Coffee Market Report
| The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of July have registered 9.70% higher from the previous month, at 1,283,033 bags. This number proving to be higher than 1.16 million bags initial estimate by the Vietnam Customs Authority for the month's coffee exports. The cumulative export performance for the first ten months of the current October 2023 to September 2024 coffee year in Vietnam that is the largest producer of robusta coffee, is reported to be 3,220,634 bags or 12.65% lower than the same period in the previous year, at a total 22,224,532 bags.
This lower export performance for Vietnam during the month of July, continues to reflect the tight internal market conditions within this largest Robusta producing nation, as producers are relatively well financed through the firmer futures market structure and reticent sellers ahead of the new crop harvest to come. Weather conditions within Vietnam are reported to be conducive with summer rainfall over the main central highlands coffee districts, following a drier than normal first half of the year. These seasonal rains will be expected to continue through to October. The forecasts from the U.S. Governments National Weather Service’s Climate Prediction Centre have reported that there is a 74% chance that La Niña weather conditions will develop by September and prevail for the remainder of the year, into the beginning of 2025. With ENSO neutral weather conditions present. The strength and timing of these weather patterns that are related to the warming or cooling of notably the Pacific Ocean temperatures will be closely monitored. In the event of La Niña, this is a cooling phenomenon that generally brings about accentuated drier weather conditions in regions of southern continent America and excessive rainfall in equatorial areas which can impact the Pacific Rim countries. With the exclusion of Brazil, which is a well-established coffee consumer market that is second only to the USA in consumption terms; there are relatively new coffee consumer markets which have developed over time, mostly within the coffee producer sector; countries such as China, India, Indonesia and Vietnam, have registered increased internal coffee consumption, as well as growth within the value add and export sector. Albeit that for these more traditional tea consumer markets, coffee consumption is developing from a very low base. China continues to report year on year growth in coffee consumption, with the USDA reporting that domestic consumption is forecast to grow by 4% during the October 2023 to September 2024 coffee year, to total 5 million bags. This is mainly comprised of coffees produced locally within China, with less than 40% of the total consumption reported to be imported green coffee. The USDA estimates the October 2023 to September 2024 domestic coffee consumption in India could grow by 2.42% to 1,270,000 bags, when compared to the previous year. This is indicated to be largely driven by sales of soluble coffee for at home consumption through e-commerce and retail channels. As well as a rise in at home consumption that will be supported by the out-of-home hospitality HORECA hotels, restaurants, catering and institutional sectors. There has similarly been an increase registered over recent years throughout non-producer nations in southeast Asia and Middle East, as the trendy out of home coffee shops in urban areas, attract younger generations to coffee consumption. Coffee consumption within South Korea has been reported to see overall coffee imports during 2023 reaching 3.22 million bags, according to Korean Customs Services. These imports primarily made up of 90% green bean raw material, with the remainder roasted finished product. This country has seen steady growth in consumption over the last six years, reaching a peak of 3.33 million bags during the 2022 calendar year. It is reported that the growth in consumption is being led by a developing coffee shop culture, with a large percentage of the population living in urbanised areas. Overall, the demand for coffee continues to register increases year on year out of Asia and is put at 34.90 million bags for the October 2023 to September 2024 coffee year or 2.5% higher than the previous year October 2022 to September 2023 coffee year. The Certified washed arabica coffee stocks held against the New York arabica market were seen to increase by 2,260 bags yesterday, to register these stocks at 828,704 bags, with 98.11% of these certified stocks held in, Europe at a total of 813,061 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 50.45% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.71% of these certified coffees, from Honduras. The pending grading stocks were seen to decrease by 2,025 bags on the day; to register 47,643 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 43.99 Usc/Lb. This equates to 17.93% price discount for the London robusta coffee. It was a mixed day on the commodity markets yesterday, with the leading in influence Oil market firmer on the day. The Sugar, Gold, Silver, Platinum and Palladium markets ended the day on a firm note, while the Coffee, Cocoa, Corn, Soybean and Wheat markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.275 Sterling, at 1.092 the Euro and with the US Dollar buying 5.547 Brazil Real. The New York and London markets started the day yesterday trading to the south of par on modest softer notes respectively, the markets reversed this trend to gain support quickly during the very early session in limited volumes of trade. The markets continued on a firmer trajectory throughout the remainder of the morning session, buoyed by support in the markets. As the afternoon progressed, the markets were seen to set a ceiling for the day, to limit the gains for the session. The markets encountered resistance to drop back from the early highs and trend through par and into negative territory. 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, setting a large trading range on the day. 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. The London market ended the day on a negative note with 66.18% of the earlier losses of the day intact, while the New York market ended on a likewise negative note, with 31.25% of the earlier losses of the day intact. This softer close for the markets, might indicate some degree of consolidation post two very firm sessions, albeit that the markets recovered from the lows of the day during the late afternoon session and with first notice day in the prompt month in New York approaching in less than two weeks time, one might think that the markets are 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 4436 – 45 SEP 245.30 – 1.00 |
