Coffee Market Report

by | 12 Feb 2021

The U.S. Governments National Weather Service’s Climate Prediction Centre have reviewed their forecast to now see a 60% chance of a shift from La Niña to neutral weather conditions in the coming months. It is expected that La Niña weather conditions will start to dissipate towards the end of March, with April bringing more neutral weather conditions.  La Niña being a weather phenomenon, which traditionally brings with it the potential for wet weather for the Pacific Rim countries and in terms of coffee, having an impact upon the climatic conditions within Colombia, Indonesia and Peru.  It can also influence dry conditions for the arabica coffee districts in South Eastern Brazil, as well as East Africa coffee producing countries. 

The weather across the Brazil coffee belt meanwhile, has registered a week good rains between the main growing regions of Minas Gerais and Espirito Santo, with weather forecasters foreseeing the possibility of further sporadic wet weather to come to the main coffee growing areas towards next week.  

The March 2021 to March 2021 contract arbitrage between the London and New York markets widened yesterday: to register this at 60.51 usc/Lb. This equates to 49.93% price discount for the London Robusta coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 18,324 bags yesterday, to register these stocks at 1,706,555 bags, with 95% of these certified stocks being held in Europe at a total of 1,620,894 bags and the remaining 5% being held in the USA at a total 85,661 bags.  There was meanwhile a smaller in number 8,454 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 98,659 bags.

It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The New York Arabica Coffee market ended the day on a positive note, while the Sugar, Cocoa and London Robusta Coffee Markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.07% lower; to see this index registered 487.20.  The day starts with the U.S. Dollar, trading at 1.379 Sterling, at 1.212 the Euro and with the US Dollar buying 5.367 Real.

The New York and London market started the day yesterday trading on a modest softer note, both markets continued to trade around par for the remainder of the morning session. As the afternoon progressed the New York market jumped back and forth between positive and negative territory before settling on a modest close to par positive note late in the day. The London market continued on its softer path for most of the afternoon session, albeit that the market bounced off the lows of the day recovering some of the ground that was lost in the early session before settling on a modest soft note at the close.

The London market ended the day on a modest negative note with 42.10% of the earlier losses of the day intact, while the New York market ended the day on a modest positive note with 15.38% of the earlier gains of the day intact. This mixed close, albeit that the markets settled near to unchanged for the day, does little to indicate direction and one might think that the markets are due for little better than a hesitant start to early trade today, against the prices set yesterday, as follows:  

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

MAR    1338 – 11                                   MAR    121.20 + 0.10

MAY     1362 – 12                                   MAY     123.05 – 0.10

JUL      1377 – 10                                   JUL     124.95 – 0.15

SEP     1393 – 10                                   SEP     126.75 – 0.15

NOV     1410 – 10                                   DEC     128.85 – 0.15

JAN     1425 – 9                                     MAR    130.55 – 0.10

MAR    1443 – 8                                    MAY    131.35  Unch

MAY     1460 – 7                                    JUL        131.90 +0.05