Coffee Market Report

by | 25 Mar 2021

The European Coffee Federation, E.C.F. have reported that the port warehouse coffee stocks held within reporting warehouses in Belgium, Germany, France, Italy and Spain, to have registered an increase in the month of December 2020 to be increased by 1% on that of the same month in the previous year, an increase of 155,167 bags. This report cumulatively reports an overall increase of 1,705,600 bags or 12.67% during the period of 31 January 2020 to 31 December 2020, to register these coffee stocks being held at the end of the calendar year at a total of 15,162,050 bags.   The stocks are reported as 5,842,467 bags robusta coffee, 4,334,683 bags natural arabica coffee (Including Brazil semi-washed) and 4,984,917 bags washed arabica coffee. These stocks do not include the privately held, unreported stocks from the industry, onsite inventory, nor the in-transit bulk container stocks and the stocks being held within non-reporting warehouses throughout Western and Eastern Europe. 

The combination of West and East Europe consumption is traditionally put somewhere in the region of approximately 1.1 million bags of coffee a week, an anticipated additional stock level that is not included in the report, when one accounts for the privately held stocks in European consumer countries, an estimate as at the end of December 2020 that European coffee stocks might have been close to the equivalent of a very safe, thirteen weeks of Western and Eastern European roasting demand.  With the continued consistent flow of Brazil exports and the arrival of the Central American and Colombia main crop, coffee continues to flow to consumer markets. 

The May-to-May contract arbitrage between the London and New York markets narrowed yesterday: to register this at 64.54 usc/Lb. This equates to 51.02% 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 5,910 bags yesterday, to register these stocks at 1,829,244 bags, with 94.9% of these certified stocks being held in Europe at a total of 1,735,448 bags and the remaining 5.1% being held in the USA at a total 93,796 bags.  There was meanwhile a smaller in number 2,910 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 44,866 bags.

It was a firmer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Sugar, Gold, Palladium, Silver and Platinum markets ended the day on a positive note, while the Cocoa and Coffee markets ended the day on a softer note.  The day starts with the U.S. Dollar, trading at 1.370 Sterling, at 1.182 the Euro and with the US Dollar buying 5.621 Real.       

The New York and London coffee markets started the day yesterday trading on a modest negative note, both markets continued to trade around par for the remainder of the morning session. Towards the end of the morning session the New York and London markets hit a ceiling limiting the gains for the day. As the afternoon progressed both markets came under a large degree of selling pressure accentuating the losses for the day’s session, the markets rallied in the late afternoon session, but this was not sustained as the markets quickly dropped back to settle on the lows of the day.

The London market ended the day on a negative note with 91.67% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 100% of the earlier losses of the day intact. The softer close does little to inspire confidence and with the markets settling on the lows of the day, one might think that the markets are due for 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.                                                            

MAY     1366 – 11                                   MAY     126.50 – 1.10

JUL      1390 – 9                                     JUL     128.55 – 1.10

SEP     1409 – 9                                     SEP     130.50 – 1.10

NOV     1425 – 8                                     DEC     132.75 – 1.00

JAN     1440 – 8                                     MAR    134.60 – 0.95

MAR    1456 – 8                                     MAY    135.45 – 0.90

MAY     1474 – 8                                     JUL        135.95 – 0.85

JUL      1490 – 8                                     SEP     136.25 – 0.85