Coffee Market Report May 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 narrowed yesterday; to register this at 55.20 usc/Lb.  This equates to 50.64% 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 845 bags yesterday; to register these stocks at 1,803,296 bags, with 90.7% of these certified stocks being held in Europe at a total of 1,635,277 bags and the remaining 9.3% being held in the USA at a total of 168,019.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at  25,515 bags.  

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 65,000 bags over the weeks of trade leading up to Monday 4th May, to see these stocks registered at 2,211,667 bags, on the day.

 The commodity markets were marginally firmer in trade yesterday, to see the overall macro commodity index taking a sideways track for the day. The Sugar and Cocoa markets ended the day on a positive note, while the Coffee markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.7836% higher; to see this index registered at 343.4383.   The day starts with the U.S. Dollar steady, trading at 1.240 to Sterling, at 1.084 to the Euro and with the US Dollar buying 5.831 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 and London markets attracted selling pressure to dip deeper into negative territory, there was however a late recovery in New York to limit the losses of the day, the London market followed suit in a more sedate manner. 

The London market ended the day on a negative note and with 48.4% of the earlier losses of the day intact, while the New York market also ended the day on a negative note and with 41% of the earlier losses of the day intact. Although recovered from the lows of the day, the softer close does little to inspire confidence and with the Brazil Real showing further signs of weakness one might think the markets are due for a hesitant start to early trade today, against the prices set yesterday, as follows:   

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

JUL    1186 – 15                                                                    JUL    109.00 – 1.60

SEP    1206 – 16                                                                    SEP   110.10 – 1.80

NOV   1225 – 18                                                                     DEC   112.00 – 1.95

JAN    1245 – 18                                                                     MAR  113.85 – 1.90 

MAR   1263 – 18                                                                     MAY  114.90 – 1.75 

MAY   1283 – 18                                                   JUL   115.95 – 1.60

JUL     1300 – 18                                                                     SEP    117.00 – 1.40

SEP    1321 – 18                                                   DEC  118.40 – 1.20