Coffee Market Report
The weather conditions within Brazil indicate good levels of rainfall for the month of March when compared to the first two months of the year. There are forecasts for a period of continued rainfall towards the end of this month. The new July 2024 to June 2025 coffee crop developing toward harvest, and in the robusta region, the Brazil Conilon harvest is set to begin soon, with an average median estimate forecast for a potential between 22 to 23 million bags of robusta coffee to come from this harvest, that will continue to fuel both local and export market consumer demand. The arabica harvest traditionally starts a little later, around midyear although isolated areas may start to come in earlier than seasonal norm where excessively high daytime temperatures have been recorded, to possibly accelerate ripening. Within the context of the expansive regions of production, the forecast potential for 44 to 45 million bags of mostly natural arabica coffee to be harvested for 2024/25 coffee year, is anticipated to peak around July this year. Climatic conditions are thus far seen to remain conducive as the weather turns seasonally drier, and this largest coffee producer and exporter to the world, heads towards traditionally drier winter months and harvest time ahead.
The current April 2023 to March 2024 coffee crop year in Peru is forecast to be somewhere in the region of 4.20 million bags, or around 2.50% higher than the previous April 2022 to March 2023 coffee year. The registrations to the New York certified stocks have been supported to some degree by exports from this washed arabica coffee producer country, in an unusual carryover environment, as the country prepares for new crop to start to come in soon. The new crop harvest will pick up pace in the coming months, and first export shipments for the April 2024 to March 2025 seasonal year, generally due to start around May. The new crop forecasts will soon start to come to the fore and ahead of harvest, is anticipated to remain steady year on year. Considering the tough past year experienced by the coffee industry in this country, which saw the midyear coffee crop come to the fore just as worldwide washed arabica demand retracted, this was an impactful turn of events within the country in coffee value terms, may be reasonable to anticipate that coffee production is likely due to register a steady to lower revision in time, rather than any increase in coffee production to come.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 12,500 bags yesterday, to register these stocks at 544,766 bags, with 99.39% of these certified stocks being held in, Europe at a total of 541,426 bags and the remaining 0.61% being held in the USA at a total 3,340 Bags. Of this, a total 286,563 bags, or 52.60% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 21.57% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 12,375 bags; to register 106,012 bags pending grading on the day.
The Certified Robusta coffee stocks held against the London Exchange were seen to increase by 63,667 bags during the week up to the 18th March 2024, to register at a total of 475,333 bags.
The May 2024 to May 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 32.04 Usc/Lb. This equates to 17.57% price discount for the London Robusta coffee.
It was a firmer day on the commodity markets yesterday, with the US Federal Reserve announcement yesterday that interest rates will be held steady, to set the course for speculative direction on the day. The leading in influence Oil markets traded firmer on the day, on the back of a weakening US Dollar. A weaker US Dollar is seen to be a bullish factor for commodities traded in other currencies. The Cocoa, Sugar, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Coffee, Corn and Wheat markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.279 Sterling, at 1.093 the Euro and with the US Dollar buying 4.966 Brazil Real.
The New York market started the day yesterday trading to the north of par on a firmer note, while the London market started the day yesterday trading on a softer note. The markets oscillated around par for the remainder of the early morning session, before attracting some degree of selling pressure to see both the New York and London markets drop below par and trend softer during the morning session. As the afternoon progressed, the New York market continued to trade lower, accentuating the losses for the day. The London was seen to drop lower, pressured by selling activity. The New York market was seen to settle into a range during the late afternoon session, to see the market gain support during the later afternoon session to recover most of the earlier losses and close on a softer note, while the London market continued to trend softer to settle on a negative note, with most of the earlier losses of the day intact, at the close.
The London market ended the day on a negative note with 78% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 46.43% of the earlier losses of the day intact. This softer close for the markets, albeit that the New York market recovered some of the earlier losses of the day under relatively modest volumes of trade, might inspire some degree of follow through support to see the markets due for a hesitant steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
MAY 3315 – 39 MAY 182.40 – 0.65
JUL 3221 – 39 JUL 181.40 – 0.40
SEP 3150 – 37 SEP 181.00 – 0.45
NOV 3075 – 35 DEC 180.50 – 0.45
JAN 3011 – 33 MAR 180.55 – 0.45
MAR 2967 – 35 MAY 180.90 – 0.40
MAY 2929 – 35 JUL 180.90 – 0.45
JUL 2874 – 35 SEP 180.75 – 0.50
