Following on from a new crop survey, Rabobank has come forth with their revised report to forecast Brazil coffee production could potentially be around 56.20 million bags the coming July 2021 to June 2022 coffee year, this revised forecast lower by 1.20 million bags from their December estimate of 57.40 million bags. The forecast anticipates 36 million bags to come from this leading producer of mostly natural arabica coffee, along with an estimated 20.20 million bags Conilon robusta coffee.

The smaller biennial bearing coffee crop which continues to develop toward harvest traditionally around April in the Conilon robusta areas, and arabica regions to follow a couple of months later, may be anticipated to carry better than average carryover stocks from this current record crop, which Rabobank have forecast to reach 67.50 million bags in 2020/21. These carryover stocks, to contribute toward an estimate of an overall 10.50 million bags of surplus coffee in the current year, to provide a boost to the approaching lower crop to come from Brazil in the new July 2021 to June 2022 coffee year.

The record Brazil harvest of 2020/21 has meanwhile registered significant month on month exports to consumer markets, with a cumulative 25.36 million bags exported in the first seven months of this seasonal year, with another five months ahead for shipments from this current crop, a potential for this country to reach 44 million bags of a combination of both arabica and conilon robusta exports to consumer markets in the current seasonal coffee year. The question therefore, with this years’ carryover coffee stocks that are anticipated to supplement any foreseeable shortfall in supply of coffee from the 2021/22 crop to come, that will fuel both Brazil's sizeable local and export consumer demand, is what the foreseeable potential for the following year July 2022 to June 2023 Brazil crop potential is likely to be. This, with many months ahead, should bring forth a Brazil production year that is a biennial higher bearing arabica crop year, though the circumstances surrounding production potential leading up to this crop cycle, will play out in the context of the, by then, realised smaller arabica crop from Brazil in 2021/22. One might anticipate that this next crop potential could become a focal point within the speculative sector of the futures markets, toward the latter part of this year. Meanwhile the new 2021/22 smaller arabica crop continues to develop toward the traditional harvest due to start mid this year, in the Brazilian winter months, while in agricultural terms, there is considerable time ahead and before the last quarter of this calendar year, when the arrival of the Brazil spring and summer rains will be required, to initiate the onset of next coffee production year to come from Brazil in 2022.

The May-to-May contract arbitrage between the London and New York markets widened yesterday: to register this at 72.08 usc/Lb. This equates to 52.12% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 17,999 bags yesterday, to register these stocks at 1,757,390 bags, with 94.6% of these certified stocks being held in Europe at a total of 1,662,552 bags and the remaining 5.4% being held in the USA at a total 94,838 bags. There was meanwhile a smaller in number 6,401 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 85,355 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to increase by 30,167 bags over the weeks of trade leading up to Monday 22nd. February, to see these stocks registered at 2,414,667 bags, on the day.

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive track for the day. The Cocoa and Coffee markets ended the day on a positive note, while the Sugar market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.63% higher; to see this index registered 506.51. The day starts with the U.S. Dollar, trading at 1.416 Sterling, at 1.215 the Euro and with the US Dollar buying 5.441 Real.

The New York and London markets started the day yesterday trading close to par on a modest firmer note, both markets quickly attracted buying support to see the markets set on a firm path for the remainder of the morning session. As the afternoon progressed, the New York market fell back from the highs of the morning before rebounding to rally late in the day, this saw the market settle on a firm note near to the highs of the day. The London market continued on a firmer track for the afternoon session before hitting a ceiling limiting the gains for the day, the market dropped back slightly to settle near to the highs of the day.

The London market ended the day on a very firm positive note with 89.80% of the earlier gains of the day intact, while the New York market ended the day on a likewise firm positive note with 90.54% of the earlier gains of the day intact. This very firm close, with both markets retaining the earlier in the day gains to see the markets settle near to the highs of the day, might inspire some degree of confidence as well as indicate direction and one might think the markets are due for a follow-through steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT               NEW YORK ARABICA USc/Lb.

MAR 1444 + 53                                         MAR 136.85 + 3.40
MAY 1460 + 44                                         MAY 138.30 + 3.35
JUL 1475 + 44                                           JUL 140.05 + 3.35
SEP 1491 + 46                                           SEP 141.55 + 3.25
NOV 1504 + 44                                         DEC 142.90 + 2.90
JAN 1517 + 43                                          MAR 143.90 + 2.70
MAR 1533 + 43                                         MAY 144.35 + 2.65
MAY 1549 + 43                                          JUL 144.70 + 2.60