Coffee Market Report
As the first month of the new year draws to a close, independent Brazil new crop forecasts are coming to the fore, with an independent trading company putting forward their estimates for the new Brazil 2024/2025 coffee crop to come, to come in at 68.20 million bags. This figure made up of 44.80 million bags arabica coffee and 23.40 million bags of Robusta coffee. This estimate is in line with the median average of independent forecasters who foresee the on average, the overall Brazil 2024/2025 coffee production to potentially reach 68 million bags. There has been some focus on the Conillon robusta areas which had experienced El Nino related record hot days though the last weeks of 2023. The signals that the climate has not markedly reflected in Brazil crop revisions will likely be welcome news for robusta constrained consumer markets, as well as the internal Brazilian supportive local roaster consumer sector, for the supply year to come and the April 2024 to March 2025 Conillon robusta coffee crop that traditionally begins harvest in April, to bolster coffee flow for shipment by mid this year. The shipment environment from this leading exporter of breadbasket commodities to consumer markets remains inconsistent and may continue to be problematic as shipping lines adjust routings in accordance to the restraints of Panama Canal weather induced congestion and the necessity of extended voyages for container vessels from the east to the north via the Cape of Good Hope.
The month of January has reported improved weather conditions for the main coffee districts in Southeast Brazil, with good rains having been reported across the main coffee growing areas. With sporadic rainfall predicted to continue into the next week. The Brazil Carnival holidays will take place from the 9th February until the 17th February, traditionally a quiet week of trade for Brazil for this largest producer and exporter of coffee to consumer markets.
The situation within Vietnam meanwhile is that there is less than seven trading days ahead of the Tet Lunar New Year due to begin on the 10th February 2024, to bring in the year of the Dragon. One might anticipate a muted couple of weeks ahead in coffee trade terms, as the two largest coffee producers, that in combination make up 47.50% of coffee export supply to international consumer markets, observe national holidays in this, leap year month of February.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 7,104 bags yesterday, to register these stocks at 250,569 bags, with 97.82% of these certified stocks being held in, Europe at a total of 245,118 bags and the remaining 2.18% being held in the USA at a total 5,451 Bags. Of this, a total 65,608 bags, or 26.18% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 50.79% of these certified coffees, originating from Honduras. There was meanwhile, a decrease of 15,087 bags to the number of bags pending grading to the exchange; to register 66,911 bags pending grading on the day.
The March 2024 to March 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 42.68 Usc/Lb. This equates to 22% price discount for the London Robusta coffee.
It was a firmer day on the commodity markets yesterday, ahead of the US Federal Reserve monetary policy announcements due to be made later today, at the conclusion of their two-day policy meeting. The US Dollar index weakened by 0.20% on the day, a weaker US Dollar is seen to be a bullish factor for commodities traded in other currencies The Coffee, Cocoa, Sugar, Corn, Wheat, Soybean and Gold markets ended the day on a positive note, while the Sugar, Silver, 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 1.082 the Euro and with the US Dollar buying 4.947 Brazil Real.
The New York and London markets started the day yesterday trading north of par on firmer notes respectively. This support continued throughout the early morning session, with both markets tracking firmer as the day progressed, before attracting some degree of selling pressure to see the markets limit the gains for the early morning session. As the afternoon progressed the New York market fell back from the early highs of the day to hit a floor, limit the losses and see the market track back upward as speculative buying support returned to the floor. The New York and London markets continued to gain momentum to rally late in the day and accentuate the gains for the day. The upward momentum brought sellers back to the floor at the top of the day, and the New York market hit a ceiling during the mid-afternoon session to limit the gains for the day. This saw the market drop back from the highs and settle on a firmer note at the close. The London market followed suit to likewise rally during the late afternoon session before seeing the market capped late in the day to drop back form the highs and settle on a firmer note at the close.
The London market ended the day on a positive note with 58.65% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 57.93% of the earlier gains of the day intact. This firmer close for the markets, with the New York and London markets tracking upward throughout the session to maintain more than half of the earlier gains of the day, one might think that the markets are possibly set for a steady follow through start to early trade today, against the prices set yesterday, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAR 3336 + 61 MAR 194.00 + 4.75
MAY 3181 + 59 MAY 190.25 + 4.20
JUL 3053 + 53 JUL 189.25 + 3.95
SEP 2949 + 46 SEP 188.95 + 3.60
NOV 2882 + 39 DEC 189.50 + 3.50
JAN 2842 + 32 MAR 190.15 + 3.20
MAR 2823 + 31 MAY 190.35 + 3.15
MAY 2806 + 31 JUL 190.45 + 3.10
