Coffee Market Report

The active and influential U.S.A. based markets are closed for the day tomorrow, in observation of the country's Independence Day holiday, which will see the London market trading solo for a shortened day of trade on the day.

On the weather front, the hurricane season for the Gulf of Mexico has started and Hurricane Beryl has formed, already moving through the Caribbean. This weather phenomenon is forecast to track in a northerly direction toward the coast of Mexico due to make landfall over the coming weekend. These tropical storms bring high winds, torrential rainfall and widespread flooding with often negative humanitarian and infrastructural impact, a number of these storms reaching hurricane status throughout the season. Hurricane Beryl is not foreseen to pose a climatic threat for the ripening new crop coffees within the Central American and Mexico producer bloc. The hurricane season if active, can bring with spells of heavy rainfall during the start of the October 202 to September 202 new crop harvest season for Central America and Mexico coffee producers. There was some degree of negative impact in recent times for coffee crop potential, following the La Nina influenced active hurricane season in the fourth quarter of 2020. This, when two fierce and back-to-back hurricanes Eta and Iota made landfall in Central America, moving across the region with high winds and heavy rainfall, the latter a hurricane category four when making landfall in Nicaragua. With the latest longer term weather forecasts indicating that the ENSO pendulum may shift toward another La Nina phenomenon toward the latter half of this year, there may be some degree of weather-related market volatility in the months to come.

The certified washed arabica coffee stocks held against the New York Exchange continue to register gradual increases, climbing to levels last seen in February 2023, up from more than twenty-year lows recorded earlier in the year, to register a low 823,726 bags yesterday. This marks an increase of 279,131 bags or 51.25% from the same time last year when the certified washed arabica coffee stocks registered 544,595 bags on 3rd July 2023. These daily released figures are received by the speculative sector of the markets, as an indication of arabica coffee availability, or lack thereof, in the consumer markets where these exchange certified coffee stocks are held.

The Certified washed Arabica coffee stocks held against the New York arabica market were seen to increase by 8,010 bags yesterday, to register these stocks at 823,726 bags, with 98.84% of these certified stocks held in, Europe at a total of 814,133 bags and the remaining 1.16% being held in the USA at a total 9,593 Bags. Of this, a total 423,782 bags, or 51.45% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 15.73% of these certified coffees, originating from Honduras. The pending grading stocks were seen to decrease by 7,341 bags; to register 23,574 bags pending grading on the day.

The September 2024 to September 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 41.69 Usc/Lb. This equates to 18.34% price discount for the London Robusta coffee.

It was a mixed day overall on the commodity markets yesterday, with the leading in influence Oil markets firmer on the day. The Coffee, Cocoa, Corn, Soybean, Sugar, Platinum and Palladium markets ended the day on a positive note, while the Wheat, Gold and Silver markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.268 Sterling, at 1.074 the Euro and with the US Dollar buying 5.676 Brazil Real.

The New York and London markets started the day yesterday trading to the south of par, pressured lower during the early morning session to accentuate the losses in very light volumes of trade. Both markets attracted buying support during the late morning session to track mildly firmer for the remainder of the morning session, gaining momentum, as support was seen to build. As the afternoon progressed the New York and London markets continued to trend in a firmer direction, as trade volume began to pick up, albeit still comparatively light, the markets hit a ceiling to limit the gains for the day with sellers returning to the floor. This saw the New York and London markets drop back from the earlier highs. The London market dropped back from the highs of the day to trend back towards par and settle on a modest firmer note with only some of the earlier gains of the day intact, whilst the New York market settled on a likewise firmer note at the close, albeit back from the highs of the day.

The London market ended the day on a positive note with 44.64% of the earlier gains of the day intact, while the New York market ended on a likewise positive note, with 44.14% of the earlier gains of the day intact. This firmer close for the markets, might provide some degree of support and direction, albeit that the London and New York markets fell back from the highs of the day during the session, to possibly 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.

SEP     4092 + 25                                         SEP     227.30 + 2.45
NOV   3931 + 30                                         DEC    224.70 + 2.35
JAN    3756 + 33                                         MAR   222.60 + 2.05
MAR  3644 + 18                                         MAY   220.35 + 1.80
MAY  3568 + 7                                           JUL     218.40 + 1.65
JUL    3503 – 1                                           SEP     216.60 + 1.60
SEP    3439 – 2                                           DEC    214.90 + 1.55
NOV  3394 – 2                                           MAR   213.45 + 1.45