Coffee Market Report

The export season for the main producer countries is drawing to a close, with less than two months left of the current October 2023 to September 2024 coffee year, ahead of new crop harvests to come from Colombia, Costa Rica, El Salvador, Guatemala, Honduras and Mexico which are expected to start flowing to consumer markets towards the beginning of next year.

Meanwhile, with the July 2024 to June 2025 crop harvest mostly complete in the Conilon robusta regions, the arabica harvest is still underway in the southeast, and the month of August, which is seasonally, the last of the winter months, weather forecasters are indicating a cold front to move through Parana over the coming weekend, temperatures are not expected to drop below freezing, to likely dampen any residual cool weather speculative activity within the coffee terminal markets as the frost window comes to an end and the last winter full moon due on the 19th August. Temperate conditions are forecast for the longer-term outlook across the vast coffee growing areas. The focus within the speculative sector of the markets may soon turn to the longer-term forecasts and weather prospects for the onset of the new spring and summer rain season for Brazil, to come in the last quarter of the year, to trigger the flowering for the next 2025 crop to come.

While the northern hemisphere largest consumer markets continue to enjoy the summer season, the winter buying activities should be anticipated to start to come to the fore around September, ahead of the new October 2024 to September 2025 coffee year, and in Europe the EUDR conditions for compliance are not yet clarified lending some uncertainties in this respect.

The Certified washed arabica coffee stocks held against the New York arabica market were seen to increase by 1,860 bags yesterday, to register these stocks at 826,444 bags, with 98.11% of these certified stocks held in, Europe at a total of 810,801 bags and the remaining 1.89% being held in the USA at a total 15,643 Bags. Of this, a total 418,116 bags, or 50.59% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.69% of these certified coffees, from Honduras. The pending grading stocks were seen to decrease by 4,381 bags on the day; to register 49,668 bags pending grading on the day.

The Certified robusta coffee stocks held against the London Exchange were seen to decrease by 28,000 bags during the week up to the 5th August 2024, to register a total of 1,047,000 bags, with Brazil Conilon accounting for over 90% of coffee held against the London Exchange.

The September 2024 to September 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 43.05 Usc/Lb. This equates to 17.48% price discount for the London robusta coffee.

It was a mixed day on the commodity markets yesterday, with the latest Reuters poll indicating that majority of economists are pricing in a 100% chance that the US Federal Reserve will start with their rate cutting cycle next month. The Coffee, Cocoa, Sugar, Platinum and Palladium markets ended the day on a firm note, the Gold market remained unchanged on the day, while the Corn, Soybean, Wheat and Silver markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.270 Sterling, at 1.093 the Euro and with the US Dollar buying 5.6369 Brazil Real.

The New York and London markets started the day yesterday trading on modest softer notes respectively. The London market quickly gained momentum gapping higher at the outset of the early morning session, in limited volume. The New York reversed the trend early to make significant gains throughout the early morning session. 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 70% of the earlier gains of the day intact, while the New York market ended on a likewise positive note, with 85.89% 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, ahead of options expiry on the prompt month in the New York due in two days’ time. One might therefore think that the markets might be pressured for a steady start to early trade today, against the prices set yesterday, as follows:

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

SEP     4481 + 98                                        SEP    246.30 + 10.35
NOV   4286 + 96                                        DEC   242.00 + 9.05
JAN     4131 + 95                                       MAR  238.70 + 7.95
MAR   3986 + 83                                       MAY  236.00 + 7.70
MAY   3888 + 83                                       JUL    233.40 + 7.45
JUL     3804 + 88                                       SEP     230.75 + 7.15
SEP     3732 + 86                                       DEC    227.80 + 6.95
NOV   3672 + 86                                       MAR   224.95 + 6.80