Coffee Market Report
The climate in Brazil as the new July 2024 to June 2025 crop sets on the trees, has after a tenuously warm and drier month in November and the most part of December, since report improved rainfall and dispersion across the vast coffee growing areas. The forecasts indicate rainfall to continue for the rest of the month, which is needed for the continued development of the new coffee crop. This crop, has been forecast to have the potential to reach a median estimate of 68.05 million bags for the forthcoming biennially higher bearing crop year.
Weather conditions within Mexico, Colombia and Central America, have been reported to be conducive for harvest and drying activities to take place. This producer bloc is forecast to collectively produce 31.50 million bags in the October 2023 to September 2024 coffee crop, steady year on year, with harvest within the lower lying areas of this largest washed arabica producer bloc well underway, to boost quality washed arabica coffee availability for export to consumer markets in the new year.
This largest quality washed arabica producer bloc which accounts for an average 70% washed arabica production, has experienced varied impactful macroeconomic inflationary pressures upon farm cost of production, while cost of finance and access to funding present microeconomic challenges, for this quality washed arabica sector. Further there remains issues surrounding the availability and affordability of labour for the ongoing harvests, which is likely exacerbated by a growing trend of migration to the north.
Coffee production for the October 2023 to September 2024 Coffee year in Colombia is forecast to potentially be 15.50% higher than the previous coffee year at a total of 12.60 million bags. This is forecast, although improved year on year is shy of the country’s average potential production of around 13.60 million bags per seasonal year. In Mexico coffee production for the October 2023 to September 2024 Coffee year is forecast to remain steady at an estimated total of 3.40 million bags. Guatemala meanwhile is expected to produce marginally more than the previous year, to potentially produce 3.50 million bags, whereas Honduras is likewise anticipated to have a 7.02% decrease in production year on year at a total of 5.30 million bags.
The New York and London markets are closed for the day on Monday the 25th December. The New York market shall be trading solo for a shortened day on Tuesday 26th December, while the London market shall resume trade on Wednesday 27th December.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 32 bags yesterday, to register these stocks at 247,912 bags, with 97.80% of these certified stocks being held in, Europe at a total of 242,461 bags and the remaining 2.20% being held in the USA at a total 5,451 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 66.34% of these certified coffees, originating from Honduras. There was meanwhile a 2,998 bags increase to the number of bags pending grading to the exchange; to register 25,225 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 59.16 Usc/Lb. This equates to 30.56% price discount for the London Robusta coffee.
It was a firmer day on the commodity markets yesterday, with newly released economic data from the US reporting that the GDP increased by 4.9% during the last quarter, bolstering speculative belief that interest rate cuts will be seen during the first quarter of 2024. This ahead of the year-end holidays, with trading volumes remaining relatively thin within the greater commodity market basket. The Coffee, Corn, Wheat, Gold, Silver, Palladium and Platinum markets ended the day on firmer note, while the Cocoa, Sugar and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.269 Sterling, at 1.100 the Euro and with the US Dollar buying 4.884 Brazil Real.
The New York and London markets started the day yesterday carrying through momentum to trade on a firmer note. This early support was short lived as the markets quickly attracted some degree of selling pressure to drop below par during the early morning session. Both markets found support to reverse the trend in the early in the day, this saw the markets attract buying support to track above par, for the remainder of the morning session. As the afternoon progressed, both the London and New York markets continued to trade in firmer territory extended the gains for the day. In latter day trade, both markets settled into a narrow range under relatively light volumes of trade, New York continued to oscillate on a firmer note to settle on a modest firmer note at the close, while the London market followed suit, to maintain most earlier gains and settle on a likewise firmer note at the close.
The London market ended the day on a positive note with 94% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 44.12% of the earlier gains of the day intact. This firmer close for the markets, off the back of a very soft session on Wednesday, might inspire some degree of consolidation, albeit that the New York market fell back from the earlier highs of the day to settle with less than half of the day’s gains intact, one might think that the markets may possibly be set 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.
MAR 2964 + 94 MAR 193.60 + 3.00
MAY 2870 + 77 MAY 191.10 + 2.95
JUL 2791 + 63 JUL 190.95 + 2.85
SEP 2737 + 50 SEP 191.45 + 2.85
NOV 2712 + 45 DEC 192.25 + 2.80
JAN 2689 + 44 MAR 193.30 + 2.70
MAR 2678 + 44 MAY 193.95 + 2.75
MAY 2671 + 44 JUL 194.45 + 2.75
