Coffee Market Report February 26 2020

The Brazil Governments Crop Supply Agency have reported that they foresee that the next 2020 new Brazil crop and due to positive biennial bearing factors for the arabica coffee farms shall be between 57.15 million and 62 million bags.   The Conab forecasts are traditionally very conservative and many would therefore see this as an indication that the new 2020 Brazil coffee crop might still be closer or even surpass the all-time record output of 61.65 million bags in 2018, as some others have already forecast. 

The Brazilian broker and consultancy group, INTL FCStone has forecast that they foresee the 2020 Brazil crop at a larger 65.1 million bags compared to the 53 million bags produced in the previous season. This estimate is well above the traditionally conservative forecast of Conab, well illustrating that the new 2020 Brazil Coffee crop might be close to the all time record output of 61.65 million bags in 2018. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday; to register this at 50.17 usc/Lb.  This equates to 46.84% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 7,559 bags yesterday; to register these stocks at 2,156,874 bags, with 89.6% of these certified stocks being held in Europe at a total of 1,933,392 bags and the remaining 10.4% being held in the USA at a total of 223,482 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags. 

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 11,333 bags over the weeks of trade leading up to Monday 24th. February, to see these stocks registered at 2,528,500 bags, on the day. 

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Sugar, Cocoa, Coffee, Orange Juice, Wheat, Corn and Soybean markets ended the day on a positive note, while the Oil, Natural Gas, Cotton, Copper, Gold and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.9602% lower; to see this index registered at 397.2483.   The day starts with the U.S. Dollar steady, trading at 1.299 to Sterling, at 1.087 to the Euro and with the US Dollar buying 4.388 Brazilian Real. 

The London and New York markets started the day yesterday trading on modest positive note, both markets maintained this modest firm stance into the early afternoon trade. As the afternoon progressed the New York market started to attract selling pressure to move into negative territory for the day only to hit a price floor and bounce back up to close on a positive note, while the London market maintained a modest positive track to close near to the highs of the day. 

The London market ended the day on a positive note and with 65.2% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 60% of the earlier gains of the day intact.  This modest firm close might inspire some degree of confidence to set the markets for a follow-through hesitant steady start to early trade today, against the prices set yesterday, as follows:   

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

MAR   1255 + 15                                                                     MAR  107.10 + 1.20

MAY   1282 + 9                                                                       MAY  108.50 + 1.60

JUL    1300 + 7                                                                       JUL    110.60 + 1.55

SEP    1320 + 8                                                                      SEP    112.55 + 1.55

NOV   1336 + 7                                                                       DEC   115.20 + 1.55

JAN    1351 + 6                                                                       MAR  117.55 + 1.50

MAR   1364 + 4                                                                       MAY  118.80 + 1.50

MAY   1384 + 3                                                                       JUL    120.00 + 1.50

JUL    1405 + 3                                                                       SEP    121.10 + 1.50