Coffee Market Report January 16 2020

Brazil’s Coffee Exporters Association Cecafé have reported that the countries green coffee exports for the 2019 calendar year were 14.8% higher than the previous year, at a record total of 36.6 million bags.   With these exports buoyed by the conilon robusta coffee crop, which allowed for the export of 3.95 million bags of conilon robusta coffees during 2019, as against a smaller 2.48 million bags exported in the previous year. 

The Coffee Exporters Association in Brazil Cecafé have also reported that the countries coffee exports for the month of December were 25.9% lower than the same month last year, to total 2.69 million bags.   This they say has contributed to the country’s cumulative coffee exports for the first three months of the October 2019 to September 2020 Coffee year to be 8.81 million bags. 

The Brazil crop year spans from April to March each year for Conilon robusta coffees and from July to June each year for the greater percentage of production that is natural arabica coffee, around 8% semi washed coffees within the overall total of arabica production. The ratios of these two very different qualities of coffee, Conilon robusta and arabica have proportionally been pegged at a ratio of around 25:75 in production terms annually.  The ratio within this current 2019 to 2020 crop year is though closer to 35:65 for reasons of gradual year on year recovery in production within the Conilon robusta sector, together with a biennial bearing smaller arabica crop that is in recovery from a record bumper arabica crop produced in the July 2018 to June 2019 crop year.  This current biennial lower arabica crop is estimated to be around 500,000 bags lower than that of the previous comparative biennially low crop cycle in the July 2017 to June 2018 crop year, around 38 million bags.  The supplemental bumper harvest that spanned crop year July 2018 to June 2019 meanwhile, a record-breaking production and export crop year, with year on year and export figures perhaps seeming skewed within the context of the current biennial lower bearing crop that is currently flowing to consumer markets. 

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 89,142 bags or 1.29% during the month of December, to register these stocks at 6,834,695 bags at the end of the month.   The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been at least 1.2 million bags 

The March to March contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 54.11 usc/Lb.  This equates to 47.34% 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 11,503 bags yesterday; to register these stocks at 2,090,148 bags, with 88.6% of these certified stocks being held in Europe at a total of 1,851,183 bags and the remaining 11.4% being held in the USA at a total of 238,965 bags.  There was meanwhile a smaller in number decrease by 9,963 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 142,341 bags. 

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a sideways track for the day. The Sugar, Cocoa, London Robusta Coffee, Orange Juice, Wheat, Gold and Silver markets ended the day on a positive note, while the Oil, Natural Gas, New York Arabica Coffee, Cotton, Copper, Corn and Soybean markets ended the day on a softer note.    The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.0169% higher; to see this index registered at 420.6815   The day starts with the U.S. Dollar steady, trading at 1.305 to Sterling, at 1.115 to the Euro and with the US Dollar buying 4.175 Brazilian Real. 

The London and New York markets started the day yesterday trading close to par on a modest positive note, both markets maintained this positive stance into the early afternoon trade. As the afternoon progressed the London market started to attract buying support to accentuate the gains for the day, only to hit a ceiling for the day and drop back to close on a modest positive note, while the New York market started to attract selling pressure to fall back from the highs of the day and close near to the lows of the day on a modest negative note. 

The London market ended the day on a modest positive note, and with 46.6% of the earlier gains of the day intact, while the New York market ended the day on modest negative note, and with 70.6% of the earlier losses of the day intact. This mixed close for the markets does little to inspire confidence and one might expect the markets are due little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:    

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

MAR   1327 + 7                                                                 MAR   114.30 – 0.60

MAY   1346 + 8                                                                 MAY   116.65 – 0.60

JUL    1366 + 10                                                               JUL     118.90 – 0.65

SEP    1385 + 10                                                              SEP     121.05 – 0.60

NOV   1403 + 9                                                                 DEC    123.65 – 0.60

JAN    1420 + 9                                                                 MAR   126.00 – 0.65

MAR   1441 + 8                                                                 MAY   127.05 – 0.65

MAY   1464 + 8                                                                 JUL    127.90 – 0.65

JUL    1487 + 8                                                                 SEP    128.70 – 0.65