Coffee Market Report

The forecasts from the U.S. Governments National Weather Service’s Climate Prediction Centre have reported that there is a 60% chance that La Niña weather conditions will develop by August and prevail for the remainder of the year. This follows what has been categorised as one of the top 5 El Niño weather patterns on record, which is forecast to wane during the next weeks ahead of ENSO neutral weather conditions, which are expected to be in place by the end of April this year. The strength and timing of these weather patterns that are related to the warming or cooling of notably the Pacific Ocean temperatures will be closely monitored. 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 National Coffee Association (NCA) based in the USA have released their latest Coffee Data Trends Report in which, they report that information extrapolated from the relatively small sample of respondents, an average 66% of Americans surveyed have indicated that they had a cup of coffee in the past day, this figure marginally improved from the 65% reported in their 2023 report. The report attributes the increase in daily coffee consumption to consumers aged 25 and over. The largest increase is among consumers aged 60 and over, whose consumption increased from 67% to 73% over the past year. Consumers aged 25-39 and 40-59 also saw an increase in consumption by from 67% to 70% and from 66% to 69%, respectively. Consumption among 18-24-year-olds remained steady at 47%.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 4,905 bags yesterday, to register these stocks at 637,405 bags, with 99.67% of these certified stocks being held in, Europe at a total of 635,320 bags and the remaining 0.33% being held in the USA at a total 2,085 Bags. Of this, a total 317,175 bags, or 49.85% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 17.95% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 3,190 bags; to register 50,154 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 46.03 Usc/Lb. This equates to 20.89% price discount for the London Robusta coffee.

It was a mixed day on the commodity markets yesterday, with the leading in influence Oil markets taking a marginally firmer track on the day. The Coffee, Cocoa, Gold, Silver and Platinum markets ended the day on a positive note, while the Corn, Sugar, Soybean, Wheat and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.254 Sterling, at 1.071 the Euro and with the US Dollar buying 5.092 Brazil Real.

The New York and London markets started the day yesterday trading in firmer territory, carrying through momentum from the close on Wednesday. Both markets were seen to attract selling pressure early to trade marginally to the south of par in modest negative territory. This pressure was short lived as the markets soon reversed the trend, to start to attract buying support and trend firmer for the remainder of the day. As the afternoon progressed, the New York and the London markets rebounded from the earlier lows to trend in a firmer direction. This support was seen to quickly build as a firmer trend built with activity increasing in New York. The arrival of the America’s at the start of their business day pushed New York higher, triggering buy stops along the way to accentuate the gains for the day, this assisted to trigger speculative short covering which saw the New York market gain ground quickly throughout the afternoon session, with the London market following suit to likewise make gains throughout the afternoon session. The upward momentum brought sellers back to the floor at the top of the day, and both New York and London markets hit a ceiling very late in the day to marginally limit the sessions gains. The New York market settled near to the highs of the day on a very firm note, following a technical rally in light of the prompt month options expiry, today the 12th April as well as first notice day approaching on the 22nd April. The London market was seen to drop back from the highs of the day and settle on a firmer note with half of the earlier gains of the day intact.

The London market ended the on a positive note with 51.63% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note, with 79.72% of the earlier gains of the day intact. This follow through firmer close for the markets, might indicate some degree of support albeit that both the New York and the London markets fell back from the earlier highs of the day, under good volumes of trade. One might therefore think that the markets might be pressured for a hesitant start to early trade today, against the prices set yesterday, as follows:

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

MAY   3843 + 66                                           MAY   220.35 + 5.70
JUL     3790 + 75                                           JUL     217.35 + 4.70
SEP     3702 + 67                                           SEP     216.10 + 4.25
NOV   3605 + 59                                           DEC    214.85 + 3.70
JAN    3508 + 57                                           MAR   214.50 + 3.45
MAR  3424 + 57                                           MAY    213.90 + 3.30
MAY  3346 + 57                                           JUL      212.85 + 3.10
JUL    3258 + 57                                           SEP      211.35 + 2.90