Coffee Market Report

by | 19 Feb 2021

The Northern Hemisphere coffee consumer markets have moved through their traditionally higher coffee consumption months of winter, mostly in various regulated lockdowns while navigating through Covid19 related restrictions. Within these coffee consumer markets meanwhile, there have been reports that some markets have registered generally steady consumption figures, with retail supermarket and online sales fuelling home consumption, to bolster inevitable lower consumption from the out of home, hotel, restaurant, catering sector.  Within relatively new coffee consumer markets meanwhile, where much of the annual coffee consumption year on year growth has been recorded, the adaption to in home coffee consumption has had mixed results, though overall, a downturn in coffee consumption in the out of home sector, is anticipated to be more pronounced within these new, developing coffee consumer markets where coffee is consumed primarily outside of the home. 

As reported by the International Coffee Organisation (ICO) Global coffee consumption is estimated to have decreased by 2.4% during the October 2019 to September 2020 coffee year, to total 164.53 million bags, this decline in global consumption stemming from the downturn in the global economy coupled with the losses in out of home consumption. The ICO projects that global coffee consumption is expected to stage a slight recovery during the October 2020 to September 2021 coffee year, as the global economy attempts to recover from the throes of Covid-19 related shutdowns and restrictions. Global Coffee Consumption is expected to increase by 1.3% during the October 2020 to September 2021 coffee year to total 166.63 million bags. 

The March 2021 to March 2021 contract arbitrage between the London and New York markets widened yesterday: to register this at 66.27 usc/Lb. This equates to 51.94% 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 3,136 bags yesterday, to register these stocks at 1,736,174 bags, with 94.5% of these certified stocks being held in Europe at a total of 1,641,336 bags and the remaining 5.5% being held in the USA at a total 94,838 bags.  There was meanwhile a larger in number 4,904 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 71,190 bags.

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a positive sideways track for the day. The Sugar, Cocoa and Coffee markets ended the day on a positive note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.24% higher; to see this index registered 496.38.  The day starts with the U.S. Dollar, trading at 1.397 Sterling, at 1.209 the Euro and with the US Dollar buying 5.427 Real.

The New York and London market started the day yesterday trading close to par on a modest firmer note, both markets soon attracted buying support to see the markets set on a firmer path for the remainder of the morning session. As the afternoon progressed the London market dropped back from the highs of the day to hit a floor, the market bounced off the lows of the afternoon session to settle on a near to unchanged modest firmer note for the day. The New York market buoyed by some degree of buying support continued on a firmer path into the later afternoon session, to see the market settle on a firm positive note for the day.

The London market ended the day on a modest positive note with 27.27% of the earlier gains of the day intact, while the New York market ended the day on a likewise firm positive note with 92.68% of the earlier gains of the day intact. This firmer close, with the New York market settling near to the highs of the day, might indicate direction to possibly set the markets for a follow through steady start for early trade today, against the prices set yesterday, as follows:  

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

MAR    1352 + 3                                     MAR    127.60 + 1.90

MAY     1380 + 8                                     MAY     129.30 + 1.90

JUL      1394 + 7                                     JUL     131.20 + 1.95

SEP     1409 + 8                                     SEP     132.95 + 1.90

NOV     1424 + 7                                     DEC     134.80 + 1.75

JAN     1437 + 7                                     MAR    136.20 + 1.55

MAR    1454 + 7                                     MAY    136.80 + 1.45

MAY     1471 + 7                                     JUL        137.25 + 1.40