Coffee Market Report

The weather forecasters are indicating favourable conditions for harvesting across the vast regions of the Brazil coffee growing areas for the remainder of this week, with temperatures expected to be somewhere in the lower teens in degrees Celsius. The Brazil Real has depreciated by 4.68% over the month of June and settled around the low for the year against the US Dollar, yesterday. The Brazil Real weakness to the US Dollar can traditionally encourage increased selling activity within the interior of Brazil, as returns to producers are increased in Brazil Real terms, however, producers are relatively well financed and continue to take a measured stance, with the prevailing Brazil coffee harvest underway. There are continued reports of lower bold bean intake and uneven ripening, compared to the harvest results of the same time last year. This uneven ripening might prove problematic for the arabica areas and farms that are traditionally set up for automated harvesting processes. These factors have seen the internal market prices for bolder bean grades continue to climb, despite the comparatively firm current coffee futures market environment.

The New York arabica coffee market shall be closed today in observance of the Juneteenth Federal Holiday, leaving the London Robusta coffee market will be trading solo for the day.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 3,325 bags yesterday, to register these stocks at 824.416 bags, with 99.08% of these certified stocks held in, Europe at a total of 816,867 bags and the remaining 0.92% being held in the USA at a total 7,549 Bags. Of this, a total 426,874 bags, or 51.78% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.76% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 7,001 bags; to register 37,084 bags pending grading on the day.

The September 2024 to September 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 45.08 Usc/Lb. This equates to 19.92% price discount for the London Robusta coffee.

It was mixed day overall on the commodity markets yesterday, as weaker than expected retail sales data for the month of May, saw the US Dollar lose ground against a basket of other currencies on the day. The Cocoa, Corn, Soybean, Gold and Platinum markets ended the day on a positive note, the Palladium market remained unchanged on the day, while the Coffee, Sugar, Wheat and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.271 Sterling, at 1.073 the Euro and with the US Dollar buying 5.441 Brazil Real.

The New York and London markets started the day yesterday trading to the north of par on modest firmer notes respectively, the markets gained support quickly during the very early session under limited volumes of trade to set a ceiling for the day. The support was short lived as the markets encountered resistance to drop back from the early highs and trend through par and into negative territory, for the remainder of the day’s session. A degree of speculative long liquidation followed, to see both the New York and London markets drop and set a new low for the day, during mid-afternoon session. As the afternoon progressed and the activity increased, the markets recovered some of the earlier losses whilst trading below par and in negative territory, the New York market settled on a softer note at the close with less than half of the earlier losses of the day intact, whilst the London market settled on a likewise softer note at the close with most of the earlier losses of the day intact.

The London market ended the day on a negative note with 68.48% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, with 24.71% of the earlier losses of the day intact. This softer close for the markets, does little to inspire confidence, albeit that the markets recovered from the lows of the day during the late afternoon session, one might think that the London market trading solo for the day is due for a follow through hesitant start to early trade today, against the prices set yesterday, as follows:

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

SEP     3994 – 63                                          SEP     226.25 – 1.05
NOV   3852 – 63                                          DEC    224.85 – 1.20
JAN    3704 – 63                                          MAR   223.70 – 1.05
MAR  3616 – 62                                          MAY   222.10 – 1.00
MAY  3556 – 59                                          JUL     220.60 – 1.05
JUL    3497 – 57                                          SEP     219.00 – 1.05
SEP    3409 – 57                                          DEC    217.25 – 1.15
NOV  3364 – 57                                          MAR   215.75 – 1.15