Coffee Market Report
The analysts Safras & Mercado have reported that Brazil coffee farmers have sold around 11% of the estimated total production of 70 million bags from the July 2024 to June 2025 Brazil Coffee crop. This crop estimate is in line with median industry forecasts and within the context of Brazil’s internal 22 million bag domestic consumption and around 45 million bags export demand, is necessary to continue to fuel consumer market demand. This selling activity is seen to be somewhat lower than the 25% sold when compared to the same time in 2023, ahead of the 2023/2024 crop year. The report meanwhile specifies that an estimated 14% of arabica production already sold and 6% of Conilon Robusta sales. There remains a reticence on the part of well financed producers to participate fully in forward sales activity, releasing coffee at a measured pace.
The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of February were 44,864 bags or 9.36% lower than the same month last year, at a total of 434,582 bags. Uganda Robusta exports registered a 0.52% decrease when compared to the same month last year, to total 372,407 bags and Arabica exports registered a comparative 40.83% decrease when compared to the same month last year to total 62,175 bags exported in February 2024. The UCDA also reports that the cumulative exports for the first five months of the current October 2023 to September 2024 coffee year to be 81,040 bags or 3.53% lower than the same period in the previous year, at a total of 2,213,299 bags. The UCDA have reported that during the month of February, the overall value of coffee exports has been seen to have increased by 25.06% when compared to the same month in the previous year, to total 82.56 million US Dollars.
The forecasts from the U.S. Governments National Weather Service’s Climate Prediction Centre have revised their earlier prediction to now report that there is a 62% chance that a La Niña weather phenomenon will develop later in the year, this following one of the more notable El Niño weather patterns on record, which is forecast to wane through the months ahead, with a La Niña forecast on the horizon. They likewise forecast that there is a 83% chance that a shift from El Niño to ENSO neutral weather conditions will take place by April-June 2024. The strength and timing of these weather patterns that are related to the warming or cooling of notably the Pacific Ocean temperatures, in the event of La Niña this is a cooling phenomenon that generally brings about accentuated drier weather conditions in regions of southern continent America and excessive rainfall in equatorial areas which can impact the Pacific Rim countries.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 9,718 bags yesterday, to register these stocks at 467,825 bags, with 99.09% of these certified stocks being held in, Europe at a total of 463,570 bags and the remaining 0.91% being held in the USA at a total 4,255 Bags. Of this, a total 239,596 bags, or 51.21% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 25.18% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 10,348 bags; to register 161,723 bags pending grading on the day.
The May 2024 to May 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 35.21 Usc/Lb. This equates to 19.15% price discount for the London Robusta coffee.
It was a mixed but softer day on the commodity markets yesterday, with a larger than expected rise in US Producer Price Index data for the month of February as the cost of goods with the USA remain high, which tampered expectations for early rate cuts by the US Federal Reserve. The Coffee, Cocoa and Palladium markets ended the day on a positive note, while the Corn, Soybean, Sugar, Wheat, Gold, Silver and Platinum markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.273 Sterling, at 1.088 the Euro and with the US Dollar buying 4.994 Brazil Real.
The New York and London markets started the day carrying through momentum from previous days close to trade to the north of par on a firmer note. The New York market was seen to oscillate around par before gaining momentum to trend in a firmer direction into the mid-morning session, while the London market was seen to follow suit, making gains during the early morning session. As the afternoon progressed, the arrival of the America’s at the start of their business day pushed the New York market further into positive territory, triggering buy stops along the way to accentuate the gains for the day. The day recorded modest volumes of trade in New York, with both the New York and London markets continuing to project in a firmer direction before encountering resistance to set a ceiling for the day. This saw the markets pressured back towards par as sellers returned to the floor, late in the day. The New York market settled on a firmer note, with most of the earlier gains of the day intact whilst the London market followed suit before dropping back from the earlier highs to settle on a modest firmer note, with some of the earlier gains of the day intact.
The London market ended the day on a positive note with 26.15% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 77.42% of the earlier gains of the day intact. This firmer close for the markets might inspire some degree of follow through confidence, with the New York market settling near to the highs of the day with most of the earlier gains of the day intact, albeit under modest volumes of trade, one might think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAY 3277 + 17 MAY 183.85 + 1.20
JUL 3183 + 24 JUL 182.25 + 1.00
SEP 3113 + 23 SEP 181.85 + 0.90
NOV 3036 + 23 DEC 181.60 + 0.80
JAN 2972 + 23 MAR 181.80 + 0.75
MAR 2924 + 23 MAY 182.05 + 0.70
MAY 2895 + 22 JUL 181.95 + 0.70
JUL 2872 + 22 SEP 181.65 + 0.70
