The analysts Safras & Mercado have reported than an estimated total 75% of the new Brazil coffee crop has already been harvested.  Based on their forecast for a new crop of 61.10 million bags, the report would indicate that so far approximately 45.83 million bags of the new crop coffee have been harvested. The pace of harvest at this time across a 5-year average is reported to be around 80%, noting that the that current crop harvest is slightly delayed when compared to that of the recorded five-year average, but not as delayed when compared to last year’s harvest which at the same point in time was recorded at 77% complete. 

The September 2022 to September 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 127.01 usc/Lb. This equates to 58.15% 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 285 bags yesterday, to register these stocks at 700,050 bags, with 91.99% of these certified stocks being held in Europe at a total of 643,977 bags and the remaining 8.01% being held in the USA at a total 56,073 bags. Of this, a total 247,518 bags, or 35.36% of the coffees registered and stored in consumer country certified warehouses of the exchange, is Brazil washed arabica, and a further 52.49% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The export season for Mexico and Central America is drawing to a close with two months left of the current October 2021 to September 2022 coffee year. This washed arabica producer bloc originally recorded increases in year-on-year comparative monthly export figures to consumer markets at the outset, has subsequently, seen coffee availability from these countries tighten, far earlier in the export season than is traditional. The initial forecasts last year for another 6 million bag crop from Honduras in particular, ahead of this country’s October 2021 to September 2022 harvest, has subsequently seen field surveys and forecasters register downward revisions as the seasonal coffee export year has progressed, to be somewhere in the region of 4.8 million bags. A similarly restrained export season experienced in neighbouring quality washed arabica producer countries, El Salvador, Costa Rica, Guatemala, and Nicaragua. The prevailing value to be had against the New York arabica market meanwhile, might be seen to be providing some relief to these washed arabica coffee producers, following six successive years of low prices against the New York arabica futures market, which many would consider to be below these producer countries’ cost of production. The question looking ahead, is whether the last eighteen months of improved value in New York will be sufficient, when countered by the impact of the latest round of steep increases in fertiliser costs will be for quality washed arabica coffee production ahead of the new crop to come. This, while the world at large and traditionally vulnerable economies, must contend with factors of rising inflationary costs, to include inputs and labour requirements, when the time approaches for the new crop harvests that are due to start in the lower lying areas in these countries, in the fourth quarter of this year.

For the medium term meanwhile, and barring an as yet unforeseen shift in coffee market fundamentals, it is unlikely that the New York washed arabica exchange certified stocks will register large increases in coffees to be graded to the exchange, and could continue to be viewed as a contributory bullish factor by the speculative sector of the coffee futures markets.

It was a mixed but overall firmer day on the commodity markets yesterday, as the US Dollar lost further ground against a basket of other commodities however the Federal Reserve raised interest rates by a further three quarters of a basis point overnight offsetting the weakness in the US Dollar. The London Robusta Coffee, Sugar, Corn, Soybean, Wheat, Gold, Silver and Palladium markets ended the day on a positive note, while the New York Arabica Coffee, Cocoa and Platinum markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.218 Sterling, at 1.019 the Euro and with the US Dollar buying 5.184 Brazil Real.

The New York and London markets started the day yesterday trading on a firmer note, the markets quickly gained momentum, buoyed some degree of buying support early in the day. This saw the markets have their gains capped early during the mid-morning session. The markets dropped back from the days highs to be set on a softer trend back towards par. As the afternoon progressed, the markets traded to the south par, this as further selling pressure saw the New York market trend in a softer direction, the London market followed albeit in a more sedate manner. The New York market staged a late in the day recovery, to see the market recover mostly all of the earlier losses of the day to settle on a near to unchanged note at the close, while the London market followed suit to recover all of the earlier losses and to see the market settle on a modest near to unchanged firmer note at the close.

The London market ended the day on a positive note with 53.57% of the earlier gains of the day intact, while the New York market ended the day on a negative note with 14.43% of the earlier losses of the day intact. This mixed close for the markets does little to indicate direction, albeit that the markets recovered most of the losses of the day to settle near to unchanged from the previous day, one might think that the markets are due for a hesitant steady start to early trade today, against the prices set yesterday, as follows:

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

SEP     2015 + 6                                          SEP      218.40 – 0.70

NOV     2014 + 7                                        DEC     214.60 – 0.75

JAN     1991 + 6                                           MAR     209.85 – 1.00

MAR    1973 + 9                                          MAY     207.05 – 1.05

MAY    1969 + 11                                     JUL      205.20 – 0.90

JUL 1963 + 11                                       SEP 203.55 – 0.80

SEP 1960 + 12                                       DEC 201.95 – 0.70

NOV 1957 + 12                                     MAR 200.00 – 0.65