Coffee Market Report
The Coffee Board of India have reported their production figure for the October 2023 to September 2024 coffee crop to have reached a total of 6.00 million bags. This figure in line with earlier reports from independent forecasters. The Coffee Board have signalled that there may be a drop in production for the current October 2024 to September 2025 coffee year, to come in at a marginally smaller 5.95 million bags due to unfavourable weather conditions experienced in the Karnataka and Kerala regions. High temperatures during the earlier months of April and May, may have affected the flowering and cherry set of the trees during the early stages of development. These warmer than usual temperatures were followed by heavy rainfall during July and throughout the first half of August, which is traditionally seen as the monsoon season over the main coffee districts runs from June through to September. The India Meteorological Department have reported that the country had received on average, 7% more rainfall this monsoon season when compared to last year, with the new 2024/25 predominantly robusta coffee crop shortly due to begin harvest in the weeks ahead.
The European Union's Deforestation Regulation (EUDR), originally set to be enforced by December 2024, has seen the European Commission propose a twelve-month delay to the implementation of the regulation following calls from various industry consortium and government lobbies, in response to the unintended consequences that the implementation of the regulation now, may have for millions of small-scale farmers worldwide. The European Union Deforestation Regulation is part of the EU’s Green Deal and aims to curb deforestation by banning the import of commodities linked to forest degradation, to include Coffee, Cattle, Cocoa, Oil Palm, Rubber, Soy and Wood. The delay has been met with criticism from environmental groups, arguing that it sends the wrong message regarding forest protection efforts. Despite the proposed postponement, the key provisions remain unchanged, requiring businesses to prove their supply chains are deforestation-free through strict due diligence processes. The delay would allow more time for supply chain actors, government and private industries, exporting and importing countries, to adjust and gather all the required due diligence information from rural and mostly infrastructurally underdeveloped supply chains that at the source, are primarily smallholder communities. The proposed delay will need the approval of the European Parliament and Council and with a little over two months before the looming deadline, there has been no firm date set yet, for the vote to take place.
Weather conditions within Brazil have been reported to have improved over the first two weeks of October, assisting to boost soil moisture levels and support the flowering of the next 2025/26 coffee crop. Weather forecasters are expecting rainfall levels to increase for the remainder of the week, with more intensified rain due to key coffee growing regions of Espírito Santo, Minas Gerais and Sao Paulo and expected to continue through to next week. One might comment that the relative uncertainty of the potential strength and timing of the forecasted La Niña weather phenomenon will be closely monitored ahead of the next Brazil coffee crop to come, as this may bring with it drier weather to the vast Southeastern Brazil coffee growing regions.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 5,550 bags yesterday, to register these stocks at 828,713 bags, with 97.98% of these certified stocks held in Europe at a total of 811,939 and the remaining 2.02% being held in the USA at a total 16,774 Bags. Of this, a total 371,932 bags, or 44.88% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 16.47% of these certified coffees, from Nicaragua. The pending grading stocks were seen to decrease by 15,220 bags, to register 44,030 bags pending grading on the day.
The Certified robusta coffee stocks held against the London Exchange reported a decrease by a decent 12,333 bags, during the week leading up to the 14th October 2024, to register a total 696,500 bags being held in northern hemisphere consumer country warehouses.
The November 2024 to December 2024 contract arbitrage between the London and New York markets widened yesterday, to register this at 34.01 Usc/Lb. This equates to 13.25% price discount for the London robusta coffee.
It was softer day on the commodity markets yesterday, with the market turning its focus to upcoming US retail sales and Jobs data due out in the week ahead, with a largely accepted view that a further 25 basis point interest rate cut will come in November. The Cocoa, Sugar, Gold and Silver markets ended the day on a firm note, while the Coffee, Corn, Soybean, Wheat, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.307 Sterling, at 1.089 the Euro and with the US Dollar buying 5.653 Brazil Real.
The New York market started the day trading to the south of par on a softer note, while the London market started the day trading to the north of par on a firmer note. Both markets were pressured lower during the early session, dropping below par to trend in a softer direction from the open. The markets continued a softer trajectory as resistance was encountered to see the markets move lower during the remainder of the morning session. As the afternoon progressed, the New York and London market were seen to briefly recover from the lows of the morning to gain momentum and set a new high for the day. This support was short lived, and the markets dropped back to see the volume increase to contribute to the day’s direction with speculative selling on the New York floor assisting to trigger stops along the way. The London market followed suit, and the markets continued to project lower to accentuate the losses for the day’s trade. The selling activity started to wane toward the end of the days’ trade, to see the markets marginally recover some of the earlier losses of the day, in limited volumes of trade for both the New York and London markets, to settle near to the lows of the day, on a soft note at the close.
The London market ended the day on a negative note with 85.71% of the earlier losses of the day intact, while the New York market ended on a likewise negative note, with 79.85% of the earlier losses of the day intact. This softer close, with both the New York and London markets settling near to the lows of the day with most of the earlier losses intact, might lead one to think that the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
NOV 4909 – 60 DEC 256.70 – 5.35
JAN 4778 – 65 MAR 255.50 – 5.05
MAR 4638 – 63 MAY 253.55 – 4.95
MAY 4524 – 61 JUL 250.40 – 4.90
JUL 4416 – 59 SEP 246.45 – 4.90
SEP 4341 – 52 DEC 240.50 – 5.05
NOV 4269 – 50 MAR 235.25 – 5.10
JAN 4189 – 50 MAY 230.60 – 5.05
