Coffee Market Report
Logistical bottlenecks are being felt in the largest collective coffee consumer bloc, a combination of EU27 countries and the UK, that collectively import around 44 million bags of coffee per annum. The arrival of the new Vietnam 2023/24 robusta coffee crop is welcomed in an environment where the lower production year Vietnam 2022/23 robusta coffee crop was most extraordinarily allocated mid-way through the past crop year. The advent of the shipping disruptions in the Suez Canal with shipping lines continuing to re-route vessels adding to extended transit and arrival lead times to consumer markets has had an influence in the futures markets as the delays for not only Vietnam, but other coffee producing countries from the equatorial and Indian Ocean rim, to include India, Indonesia and East Africa whose exports to key consumer markets in the northern hemisphere, are impacted by altered schedules and shipping lane routes. Elsewhere, the South Pacific and Oceania shipping lanes are still constrained by the low water levels in the Panama Canal, a route that is reported to account for around 40% of container traffic to the USA. These constraints and delays are contributing to the prevailing volatility in the coffee markets, in the context of the already lower than average consumer market inventory position.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,142 bags yesterday, to register these stocks at 254,336 bags, with 97.86% of these certified stocks being held in, Europe at a total of 248,885 bags and the remaining 2.14% being held in the USA at a total 5,451 Bags. Of this, a total 68,928 bags, or 27.10% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 51.41% of these certified coffees, originating from Honduras. There was meanwhile, an increase of 11,365 bags in the number of bags pending grading to the exchange; to register 65,278 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 39.49 Usc/Lb. This equates to 21.12% price discount for the London Robusta coffee.
It was a softer day on the commodity markets yesterday, with newly released US economic data showing that the economy grew faster than expected during the fourth quarter of 2023, to inspire speculation of a potential for the US Federal Bank to alter fiscal strategy during the first half of 2024. The London Robusta Coffee, Gold and Silver markets ended the day on a positive note, while the New York Arabica Coffee, Cocoa, Corn, Sugar, Soybean, Wheat, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.270 Sterling, at 1.083 the Euro and with the US Dollar buying 4.917 Brazil Real.
The New York market started the day yesterday trading on a modest near to unchanged softer note, while the London market started the day trading on a firmer note carrying through momentum from the close on Wednesday. The New York market quickly attracted a degree of selling pressure to move lower during the morning session, while the London market followed suit albeit in a more sedate manner to oscillate around par for the remainder of the morning session. As the afternoon progressed, the markets started to see buying support build, with the arrivals of the Americas at the start of their day. The London market continued a firmer path, triggering buying activity to see the market build and hit a ceiling late in the day, limiting the day’s gains with the market settling near to the highs of the day. The New York market continued to trade in softer territory throughout the early afternoon session before finding support during the mid-afternoon session to rebound from the earlier lows, recovering more than half of the day’s losses to settle on a softer note at the close.
The London market ended the day on a positive note with 80% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 49.02% of the earlier losses of the day intact. This follow through mixed close for the markets, with the London market settling on a firm note and the New York market recovering more than half of the earlier losses might provide some degree of follow through confidence to see the markets possibly set for a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 3251 + 44 MAR 186.95 – 2.50
MAY 3085 + 36 MAY 183.70 – 2.50
JUL 2974 + 37 JUL 182.90 – 2.55
SEP 2886 + 30 SEP 182.85 – 2.65
NOV 2843 + 29 DEC 183.70 – 2.75
JAN 2812 + 27 MAR 184.85 – 2.85
MAR 2796 + 26 MAY 185.35 – 2.75
MAY 2781 + 26 JUL 185.70 – 2.70
