Coffee Market Report
With the month of May almost complete and shipment statistics already at hand, the Vietnam General Statistics office have estimated that the coffee exports for the month are reported as 36.50% lower than the same month last year, at a total of approximately 1,583,333 bags. The May 2024 export performance is anticipated to result in the countries coffee exports for the first eight months of the current October 2023 to September 2024 coffee year to be 13.06% higher than the same period last year, at a cumulative total of 23,838,350 bags. The General Statistics office of Vietnam have at the same time estimated that the value of the country’s coffee exports for the first five months of the current calendar year, shall be 44% higher than the same period in the previous year, at a total of approximately 2.90 billion US Dollars.
The winter months are setting in within the southern hemisphere, typically sees the focus of the coffee markets shift to the largest coffee producer and exporter, Brazil, where the arrival of cooler weather to the vast coffee growing areas in Brazil is monitored. Although severe cold weather events across the Brazil coffee belt are rare, the frost occurrence that took place in July 2021, was extensive in both the areas affected and the severity of coffee tree damage at the time.
The implication for any as yet unforeseen cold weather event to occur in the Brazil coffee growing areas, if early in the winter could have some impact upon the Brazil July 2024 to June 2025 biennial arabica crop which is ripening and will see harvest pick up pace soon across the vast arabica areas. The cumulative total Brazil crop is forecast to come in at an estimated median of 68.50 million bags.
The Conilon 2024/25 robusta crop that is already in peak harvest is less vulnerable in winter as the harvest starts and completes earlier, less risk of damage to cherries than in the arabica areas which begin harvest deeper into winter. The Conilon harvest meanwhile, traditionally supplies the well-established Brazilian local consumer roaster industry, while together with value-add soluble exports, has in recent time recorded significant increase in exports to consumer markets, reported at a record 6,528,649 bags during the first ten months of the current July 2023 to June 2024 coffee year. This figure is some 490% higher than the same period in the previous year and 62.03% higher than the previous record during the 2020/21 production year. This significant jump in Conilon exports is reflective of not only of the steady year on year Conilon output that has come from Brazil in the 2023/24 year, is in addition indicative of the robusta market share that has shifted to Brazil, as an alternative to the shortfall in robusta supply versus demand over the same period, particularly from leading robusta producer and exporter, Vietnam.
The Brazil natural arabica harvest is anticipated to reach a median estimated 45 million bags production this year, required to continue to fuel both domestic and largely export supply to coffee consumer markets. Exports are reported to have cumulatively reached 29,754,027 bags during the first ten months of the current July 2023 to June 2024 coffee year, this figure 13.11% higher than the same period last year and second in export volume terms only to the record year seen in 2020/21, over the same ten months reported at 32,496,076 bags.
Temperatures across the vast expanse of coffee production areas in Brazil, are for the most part reported to be within a normal range of double-digit degrees centigrade for the time of year. Weather forecasts will be monitored by both the speculative sector and coffee industry participants, as winter months progress through August, to potentially add further volatility to the coffee futures markets, in the short to medium term.
Tomorrow is Corpus Christi and many countries including Brazil, will have a holiday in observance of the same, likely to encourage many industries to prefer to take a bridge day follow on holiday on Friday, with an extended long weekend ahead, the largest coffee producer nation off the field of play.
The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 3,635 bags yesterday, to register these stocks at 778,321 bags, with 99.28% of these certified stocks held in, Europe at a total of 772,732 bags and the remaining 0.72% being held in the USA at a total 5,589 Bags. Of this, a total 387,770 bags, or 49.82% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 16.98% of these certified coffees, originating from Honduras. The pending grading stocks were seen to increase by 17,685 bags; to register 41,655 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 44.07 Usc/Lb. This equates to 19.08% price discount for the London Robusta coffee.
It was a firmer day overall on the commodity markets yesterday, with the US Dollar softening against a basket of other currencies, a weaker Dollar is traditionally seen to be a bullish factor for commodities traded in other currencies, along with speculative focus this week on the U.S. core personal consumption expenditures price index (PCE) data due to be released on Friday. The Coffee, Cocoa, Sugar, Wheat, Gold, Silver and Platinum markets ended the day on a positive note, while the Corn, Soybean and Palladium market ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.275 Sterling, at 1.084 the Euro and with the US Dollar buying 5.160 Brazil Real.
The New York and London markets started the day yesterday trading on a firmer note, and New York carrying through momentum from the close on Friday ahead of the Memorial Day holiday yesterday. The London market quickly gained momentum higher at the outset of the early morning session, in limited volume. The New York market was slower to react and having set a higher level, traded either side of par in a comparatively quiet volume morning. Both the New York and London markets were seen to build support as the day progressed. 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 make significant gains throughout the afternoon session. The New York market continued the upward momentum before being capped very late in the day, to see the market marginally drop back and settle on a very firm note at the close. The London market followed suit to settle on a very firm note at the close, with most of the earlier gains of the day intact.
The London market ended the day on a positive note with 91.57% of the earlier gains of the day intact, while the New York market ended the day on a likewise very positive note, with 84.95% of the earlier gains of the day intact. This follow through firmer close for the markets, might indicate some degree of support and direction with both the New York and London market gaining momentum throughout the session to settle near to the highs of the day under good volumes of trade. One might therefore think that the markets might be ready for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JUL 4120 + 228 JUL 230.95 + 12.70
SEP 4025 + 219 SEP 229.80 + 12.45
NOV 3915 + 206 DEC 228.45 + 12.35
JAN 3810 + 194 MAR 227.45 + 12.20
MAR 3716 + 184 MAY 226.35 + 11.95
MAY 3655 + 181 JUL 225.45 + 11.70
JUL 3586 + 178 SEP 224.50 + 11.45
SEP 3494 + 178 DEC 223.60 + 11.10
