Coffee Market Report February 27 2020

The Coffee Exporters Association in Brazil Cecafé have reported that the countries coffee exports for the month of January were 9.9% lower than the same month last year, to total 2.9 million bags.   This they say has contributed to the country’s cumulative coffee exports for the first four months of the October 2019 to September 2020 Coffee year to be 11.71 million bags. 

Cecafé also reported that in January the world’s largest producer shipped 2.6 million bags of Arabica Coffee, this figure 12.8% lower than the same month last year and 223,828 bags of Robusta Coffee, this figure 48% higher than the same month last year. 

Brazil’s and the world’s largest coffee cooperative Cooxupé have reported that they expect this year’s crop to produce a good amount of high-quality bean due to favourable weather conditions over most of the coffee producing areas in Brazil. Due to the Biennial bearing nature of the Brazil Coffee Crop many leading analysts now forecast that production in 2020 could reach the 70 million bag mark, although Brazil and the world’s largest coffee cooperative Cooxupé’s estimates are more in line with the Brazilian government’s forecast of 59.6 million bags, slightly below the all-time production record of 61.7 million bags in 2018. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday; to register this at 51.58 usc/Lb.  This equates to 47.28% 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 16,234 bags yesterday; to register these stocks at 2,140,640 bags, with 89.6% of these certified stocks being held in Europe at a total of 1,917,158 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 Coffee and Soybean markets ended the day on positive note, the Orange Juice market remained unchanged on the day, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat, Corn, 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 1.9285% lower; to see this index registered at 393.3643.   The day starts with the U.S. Dollar steady, trading at 1.293 to Sterling, at 1.091 to the Euro and with the US Dollar buying 4.450 Brazilian Real. 

The London and New York markets started the day yesterday trading on negative note, both markets maintained this soft stance into the early afternoon trade. As the afternoon progressed the New York market started to attract buying support to move into modest positive territory and accentuate the gains to close on a positive note, while the London market also attracted buying support buoyed by the firm New York market and to close on a likewise positive note.

 The London market ended the day on a positive note and with 81.25% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 88.8% of the earlier gains of the day intact.  This 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   1268 + 13                                                                       MAR  109.10 + 2.00

MAY   1295 + 13                                                                       MAY  110.65 + 2.15

JUL    1313 + 13                                                                       JUL    112.70 + 2.10

SEP    1333 + 13                                                                      SEP    114.60 + 2.05

NOV   1349 + 13                                                                       DEC   117.15 + 1.95

JAN    1364 + 13                                                                       MAR  119.45 + 1.90

MAR   1376 + 12                                                                       MAY  120.75 + 1.95

MAY   1396 + 12                                                                       JUL    121.95 + 1.95

JUL    1417 + 12                                                                       SEP    123.15 + 2.05