Coffee Market Report April 08 2020

Following on from a new crop survey, Rabobank has come forth with their revised report to forecast Brazil coffee production to potentially reach 67.50 million bags in the coming July 2020 to June 2021 coffee year.  The forecast anticipates a record 49 million bags to come from this leading producer of mostly natural arabica coffee, along with an estimated 18.50 million bags Conilon robusta coffee.  The larger biennial bearing coffee crop which is due to begin harvest in the robusta growing areas imminently, will continue to comfortably fuel supply to both their local sizeable approximately 21.50 million bags of local annual domestic coffee consumption, as well as to maintain a continuation of export supply, with this largest coffee producer achieving an average 36 million bags of green bean coffee equivalent over a twelve month period, in exports to coffee consumer markets abroad.  

The July to July contracts arbitrage between the London and New York markets broadened yesterday; to register this at 65.12 usc/Lb.  This equates to 53.80% 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 5,867 bags yesterday; to register these stocks at 1,951,000 bags, with 90.5% of these certified stocks being held in Europe at a total of 1,765,718 bags and the remaining 9.5% being held in the USA at a total of 185,282 bags.  There was meanwhile a larger in number increase by 8,548 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 26,413 bags. 

The commodity markets were slightly firmer in trade yesterday, to see overall macro commodity index taking an upwards sideways track for the day. The Cocoa, Coffee and Sugar markets ended the day on a positive note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.0757% higher; to see this index registered at 342.5796   The day starts with the U.S. Dollar steady, trading at 1.231 to Sterling, at 1.085 to the Euro and with the US Dollar buying 5.221 Brazilian Real.     

The London and New York markets started the day yesterday trading close to par on a positive note, The London market retained this stance into the early afternoon trade, while the New York market started to attract buying support to move onto a firm positive track for the early afternoon trade. As the afternoon progressed both the New York and London markets attracted little selling pressure to drop down briefly before both moving back onto a positive track for the remainder of the afternoon trade to close on a positive note for the day’s trade. 

The London market ended the day on a positive note and with 92.3% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 81.81% of the earlier gains of the day intact. This positive close for the markets might inspire some degree of confidence to possibly set the markets for a follow through steady start to early trade today, against the prices set yesterday, as follows:  

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

JUL    1233 + 12                                                                     JUL    121.05 + 3.15 

SEP    1247 + 8                                                                       SEP    122.35 + 3.40 

NOV   1264 + 7                                                                        DEC   123.70 + 3.50

JAN    1281 + 6                                                                        MAR  125.05 + 3.60 

MAR   1296 + 5                                                                        MAY  125.90 + 3.55  

MAY   1310 + 5                                                   JUL    126.75 + 3.55 

JUL    1325 + 5                                                                        SEP    127.65 + 3.55 

SEP   1344 + 5                                                    DEC  129.00 + 3.45