Brazil’s government food supply and statistics agency CONAB have come forth to report that Brazilian Coffee producers are, due to larger biennial bearing factors for the arabica coffee farms, forecast to produce 53.43 million bags arabica for the July 2022 to June 2023 crop year.

This estimate has been revised downwards by 4.14% from their previous estimate of 55.74 million bags released in January this year. The revision by CONAB is cited to be due to adverse climatic conditions during development of the crop, adding that last year’s frost events affected yields. This revised crop estimate figure is 12.01% larger than the current downcycle crop year and 15.30% lower than the previous biennially bearing larger record crop seen during the 2020 crop cycle.

CONAB has projected that the July 2022 to June 2023 arabica coffee production is forecast to be 13.60% larger than the current year at a total of 35.71 million bags, while Robusta production is forecast to be 8.70% higher than the current year at a total of 17.70 million bags. The CONAB forecasts are traditionally conservative, and many would therefore anticipate this as an indication that the new 2022 Brazil coffee crop might reach closer to 63 million bags, in line with the forecasts that are coming to the fore from a number of independent bodies. This, as the Brazil conilon robusta crop is currently in harvest and the new Brazil arabica coffee crop continues to develop to maturity ahead of harvest that is soon to begin.

The July 2022 to July 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 124.35 usc/Lb. This equates to 56.86% price discount for the London Robusta coffee market. This wide arbitrage may be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,708 bags yesterday, to register these stocks at 1,108,296 bags, with 95.80% of these certified stocks being held in Europe at a total of 1,061,762 bags and the remaining 4.20% being held in the USA at a total 46,534. Of this, a total 871,968 bags, or 51.61% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.99% of these certified coffees, originating from Honduras. There was meanwhile a 3,575 bags increase to the number of bags pending grading to the exchange; to register 5,200 bags pending grading on the day.

It was a firmer day overall on the commodity markets yesterday, as the greater commodity basket saw widespread gains on inflation continues to plague international markets. The Coffee, Corn, Soybean, Wheat, Gold, Silver, Platinum and Palladium markets ended the day on a positive note, while the Cocoa and Sugar markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.245 Sterling, at 1.057 the Euro and with the US Dollar buying 4.931 Brazil Real.

The New York market started the day yesterday trading on a modest softer note, while the London market started the day trading on a modest firmer note, both markets would project in a softer path for the remainder of the morning session. As the afternoon progressed the markets would be pressured lower by some degree of selling pressure, this saw both the New York and London markets hit a floor to limit the gains for the day. The markets would rebound from the lows of the day and start to build momentum to trend in a firmer direction into the late afternoon session. The New York market continued on its upward momentum path before being capped briefly very late in the day. This saw the New York market settle on a firmer note, while the London market followed to also settle on a firmer note at the close.

The London market ended the day on a positive note with 80.95% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 61.11% of the earlier gains of the day intact. This firmer close for the markets might indicate some degree of consolidation following a week of mainly speculatively driven activity, to possibly set the markets for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                NEW YORK USC/LB.

JUL 2080 + 17                                             JUL 218.70 + 1.10
SEP 2081 + 15                                             SEP 218.80 + 1.10
NOV 2075 + 12                                           DEC 218.45 + 1.00
JAN 2069 + 9                                              MAR 217.50 + 0.85
MAR 2064 + 9                                            MAY 216.30 + 0.75
MAY 2060 + 10                                          JUL 214.65 + 0.65
JUL 2058 + 10                                            SEP 212.60 + 0.60
SEP 2054 + 10                                            DEC 210.50 + 0.60