Coffee Market Report

Tomorrow is the Ascension Day public holiday for many leading European countries but does not impact upon the USA and UK and the coffee markets. It is likely though in terms of physical trade and the significant consumer market share of the Western Europeans, to somewhat mute business for the day.

The certified washed arabica coffee stocks held against the New York Exchange continue to register gradual daily increases, climbing to levels above the more than twenty-year lows recorded in November last year, to register 701,423 bags yesterday. This marks an increase of 321,390 bags or 84.57% from this low point registered on the 1st November 2023 when the certified washed arabica coffee stocks registered 380,033 bags. One might comment that the historic high for the certified washed arabica coffee stocks held against the New York exchange was registered at 5,111,858 bags on the 10th September 2004, this some 4,410,435 bags or 628.78% higher than the level seen today. The main component of the certified washed arabica coffee stocks come from Brazil, accounting for over 48% of all coffees held against the New York Exchange, with new registrations coming mainly from Brazil semi-washed arabica, Honduras as well as a small percentage of registrations coming from Peru. These daily released figures are received by the speculative sector of the markets, as an indication of arabica coffee availability, in the consumer markets where these exchange certified coffee stocks are held. The daily registrations to the exchange might be interpreted as a bearish factor for the market, indicating an improvement in coffee flow to consumer markets.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 14,465 bags yesterday, to register these stocks at 701,423 bags, with 99.20% of these certified stocks being held in, Europe at a total of 695,834 bags and the remaining 0.80% being held in the USA at a total 5,589 Bags. Of this, a total 336,718 bags, or 48.01% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 16.46% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 875 bags; to register 118,852 bags pending grading on the day.

The July 2024 to July 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 43.43 Usc/Lb. This equates to 22.08% price discount for the London Robusta coffee.

It was a mixed but overall softer day on the commodity markets yesterday, with the leading in influence Oil markets lower on the day. The New York Arabica Coffee, Cocoa, Sugar and Platinum markets ended the day on a positive note, while the London Robusta Coffee, Corn, Soybean, Wheat, Gold, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.248 Sterling, at 1.074 the Euro and with the US Dollar buying 5.074 Brazil Real.

Meanwhile, the Monetary Policy Committee from The Central Bank in Brazil will make a decision today regarding a potential interest rate cut, with the current Selic rate 10.75%. It is widely expected that the central bank will cut the interest rate by a further 0.50%, which would mark the seventh consecutive rate cut, in as many months.

The New York market started the day yesterday trading to the north of par on a modest firmer note, whilst the London market started the day trading on a very soft note. The pressure from London was seen to spill over into the New York market, as both markets very quickly set new lows for the day, pressured by selling early in the day. As the day progressed, both the New York and the London markets were seen to gain support, recovering from the early in the day lows to trend back towards par. The New York market, with the arrival of the America’s at the start of their business day, saw volumes begin to increase and support grow as the market recovered from the mid-morning lows, to trend back towards par. The London market followed suit, albeit in a more sedate manner. The New York market continued in a firmer manner for the remainder of the day’s session, before being capped late in the day to drop back and settle on a firmer note at the close. The London market was seen to encounter resistance during the afternoon session to settle into a range and see the market close on a very soft note albeit with only half of the earlier losses of the day intact.

The London market ended the day on a negative note with 58.21% of the earlier losses of the day intact, while the New York market ended the day on a positive note, with 69.05% of the earlier gains of the day intact. This mixed close for the markets, with the New York market gaining support during the late afternoon session to settle on a firmer note at the close and the London market recovering some of the earlier losses of the day to settle on a negative note at the close, might see the markets set for a follow through steady start to early trade today, against the prices set yesterday, as follows:

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

JUL     3378 – 163                                       JUL    196.65 + 1.45
SEP     3305 – 165                                       SEP    195.40 + 1.25
NOV   3226 – 159                                       DEC   194.25 + 1.40
JAN    3128 – 152                                       MAR  193.70 + 1.30
MAR  3049 – 152                                       MAY  193.20 + 1.35
MAY  2996 – 148                                       JUL    193.05 + 1.65
JUL    2939 – 148                                       SEP    192.75 + 2.30
SEP    2874 – 148                                       DEC   192.40 + 3.15