is expected to more than offset reduced production in the primarily robusta producing nation of Indonesia. In this respect, the USDA have forecast an estimated production output in Brazil for the July 2023 to June 2024 coffee year to be 3.70 million bags or 5.91% larger than the previous coffee year, at a total of 66.30 million bags, whereas the USDA have forecast production output for the mainly robusta producing nation of Indonesia for the April 2023 to March 2024 coffee year to be 2.15 million bags or 18.14% lower than the previous year, at a total of 9.70 million bags.
The USDA have revised their figures for ending stocks in Brazil at the end of the June 2022 to July 2023 Coffee year higher by 1.90 million bags since their last estimate in June this year to now be recorded at 4,585,000 bags, heading into the new July 2023 to June 2024 biennially bearing larger Brazil arabica coffee crop year. These carryover stocks to provide some supplement and fuel supplies into Brazil’s strong domestic coffee consumption, as well as consumer markets for the months leading into the next anticipated crop to come, in the July 2024 to June 2025 coffee year.
The USDA reports that for the October 2023 to September 2024 primarily Robusta coffee producing country of Vietnam, coffee production will total 27.50 million bags. This they say shall be 1.10% larger than the previous October 2022 to September 2023 crop. The current October 2023 to September 2024 crop they foresee, to be made up from 26.62 million bags Robusta coffee, up 1.22% from the previous coffee year and 880,000 bags of Arabica coffee, down 11.11% from the previous coffee year. Added to this they foresee that carryover stocks from the previous October 2022 to September 2023 coffee year shall add a modest 339,000 bags of coffee, due to the limited supply leading into the current coffee year.
The USDA have forecast that global coffee demand for the current October 2023 to September 2024 coffee year will possibly reach a record 169.50 million bags, up 0.29% from the previous year. Their latest forecast would indicate the potential for a global surplus coffee supply of 1.90 million bags.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,945 bags yesterday, to register these stocks at 247,944 bags, with 97.79% of these certified stocks being held in, Europe at a total of 242,461 bags and the remaining 2.21% being held in the USA at a total 5,483 Bags. Of this, a total 43,837 bags, or 17.68% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 66.33% of these certified coffees, originating from Honduras. There was meanwhile a 6,573 bags decrease to the number of bags pending grading to the exchange; to register 22,227 bags pending grading on the day.
The March 2024 to March 2024 contract arbitrage between the London and New York markets narrowed yesterday to register this at 60.42 Usc/Lb. This equates to 31.70% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, with trading volumes beginning to show signs of slowing ahead of the holiday long weekend. The Cocoa, Silver and Platinum markets ended the day on firmer note, while the Coffee, Corn, Sugar, Soybean, Wheat, Gold and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.264 Sterling, at 1.095 the Euro and with the US Dollar buying 4.914 Brazil Real.
The New York and London markets started the day yesterday carrying through support from the close on Tuesday, to continue to make gains during the early morning session. This support was short lived, as both the New York and the London markets very quickly encountered resistance near to the highs of the day, to see the markets drop back towards par during the late morning session. As the afternoon progressed the volume increased, albeit in modest terms, to contribute to the day’s direction with speculative selling returning to the New York floor to trigger stops along the way. The London market followed suit and the markets continued to project lower with a measure of speculative long liquidation to accentuate the losses for the day’s trade. The late afternoon session saw the markets rebound slightly off of the lows of the day to recover a small degree of losses, to settle on very soft notes at the close respectively.
The London market ended the day on a negative note with 67.39% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 82.19% of the earlier losses of the day intact. This very soft close for both New York and London has seen the markets offset the gains from the rally on Tuesday, to settle near to the close from Monday’s session. The markets both settled near to the lows of the day at the close, which may lead one to think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 2870 – 62 MAR 190.60 – 11.80
MAY 2793 – 67 MAY 188.15 – 11.45
JUL 2728 – 67 JUL 188.10 – 11.30
SEP 2678 – 65 SEP 188.60 – 11.40
NOV 2667 – 60 DEC 189.45 – 11.50
JAN 2645 – 60 MAR 190.60 – 11.75
MAR 2634 – 60 MAY 191.20 – 11.85
MAY 2627 – 60 JUL 191.70 – 11.95
