Vietnam, the largest robusta producer and exporter to consumer markets, has with Tet Lunar New Year celebrations observed in January this calendar year, seen a steady flow of new crop robusta coffees arrived to the ports and with the easing of logistical challenges from this part of the world in comparison to the same time last year, readily being shipped to consumer markets. The median estimate for the current October 2022 to September 2023 production coffee year is anticipated to reach 28.50 million bags. This forecast is 7.57% lower than the previous year, that is made up from 27 million bags robusta coffee, down 6.90% from the previous coffee year and 1.50 million bags of arabica coffee, up 7.30% from the previous coffee year. The well-respected United States Department of Agriculture USDA Global Agricultural Information Network report that carryover stocks from the previous October 2021 to September 2022 coffee year to be in the region of 4.89 million bags of coffee.

Of this new October 2022 to September 2023 crop, the forecast is that Vietnam will export 0.81% or 200,000 bags of green coffee less than the previous October 2021 to September 2022 coffee year, at a total of 24.50 million bags. One might anticipate that so long as the arbitrage between the New York Arabica futures market and the London Robusta futures market remains relatively wide, the price gap may be viewed by price sensitive roasters as an attractive alternative discount for robusta coffee against the comparatively higher value arabica coffee, leading some roasters to allow for the inclusion of, or increased usage of robusta coffee into their blends, within price constrained and aggressively competitive consumer markets.

Outside of Brazil, whose Conilon robusta coffee production is second in size to Vietnam, these robusta coffees for the most part absorbed internally; Indonesia remains second in size of exports of robusta coffee production to importer consumer markets. This country is near to completing the current April 2022 to March 2023 coffee year, that has been estimated at 11.35 million bags by the latest United States Department of Agriculture USDA Global Agricultural Information Network report. Looking to the development of their new mostly robusta crop developing ahead of the next April 2023 to March 2024 coffee year, for which this third largest robusta producer will start to harvest in the months to come. This country has likewise seen their internal coffee consumption and value add industry expand over time, are reported to have exported a cumulative 6.92 million bags over the 12-month period October 2021 to September 2022.

Within Uganda meanwhile, the leading robusta producer country in Africa., fourth largest exporter to non-producing consumer markets, had seen their October 2022 to September 2023 coffee crop initially estimated, ahead of harvest to be around 6.40% lower than the previous year which reached a reported record for the country, total of 6.45 million bags. This figure made up of a forecasted 5.50 million bags robusta coffee and 950,000 bags arabica coffee. There has since been some development within the Uganda robusta supply for the first half of this year, early reports are that the crop has come in significantly lower than was initially anticipated by most independent forecasters. Of this new crop, it was initially expected that Uganda could reach 6.35 million bags of green coffee, a figure that will likely need to be adjusted in line with the apparent and unanticipated decline in robusta production. The governing authority programs continue to be supportive for coffee production, expansion and training programs as well as free market economics, which align with the country's ambitions to continue to increase coffee production and foreign exchange earning income in the years to come.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 158 bags yesterday, to register these stocks at 832,072 bags, with 95.13% of these certified stocks being held in, Europe at a total of 791,545 bags and the remaining 4.87% being held in the USA at a total 40,527. Of this, a total 432,919 bags, or 52.03% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 44.78% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register no pending grading on the day.

The Certified Robusta coffee stocks held against the London exchange have been reported to increase by 69,833 bags over the week of trade leading up to Monday 20th February to see these stocks registered at 1,059,000 bags on the day.

The May 2023 to May 2023 contract arbitrage between the London and New York markets widened yesterday to register this at 93.10 usc/Lb. This equates to 49.04% 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.

It was a mixed day on the commodity markets yesterday, with the leading in influence Oil market lower on the day, while the US Dollar gained ground against a basket of other currencies yesterday. The Coffee, Corn, Soybean, Sugar, Silver, Palladium and Platinum markets ended the day on a positive note, while the Cocoa, Oil, Wheat and Gold markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.210 Sterling, at 1.065 the Euro and with the US Dollar buying 5.168 Brazil Real.

The New York and London markets started the day trading on a firmer note, carrying through the momentum from the previous sessions close. The markets attracted some degree of selling pressure to drop back below par for the remainder of the morning session. As the day progressed, a firmer trend built as activity increased in New York. The Brazil Carnival celebrations continue this week, to remove this producer from commercial activity this week, and the arrival of the America’s at the start of their business day pushed New York higher, triggering buy stops along the way to accentuate the gains for the day. This saw the New York market gain ground quickly throughout the afternoon session, in large volumes of trade. The late afternoon session saw the London market follow suit. The New York market continued the upward momentum before being capped during the late afternoon session, the market fell back from the day's highs to settle on a firmer note at the close. The London market maintained most of the earlier gains to settle on a firmer note at the close.

The London market ended the day on a positive note with 84.21% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 56.94% of the earlier gains of the day intact. This follow through very firm close for the markets, might indicate some degree of confidence, albeit that the New York market fell back from the early highs of the day, to possibly see the markets pressured 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.

MAY   2133 + 16                                     MAY   189.85 + 4.10
JUL     2119 + 15                                     JUL     188.15 + 3.90
SEP     2096 + 14                                     SEP     185.80 + 3.50
NOV   2065 + 11                                     DEC    183.70 + 3.35
JAN    2047 + 8                                       MAR   183.45 + 3.55
MAR  2045 + 7                                       MAY   184.10 + 3.55
MAY  2048 + 7                                       JUL     184.30 + 3.50
JUL    2054 + 7                                       SEP     184.45 + 3.35