Coffee Market Report
The agribusiness analysts, Safras & Mercado have issued their estimate that almost 98% of the new Brazil coffee crop has already been harvested, as of the 19th August 2024. The harvest this year is at a faster pace, when compared to the same time last year which was reported at around 95%. Based on their forecast for a new crop of 66.04 million bags, the report would indicate that so far approximately 64.72 million bags of the new crop coffee have been harvested, the coffee made up of around 20.70 million bags of Conilon robusta coffee, which is reported to be complete and approximately 44.02 million bags of arabica coffee harvested, which is reported at 97% complete thus far.
A Reuters poll taken with eleven leading trade and market analysts has concluded that the present October 2023 to September 2024 global coffee surplus shall be approximately 700,000 bags. The poll also concluded that the global coffee supply is seen to be in a narrow surplus of 150,000 bags for the coming October 2024 to September 2025 coffee year.
While in terms of the global coffee supply factor and while the poll concluded that the current July 2024 to June 2025 Brazil crop is likely to be around 68.10 million bags. The poll has indicated that for the coming Brazil July 2025 to June 2026, the next biennially bearing year in the Brazil coffee cycle production levels will be around 70.75 million bags.
The poll concluded that the coffee markets are due to continue on a bullish trajectory later in the year and that it is likely that the New York market, will be trading at around 260 usc/Lb or up 7.04% from yesterdays close and the London market at around US$ 4,750.00 per Mt., or up 3.85% from yesterdays close, by the end of the year.
One might comment that while the Reuters report is a summary average drawn from eleven leading trade and market analysts, most recent industry and independent reports point to a supply deficit for the current October 2023 to September 2024 coffee year, with limited producer and consumer carryover stocks visible into the coming October 2024 to September 2025 coffee year ahead. The development of a smaller than initially anticipated Brazil 2024/25 crop, as well as a reduction in potential production projections for the coming 2024/25 Vietnam coffee crop, anticipated due to adverse weather conditions during crop development. This while the primary washed arabica production to come from Colombia, Mexico and Central America in 2024/25 coffee year, will begin to pick up pace towards the end of the year and is thus far anticipated to bring in a steady overall production estimated in the region of 27.50 million bags for the coming October 2024 to September 2025, coffee year.
Monday shall see the UK celebrate their Summer Bank Holiday, this will see the London Robusta Market closed for the day, leaving the New York market to trade solo on the day.
The Certified washed arabica coffee stocks held against the New York arabica market were seen to decrease by 4,063 bags yesterday, to register these stocks at 838,167 bags, with 98.13% of these certified stocks held in, Europe at a total of 822,524 bags and the remaining 1.87% being held in the USA at a total 15,643 Bags. Of this, a total 408,445 bags, or 48.73% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.02% of these certified coffees, from Honduras. The pending grading stocks were seen to decrease by 1,190 bags; to register 29,326 bags pending grading on the day.
The November 2024 to December 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 35.43 Usc/Lb. This equates to 14.59% price discount for the London robusta coffee.
It was an overall softer day on the commodity markets yesterday, with the US Dollar gaining ground against a basket of other currencies, a firmer Dollar is seen to be a bearish factor for commodities traded in other currencies. Whilst investors look to the next US Federal Reserve meeting in September for the first interest rates cuts to come. The Cocoa and Sugar markets ended the day on a firm note, while the Coffee, Corn, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a negative note. The day starts with the U.S. Dollar trading at 1.310 Sterling, at 1.113 the Euro and with the US Dollar buying 5.593 Brazil Real.
The New York market started the day yesterday trading to the south of par, pressured lower from the outset, whilst the London market started the day trading on a firmer note, gaining momentum to set a new high for the day during the early morning session. The support in London filtered into the New York market to see the market likewise gain momentum and set a new high for the day during the early session. This support was short lived as both the New York and London markets were seen to encounter resistance during the morning session to drop back below par and trend softer for the remainder of the morning session. As the afternoon progressed the volume increased, to contribute to the day’s direction with speculative selling pressuring the New York market lower as stops were triggered along the way. The London market followed suit, and the markets continued to project lower with a measure of speculative long liquidation to accentuate the losses for the day’s trade. The late afternoon session saw the markets rebound off of the lows of the day to recover a small degree of losses, to see the markets settle on negative notes at the close.
The London market ended the day on a negative note with 60.41% of the earlier losses of the day intact, while the New York market ended on a likewise negative note, with 77.91% of the earlier losses of the day intact. This softer close for both New York and London markets, with the markets pressured lowered throughout the session to settle near to the lows of the day in a comparatively lighter volume session, might see the markets set for little better than a hesitant start to early trade today, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
SEP 4903 – 51 DEC 242.90 – 6.35
NOV 4574 – 58 MAR 241.20 – 5.85
JAN 4380 – 60 MAY 239.30 – 5.65
MAR 4221 – 58 JUL 237.15 – 5.45
MAY 4106 – 56 SEP 234.90 – 5.45
JUL 4005 – 57 DEC 232.40 – 5.40
SEP 3931 – 58 MAR 229.75 – 5.40
NOV 3870 – 58 MAY 227.10 – 5.35
