Coffee Market Report
News has come to the fore of significant rainfall received in East Africa in recent weeks, in regions of Kenya and Uganda that have been in receipt of torrential downpours, rivers created in populated rural areas, mud and landslides with tragic loss of life, displacement and infrastructural damage within vulnerable communities that are affected. This El Niño weather has been categorised as one of the top 5 El Niño weather patterns on record, and is still disrupting weather patterns globally, while this weather pattern is forecast to wane during the months ahead with a likelihood according to the U.S. Governments National Weather Service’s Climate Prediction Centre, that La Niña weather conditions will develop by August and prevail for the remainder of the year.
The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of April were 18,065 bags or 4.84% higher than the same month last year, at a total of 390,977 bags. Uganda Robusta exports registered a 21.72% increase when compared to the same month last year, to total 290,037 bags and Arabica exports registered a 25.02% decrease when compared to the same month last year to total 100,940 bags exported in April 2024. The UCDA also reports that the cumulative exports for the first seven months of the current October 2023 to September 2024 coffee year to be 216,678 bags or 6.87% lower than the same period in the previous year, at a total of 2,938,308 bags. The UCDA have reported that during the month of April, the overall value of coffee exports has been seen to have increased by 41.71% when compared to the same month in the previous year, to total 84.81 million US Dollars.
The respected United States Department of Agriculture USDA Global Agricultural Information Network has revised their estimate for the fine washed arabica coffee crop from El Salvador over the current October 2023 to September 2024 coffee year down by 17.16% to now reach a total of 555,000 bags, this reported decline in production as a result of a lack of labour availability due to migration in rural areas is affecting farm activities such as pruning, picking and processing. In addition, prices for inputs remain high, increasing production costs, which have negatively impacted the 2023/24 coffee year harvest.
The report further estimates that El Salvador coffee production, is due to increase marginally by 0.90% during the coming October 2024 to September 2025 coffee year, at an estimated at 560,000 bags, of which the report goes on to estimate 505,000 bags will be exported to consumer markets from the coming crop harvest. The year-on-year carryover stocks from the current October 2023 to September 2024 into the new October 2024 to September 2025 coffee year are put at a relatively high 115,000 bags ahead of the new harvest to come, this as producers have been seen to hold back coffee sales in the expectation of higher prices to come. This new harvest traditionally begins around October each year, in the lower lying areas, to pick up pace as the cooler higher areas start harvest toward the end of the year.
The USDA report has revised their estimate for El Salvador domestic annual consumption over the current coffee year meanwhile, to be 1.75% higher than the previous estimate at a total of 295,000 bags, consisting of mainly instant coffee soluble imports from neighbouring central American producer countries.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 4,755 bags yesterday, to register these stocks at 740,449 bags, with 99.25% of these certified stocks being held in, Europe at a total of 734,860 bags and the remaining 0.75% being held in the USA at a total 5,589 Bags. Of this, a total 359,773 bags, or 48.59% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 16.87% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 5,917 bags; to register 59,787 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 45.01 Usc/Lb. This equates to 22.57% price discount for the London Robusta coffee.
It was a mixed day on the commodity markets yesterday, with newly released US Consumer Price data reflecting an early sign that inflation is starting to cool within the worlds largest economy which may lead investors to believe interest rate cuts are on the horizon. The Cocoa, Gold, Silver, Palladium and Platinum markets ended the day on a positive note, while the Coffee, Corn, Sugar, Soybean and Wheat markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.269 Sterling, at 1.089 the Euro and with the US Dollar buying 5.136 Brazil Real.
The New York and London markets started the day yesterday trading on a firm note carrying through momentum from the close on Tuesday. The markets oscillated around par and mildly firmer for the remainder of the early morning session, before attracting some degree of selling pressure and both New York and London markets fell below par, to trend softer during the morning session. As the afternoon progressed, speculative selling returned to the New York floor to trigger stops along the way. The floor established and buyer support returned to rebound from the earlier lows and recover some of the earlier losses. The London market followed suit to drop lower, pressured by technical selling activity. The New York market, trading in a wide range on the day, recovered from the lows to settle on a softer note at the close, with the London market following suit to likewise recover most of the earlier losses and settle on a softer note at the close.
The London market ended the day on a negative note with 48.44% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, with 33.72% of the earlier losses of the day intact. This softer close for the markets, albeit that the New York and London markets recovered most of the earlier losses of the day to settle in softer territory, and one might think that the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 3402 – 31 JUL 199.40 – 1.45
SEP 3336 – 28 SEP 198.40 – 1.50
NOV 3268 – 24 DEC 197.50 – 1.55
JAN 3185 – 19 MAR 196.80 – 1.65
MAR 3108 – 17 MAY 196.50 – 1.65
MAY 3050 – 16 JUL 196.30 – 1.70
JUL 2993 – 15 SEP 196.00 – 1.70
SEP 2928 – 15 DEC 195.75 – 1.75
