Coffee Market Report April 16 2020

Brazil’s government food supply and statistics agency CONAB have come forth to report that Brazilian Coffee producers have closed forward sales for an estimated 31% of the 2020/2021 Arabica Coffee Crop and 14% of the Robusta Coffee Crop.  The report has not made available comparative sales percentages at the same time last year, though this relatively active selling activity ahead of the harvest, that is soon to start in the Conilon robusta areas, is likely to be facilitated by the continued weakness in the Brazil Real currency against the US Dollar, to encourage forward sales despite the low reference prices in London and New York. 

The Green Coffee Association of the U.S.A. have announced that the country’s port warehouse stocks decreased by 288,658 bags or 4.42% during the month of March, to register these stocks at 6,023,568 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.  These cumulative coffee stocks would indicate that there is a steady level of comfort of just over twelve weeks of overall supply available to fuel these two countries’ combined coffee consumption. 

The Indian Ministry of Earth Sciences has reported that India is expected to receive close to the normal average amount of rainfall for the 2020 Monsoon season beginning in June and continuing for four months. The lockdown remains in place although news is filtering through that the agricultural sector in particular northern tea gardens are being permitted by authorities to resume operations. 

The Australian Government Bureau of Meteorology have reported that conditions within the Pacific Ocean remain neutral and with no evidence of either an El Niño or an La Niña phenomenon’s in play, which would indicate normal weather conditions for the pacific rim coffee producing countries. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday; to register this at 66.50 usc/Lb.  This equates to 54.87% 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 34,972 bags on yesterday; to register these stocks at 1,866,211 bags, with 90.4% of these certified stocks being held in Europe at a total of 1,686,704 bags and the remaining 9.6% being held in the USA at a total of 179,507 bags.  There was meanwhile a 34,972 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 61,580 bags.  

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 26,500 bags over the weeks of trade leading up to Monday 13th. April, to see these stocks registered at 2,352,167 bags, on the day. 

The commodity markets were mostly softer in trade yesterday against some degree of buoyancy being shown by the U.S. Dollar, to see the overall macro commodity index taking a softer track for the day. The Sugar and Coffee markets ended the day on a positive note, while the Cocoa market ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.3403% lower; to see this index registered at 335.8524.   The day starts with the U.S. Dollar showing some degree of buoyancy and steady, trading at 1.248 to Sterling, at 1.089 to the Euro and with the US Dollar buying 5.237 Brazilian Real.     

The New York and London markets started the day yesterday trading close to par on a modest negative note, both markets continued on this soft downward track into the early afternoon trade. As the afternoon progressed both the London and the New York markets started to attract buying support to move into positive territory for the day, both markets remained buoyant to the close on a positive note. 

The London market ended the day on a positive and with 81.82% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 54.88% of the earlier gains of the day intact. This positive close some degree of confidence but with the Brazil Real slipping back against the US Dollar one might expect 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.                                               

JUL    1206 + 14                                                                    JUL    121.20 + 2.85 

SEP    1224 + 14                                                                    SEP   122.25 + 2.70 

NOV   1243 + 15                                                                    DEC   123.55 + 2.50

JAN    1260 + 14                                                                     MAR  125.05 + 2.55 

MAR   1274 + 12                                                                     MAY  125.85 + 2.45  

MAY   1289 + 8                                                    JUL   126.60 + 2.40

JUL     1306 + 7                                                                       SEP    127.30 + 2.35

SEP    1327 + 5                                                    DEC  128.65 + 2.45