Coffee Market Report
The analysts Safras & Mercado have reported that Brazil coffee farmers have sold around 89% of the estimated total production of 66.65 million bags from the July 2023 to June 2024 Brazil Coffee crop, as of the 9th April 2024. This selling activity slightly exceeds the 5-year average, which is reported at 88%. The report highlights that an estimated 86% of arabica production already sold, in line with the 5-year average of 85% and 96% of Conillon Robusta sales, ahead of the 5-year average pegged at 92%. The recent appreciation in internal prices in line with the increased value in the futures markets, has brought some activity to the domestic physical market, with growers taking advantage of the higher exchange prices as well as the stronger US Dollar vs the Brazil Real, which is assisting to provide greater returns to producers in local currency.
The London Robusta coffee futures market reached an all-time high during trade yesterday, with the market peaking at US$ 4,036.00 per Mt. This, the highest level seen, since the contract started trading on the Intercontinental Exchange in January 2008. Prior to the start of the London Robusta ICE contract, the high registered was in 1994 at a level of US$ 3,900.00 per Mt. The factors of supply constraints from the world's largest robusta coffee producer Vietnam, along with logistical challenges in moving coffee to consumer markets, continue to provide buoyancy to the market.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to decrease by 1,064 bags yesterday, to register these stocks at 623,481 bags, with 99.67% of these certified stocks being held in, Europe at a total of 621,396 bags and the remaining 0.33% being held in the USA at a total 2,085 Bags. Of this, a total 294,916 bags, or 47.30% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 18.27% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 9,266 bags; to register 56,813 bags pending grading on the day.
The July 2024 to July 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 46.46 Usc/Lb. This equates to 20.48% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, with the leading in influence Oil markets softer on the day, as positive economic data from the USA viewed by the speculative sector as an indication that the Federal Reserve may hold out longer than initially expected on their monetary policy rate cutting cycle. The Coffee, Sugar and Gold markets ended the day on a positive note, while the Cocoa, Corn, Soybean, Wheat, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.243 Sterling, at 1.062 the Euro and with the US Dollar buying 5.286 Brazil Real.
The New York market started the day yesterday trading on a softer note, before attracting support early to reverse the trend and turn positive. The London market started the day yesterday trading on a firmer note, extending the gains from the close on Monday. Both markets gained momentum early to trigger stop losses along the way and set new highs for the day during the morning session. The markets hit a ceiling, during the late morning session, with London Robusta driven to new record high. As the afternoon progressed, both the New York and London markets eased pace and earlier momentum to slip back from the highs. The New York market was weighed lower to drop back towards par, in relatively choppy trade within a wide range on the day. The London market traded above par on a softer trajectory for the remainder of the afternoon. Both markets set the close on a positive note, albeit back from the highs of the day.
The London market ended the on a positive note with 32.18% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note, with 27.43% of the earlier gains of the day intact. The close yesterday registered the sixth consecutive firmer session, with first notice day in the prompt month approaching, open interest is reported at 19,585 lots. The markets encountered resistance late in the day to drop back from the early highs of the day, which may see the markets 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 4005 + 31 MAY 231.55 + 5.20
JUL 3977 + 28 JUL 226.85 + 1.55
SEP 3896 + 25 SEP 225.20 + 1.65
NOV 3794 + 27 DEC 223.75 + 1.75
JAN 3684 + 23 MAR 223.15 + 1.65
MAR 3602 + 26 MAY 222.00 + 1.50
MAY 3535 + 27 JUL 220.50 + 1.40
JUL 3451 + 30 SEP 218.20 + 1.25
