Coffee Market Report
Uganda is the leading robusta producer country in Africa and fourth largest robusta exporter to non-producing consumer markets is expected to produce around 6.50 million bags during the coming October 2024 to September 2025 coffee year or on par with the current coffee year. This crop is expected to be made up of 5.50 million bags of Robusta Coffee and around 1 million bags of arabica Coffee. The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the first eleven months of the current October 2023 to September 2024 coffee year to be 5.82 million bags and one might think with only one month left to report, that the country's exports will surpass the 6 million bag mark for the 2023/24 year.
There is an enthusiasm within the country to increase robusta productivity, which has a direct relationship to the improved value that producers are receiving for their coffee considering the robusta supply demand shortfall within the worldwide consumer markets, and the record prices reflected in the London futures market. The UCDA have partnered with the Agricultural Business Iniative (aBi) to design and implement a National Action Plan for compliance with the European Union Deforestation Regulation. Through this initiative, the Government of Uganda have allocated 13.90 billion Uganda Shillings to establish and implement a National Traceability System to manage EUDR compliance processes, the target to is have at least one million farmers registered with their geolocations recorded by the end of the year.
The April 2024 to March 2025 crop from Indonesia continues to flow to export markets, the current coffee crop which is around 85% robusta coffee and the balance arabica coffee, has been forecast ahead of the harvest to potentially reach a median of 11.50 million bags, which is 31.45% above that of the April 2023 to March 2024 total production. The local consumer market in Indonesia is estimated to absorb approximately 4.80 million bags of coffee internally, whereas imports of other origin coffees into the market is permitted to similarly boost the country’s bustling soluble and value addition local and export coffee roasting activities.
With very limited supply of current crop robusta coffee within Vietnam, the new crop is developing and should soon begin harvest. Weather conditions have been reported to be conducive through the rain season although showers will need to start to ease in the coming weeks, to aid the harvesting activities that can begin with limited interruption. The new October 2024 to September 2025 coffee crop harvest is ahead although signals are that the prevailing internal supply environment is unlikely to ease until this country’s new crop harvest starts to come to market toward the end of this year. The coming Vietnam 2024/25 coffee crop is expected to reach an estimated 28 million bags, of which 95% is robusta coffee.
The Brazil coffee growing regions are reported to be mostly dry this week following sporadic rainfall over the weekend. Weather forecasters had initially indicated the potential for light rains to come to the fore towards the end of the month over the coming weekend, although revised models are indicating rain to come toward mid-October. With very scarce access to irrigation, the spring rains are required to trigger the flowering season in the Brazil arabica districts and will need to be followed by regular summer rainfall to set the crop for the coming Brazil 2025/26 coffee year. The success of the rain season as well as the development of the Brazil 2025/26 crop to come, will be a factor that is closely monitored by all coffee market players, in view of the lower than anticipated performance due to inclement weather reducing the initial forecasts ahead of harvest versus the now complete harvest for production year Brazil 2024/25.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,140 bags yesterday, to register these stocks at 830,587 bags, with 97.90% of these certified stocks held in Europe at a total of 813,173 bags and the remaining 2.10% being held in the USA at a total 17,414 Bags. Of this, a total 402,559 bags, or 48.46% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 14.42% of these certified coffees, from Honduras. The pending grading stocks were seen to remain unchanged; to register 10,881 bags pending grading on the day.
The Certified robusta coffee stocks held against the London Exchange reported a decrease by 110,333 bags during the week leading up to the 23rd. September 2024, to register a total of 820,167 bags being held in northern hemisphere consumer country warehouses. Brazil Conilon robusta coffee accounting for over 80% of the coffee held against the London Exchange.
The November 2024 to December 2024 contract arbitrage between the London and New York markets narrowed yesterday, to register this at 22.08 Usc/Lb. This equates to 8.21% price discount for the London robusta coffee.
It was a firmer day overall on the commodity markets yesterday, as the markets begin to price in a second consecutive interest rate cut to come, with the traditional safe haven commodity, Gold reaching new record highs during the session yesterday. The Coffee, Cocoa, Corn, Sugar, Soybean, Wheat, Gold and Platinum markets ended the day on a firm note, while the Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.333 Sterling, at 1.114 the Euro and with the US Dollar buying 5.474 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 the trend early to gain momentum, gapping higher in limited volume as buy stops were triggered in early technical support. This buoyant support continued through the mid-morning session to see both the New York and London markets set new highs for the day. This support during the morning session encountered resistance near to the highs of the day and both markets gradually tracked lower and away from the mid-morning highs to trend back towards par. As the afternoon progressed the markets continued to trade within a steady range. The London market held support to post a late in the day recovery and settle near to the highs of the day, and the New York market dipped below par, touching the low of the day to see buyers return to the floor in support. The New York market settled on a modest firmer note away from the days’ high, on a positive note.
The London market ended the day on a positive note with 87.58% of the earlier gains of the day intact, while the New York market ended on a likewise positive note, with 38.23% of the earlier gains of the day intact. This follow through firmer close for the markets, might indicate some degree of consolidation to possibly see the markets set for a hesitant start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
NOV 5446 + 134 DEC 269.10 + 1.30
JAN 5152 + 117 MAR 266.85 + 1.00
MAR 4936 + 90 MAY 264.15 + 0.80
MAY 4787 + 78 JUL 260.90 + 0.65
JUL 4658 + 64 SEP 257.05 + 0.45
SEP 4561 + 47 DEC 251.35 – 0.05
NOV 4481 + 45 MAR 246.05 – 0.40
JAN 4391 + 45 MAY 241.30 – 0.60
