Coffee Market Report

The forecasts from the U.S. Governments National Weather Service’s Climate Prediction Centre have reported that there is a 49% 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 June 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.

Heavy rains continue to batter some regions in Kenya, causing widespread flooding and landslides across the country in recent weeks, with the forecast for rains to continue in the days to come. The torrential rainfall has resulted in loss of life and extensive infrastructure damage. The rains have been amplified by the El Niño weather pattern, a naturally occurring climate phenomenon typically associated with increased heat worldwide, leading to heavy downpours in regions around the equator. The anticipated shift from El Niño weather patterns to ENSO neutral should assist to see rains abate in the weeks to come.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 11,943 bags yesterday, to register these stocks at 699,616 bags, with 99.20% of these certified stocks being held in, Europe at a total of 694,027 bags and the remaining 0.80% being held in the USA at a total 5,589 Bags. Of this, a total 323,808 bags, or 46.28% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 17.31% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 13,498 bags; to register 106,439 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 45.46 Usc/Lb. This equates to 22.57% price discount for the London Robusta coffee.

It was a firmer day on the commodity markets yesterday, with the US Dollar weaking by 0.30% against a basket of other currencies, a weaker US Dollar is seen to be a bullish factor for commodities traded in other currencies. The Coffee, Cocoa, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, the Sugar market remained unchanged on the day, while the Corn and Soybean markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.252 Sterling, at 1.077 the Euro and with the US Dollar buying 5.142 Brazil Real.

The New York market started the day yesterday trading on a firmer note, carrying through the momentum from the close on Wednesday, whilst the London market started the day trading to the south par in softer territory. The London market was seen to reverse the trend early, 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 gained momentum from the start of the day 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, 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 late in the day to limit the sessions gains. The New York market settled near to the highs of the day on a firm note. The London market was seen to drop back from the highs of the day and settle on a firmer, attracting selling pressure late in the day to only maintain less than half of the earlier gains of the day.

The London market ended the day on a positive note with 29.41% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note, with 89.66% of the earlier gains of the day intact. This follow through firmer close for the markets, might indicate some degree of support with New York market settling near to the highs of the day, albeit under modest volumes of trade, one might think that the markets may be pressured for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

JUL     3439 + 25                                           JUL    201.45 + 3.90
SEP     3364 + 26                                           SEP    200.00 + 3.75
NOV   3290 + 31                                           DEC   198.70 + 3.70
JAN    3197 + 34                                           MAR  198.10 + 3.65
MAR  3117 + 39                                           MAY   197.60 + 3.60
MAY  3060 + 37                                           JUL     197.35 + 3.50
JUL    3002 + 37                                           SEP     197.05 + 3.40
SEP    2937 + 37                                           DEC   196.75 + 3.25