Coffee Market Report
The respected U.S. Department of Agriculture Global Agricultural Network (USDA) have come forth to revise their forecast for the July 2024 to June 2025 Brazil coffee crop down by 5.01% from their estimate earlier in the year, to now total of 66.40 million bags. This figure represents a negligible increase in production of 0.15% when compared to the previous July 2023 to June 2024 biennially bearing crop and an increase in production of 6.07% in production when compared to the lower crop of July 2022 to June 2023 coffee year. The estimate for this 2024/25 coffee crop is marginally higher than the median consensus and already absorbed within the market.
The USDA report reflects a 1.13% increase in primarily natural process arabica coffee production for the July 2023 to June 2024 crop year to total 45.40 million bags, and a 1.87% decrease in Conilon Robusta coffee production, to total 21 million bags, when compared to the previous July 2023 to June 2024 coffee year. Of this current crop, the USDA forecasts that Brazil will export 6.03% or 2.60 million bags lower, overall than the previous July 2023 to June 2024 coffee year. They foresee estimated exports to potentially reach 40.50 million bags of green coffee for this current July 2024 to June 2025 coffee year.
The new Brazil coffee crop to come in 2025/26, is gradually developing and for the most part, weather has continued to be reported as conducive. This follows dry and warm weather conditions experienced within the arabica coffee regions during the 2nd and 3rd quarters of this year ahead of the start of the rain season, a factor that many market players are keeping an eye on as this could potentially impact the potential of the forming 2025/26 Brazil coffee crop. It is early days in the development phase and will need to be monitored going forward. The USDA has not provided their estimate for this crop to come in this latest report, but in this respect, early forecasts for this Brazil coffee crop may soon be anticipated to start to filter into the markets.
The USDA have come forth to revise their early forecast for the October 2024 to September 2025 coffee crop from Colombia, higher by 4.03%, to now total 12.90 million bags, with the USDA citing continued recovery from favourable weather conditions and producers adopting improved agronomic practices to mitigate climate changes. This production performance reflects a marginal 1.10% increase in production from the previous October 2022 to September 2023 coffee year. The report further anticipates green coffee exports from this fine washed arabica producing country to reach 10.90 million bags during the October 2024 to September 2025 coffee year, this figure 1.87% higher than the previous October 2022 to September 2023 coffee year.
While Brazil, Colombia, Peru, Indonesia, Uganda and smaller producers in East and Central Africa will be shipping coffees to supply the 2024/25 coffee year. The main harvest from Colombia, Central America, Mexico, Vietnam, India, China, are underway. These latter coffee countries have a collective export potential of 26 million bags arabica coffee, 34 million bags robusta coffee, while collectively Africa contributes around 12 million bags in both arabica and robusta export potential. The projection for the coffee year October 2024 to September 2025 is for global production to reach an estimated 169.50 million bags and for global coffee demand in the region of 171 million bags.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 14,774 bags yesterday, to register these stocks at 893,325 bags, with 98.09% of these certified stocks held in Europe at a total of 876,231 bags and the remaining 1.91% being held in the USA at a total 17,094 Bags. Of this, a total 477,306 bags or 53.43% of the coffees registered and stored in consumer country certified warehouses of the exchange, are Brazil washed arabica, and a further 13.90% of these certified coffees, from Nicaragua. The pending grading stocks were seen to decrease by 4,093 bags on the day, to register 78,935 bags pending grading on the day.
The January 2025 to March 2025 contract arbitrage between the London and New York markets widened yesterday, to register this at 78.57 Usc/Lb. This equates to 26.57% price discount for the London robusta coffee.
It was a mixed day on the commodity markets yesterday, with a newly released Reuters poll indicating that most economists anticipate a US Federal Reserve interest rate cut in December, with smaller rate reductions projected for 2025. The increase in geopolitical tensions contributing toward macroeconomic uncertainty. New York Arabica Coffee, Cocoa, Gold, Palladium and Platinum markets ended the day on a firm note, while the London Robusta Coffee, Corn, Sugar, Soybean, Wheat and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.258 Sterling, at 1.047 the Euro and with the US Dollar buying 5.813 Brazil Real.
The New York and London markets started the day yesterday trading on firmer notes respectively, bukling momentum during the morning session to see both the New York and London markets set a new high for the day’s session early in the day. The late morning session saw the markets drop back from the early highs but continue to trade in firmer territory for the remainder of the morning session. As the afternoon progressed, the New York and London markets traded back through par, albeit in comparatively fair volumes for the day of trade. The New York market quickly gathered support to rebound from the lows and gain momentum into the afternoon session, this saw the market settle on a firmer note, with more than half of the earlier gains of the day intact. The London market followed suit to likewise trade through par, to see the market set on a modest softer path into the late session. The London market recovered from the lows to settle on a modest near to unchanged note at the close.
The London market ended the day on a modest near to unchanged softer note with 31.43% of the earlier losses of the day intact, while the New York market ended the day on a positive note, with 64% of the earlier gains of the day intact. This mixed close for the markets, with the London market recovering most of the earlier losses to settle near on a modest softer note and the New York market settling on a firmer note, might inspire some degree of follow through support, albeit that the New York market fell back from the thirteen year high set during the session yesterday, one might think that the markets set for a follow through steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
JAN 4787 – 11 MAR 295.70 + 3.20
MAR 4732 – 10 MAY 293.15 + 2.90
MAY 4678 – 16 JUL 288.55 + 2.25
JUL 4616 – 18 SEP 283.65 + 1.75
SEP 4556 – 22 DEC 276.75 + 1.45
NOV 4510 – 25 MAR 270.40 + 1.05
JAN 4454 – 25 MAY 263.70 + 0.80
MAR 4405 – 24 JUL 256.75 + 0.50
