Coffee Market Report April 22 2020

Reports from Brazil indicate good rains so far this month for most of the main coffee districts in the country, which has assisted the maturing coffee cherries.   With many of the conilon Robusta farms soon to start the new crop harvest and with the arabica coffee farms due to start harvesting in five to six weeks’ time, bringing with the harvest continued bearish sentiment within the market due to the ongoing Covid-19 pandemic and the possible effects this will have on the Brazil coffee harvest. 

With continued stringent measures in place regarding social distancing and Covid-19 precautionary policies there may be an impact on the Brazil coffee harvest although, most of the Brazilian coffee farms, even the smaller enterprises utilise some degree of social distancing and hand harvest or mechanical methods of picking, while the Brazilian method of one harvest, rather than only picking ripe cherry in several rounds a season, is already much less labour intensive, the impact may be more subdued than in countries where picking is done in several rounds a harvest season by manual labour to be more adversely impacted by Covid-19 pandemic. 

There will however be challenges from a logistical aspect, the disruptions in origin countries, and depending on the stringency of the lockdown or social distancing, or travel ban measures that are put into place, would indicate a continuation of delays and disruptions to movement of consignments and ultimately the flow of goods to consumer markets. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 59.84 usc/Lb.  This equates to 53.66% 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 8,303 bags yesterday; to register these stocks at 1,878,032 bags, with 90.6% of these certified stocks being held in Europe at a total of 1,702,213 bags and the remaining 9.4% being held in the USA at a total of 175,819 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,460 bags.  

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 44,000 bags over the weeks of trade leading up to Monday 20th. April, to see these stocks registered at 2,308,167 bags, on the day. 

The commodity markets were very negative in trade yesterday, Raw sugar futures on the intercontinental exchange slid to their lowest level in 12 years, while arabica coffee touched it lowest level in a month as a further drop in crude oil sparked broad based weakness across commodity markets, to see the overall macro commodity index taking a negative track for the day. The Cocoa, Sugar and Coffee Markets ended the day on a negative note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.3283% lower; to see this index registered at 320.5804.   The day starts with the U.S. Dollar steady, trading at 1.2310 to Sterling, at 1.0882 to the Euro and with the US Dollar buying 5.3163 Brazilian Real.     

The New York and London markets started the day yesterday trading on a negative note, both markets continued on this soft track into the early afternoon trade. As the afternoon progressed both the London and the New York markets briefly attracted buying support to trend upwards, but this was short lived with both the London and the New York markets slipping back onto a negative track towards to the close. 

The London market ended the day on a very negative and with 88.6% of the earlier losses of the day intact, while the New York market ended the day on a likewise very negative note and with 92.6% of the earlier losses of the day intact. This negative close does little to inspire confidence and 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    1139 – 38                                                                  JUL    111.50 – 3.75

SEP    1160 – 35                                                                   SEP   112.70 – 3.80 

NOV   1180 – 33                                                                   DEC   114.60 – 3.50

JAN    1201 – 30                                                                   MAR  116.30 – 3.25 

MAR   1220 – 29                                                                   MAY  117.20 – 3.10  

MAY   1238 – 28                                                 JUL   118.10 – 3.00

JUL     1255 – 28                                                                    SEP    119.05 – 2.85

SEP    1275 – 27                                                 DEC  120.60– 2.85