Coffee Market Report

The harvest in Vietnam is progressing well, as farmers begin to build up new crop robusta coffee stocks. With just over a month left, ahead of the Tet New Year holidays, which will bring in the year of the Dragon, traditionally see selling activity increase ahead of these celebrations, when farmers ordinarily use coffee sales to finance the preparations ahead of the nationally observed holidays. It is likely to see commercial activity within Vietnam start to slow ahead of 10th February this year.

This aside, there is little in the way of striking fundamental news coming to the markets from the main producer blocs and, within Brazil, the focus shall now be with the new crop developing, and upon the varied state, commercial industry and independent forecasts that are soon due to come to the fore on the prospects of the new 2024 Brazil crop, which begins harvest in April in the Conilon robusta areas, and traditionally mid-year, in the main arabica growing areas.

Meanwhile, the USA and UK among others have warned rebels in Yemen that they will face consequences if they continue to attack commercial shipping liners in the Red Sea and Suez Canal areas. This after a call for an immediate end to the attacks which have impacted one of the highest traffic shipping channels in the globe leading to most of the worlds shipping lines having to divert their vessels via the Cape of Good Hope on Africa’s Southernmost tip due to security concerns.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday, to register these stocks at 253,144 bags, with 97.85% of these certified stocks being held in, Europe at a total of 247,693 bags and the remaining 2.15% being held in the USA at a total 5,451 Bags. Of this, a total 52,000 bags, or 20.54% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 62.82% of these certified coffees, originating from Honduras. There was, meanwhile, an increase of 2,880 bags in the number of bags pending grading to the exchange; to register 12,616 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 59.18 Usc/Lb. This equates to 31.89% price discount for the London Robusta coffee.

It was a mixed day overall on the commodity markets yesterday, ahead of key US jobs data that is due out later today. The European Central Bank is due to release Euro zone inflation figures later today, with expectations that this is due to rise from 2.4% reported in November. This follows inflation figures released by the German Federal Statistics office yesterday to report that in December inflation rose to 3.8% up from 2.3% in November. The London Robusta Coffee, Corn, Sugar, Wheat, Gold and Silver markets ended the day on a positive note, the Cocoa market remained unchanged on the day, while the New York Arabica Coffee, Soybean, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.268 Sterling, at 1.094 the Euro and with the US Dollar buying 4.897 Brazil Real.

The New York market started the day yesterday on a softer note, pressured lower from the close on Wednesday. While the London market started the day on a firmer note, making gains during the early morning session. The New York market continued to trend lower, with selling activity in modest volumes pushing the market lower throughout the morning session. The London market found support to hit a ceiling for the days session. As the afternoon progressed, the New York market was seen to reverse the early morning trend and gain momentum to recover mots of the earlier losses of the day and trade above par setting a new high for the day. This support was short lived as the market encountered resistance near to the highs of the day to drop back and trend back below par. The London market continued on a firmer path to settle near to the highs of the day at the close, while the New York market found support late in the day to recover some of the earlier losses and settle on a modest softer note at the close.

The London market ended the day on a positive note with 72.09% of the earlier gains of the day intact, while the New York market ended the day trading on a negative note with 58.33% of the earlier losses of the day intact. This mixed close for the markets, albeit that the New York market recovered almost half of the earlier losses of the day to settle on a modest softer note, does little to indicate direction and one might think that the markets are due for a follow through hesitant start to early trade today, against the prices set yesterday, as follows:

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

MAR      2786 + 20                                          MAR      185.55 – 0.70
MAY      2714 + 31                                          MAY      183.50 – 0.60
JUL        2650 + 27                                          JUL        183.80 – 0.60
SEP        2605 + 20                                          SEP        184.60 – 0.60
NOV      2580 + 18                                          DEC       185.85 – 0.60
JAN       2555 + 18                                          MAR      187.55 – 0.60
MAR     2547 + 18                                          MAY      188.55 – 0.60
MAY     2537 + 18                                          JUL        189.35 – 0.60