Coffee Market Report

by | 26 Mar 2021

The Colombian National Coffee Growers Federation have come forth to report that the traditional washed quality arabica producer, reached a cumulative output level for the October 2019 to September 2020 coffee year of 13.90 million bags or 6% down from the previous coffee year. The National Coffee Growers Federation has reported a slight decrease in production for the first half of this year is due to the effects of the La Niña weather phenomenon, which was seen to bring with it increased rainfall and lower temperatures towards the back end of last year and the beginning of this year. Although, one might think that with weather conditions conducive and Colombia reporting increased production figures for both January and February when compared to the same period in the previous year, that this fine washed Arabica producing country is on track to meet their targeted production levels of around 14 million bags for the October 2020 to September 2021 coffee year.

The quality washed arabica producer country of Colombia, is anticipated, to some degree to reflect some impact as a result of the perpetual year on year soft reference prices of the coffee terminal markets. The Colombian National Coffee Growers Federation have reported that a proposed tax reform is set to go to congress next month which may see new taxes levied on agricultural inputs such as fertilizers. The negative financial impact that this may have upon coffee farmers to inevitably result in low farm inputs ahead of the new coffee crops, to affect overall potential yield, as well as during harvest, less cyclical harvest rounds reducing the potential quality of harvested coffee. 

The May-to-May contract arbitrage between the London and New York markets widened yesterday: to register this at 64.68 usc/Lb. This equates to 51.09% 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 6,269 bags yesterday, to register these stocks at 1,835,513 bags, with 94.9% of these certified stocks being held in Europe at a total of 1,741,717 bags and the remaining 5.1% being held in the USA at a total 93,796 bags.  There was meanwhile a smaller in number 3,355 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,511 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 Cocoa, New York Arabica Coffee, Gold, Palladium, Silver and Platinum markets ended the day on a positive note, while the Sugar, London Robusta Coffee, Gold, Silver, Platinum and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar, trading at 1.376 Sterling, at 1.178 the Euro and with the US Dollar buying 5.649 Real.       

The New York and London coffee markets 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 and London markets continued to oscillate around par before coming under some degree of selling pressure to see the markets drop back for the day, the markets soon hit a floor limiting the losses for the day and to see both the New York and the London markets settle near to unchanged on the day.

The London market ended the day on a modest close to par negative note with 8.33% of the earlier losses of the day intact, while the New York market ended the day on a modest close to par positive note with 9.50% of the earlier gains of the day intact. The mixed close does little to indicate direction, albeit that the markets recovered from the earlier in the day lows to settle near to unchanged for the day, one might think that the markets are due for 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     1365 – 1                                     MAY     126.60 + 0.10

JUL      1387 – 3                                     JUL     128.65 + 0.10

SEP     1407 – 2                                     SEP     130.60 + 0.10

NOV     1423 – 2                                     DEC     132.95 + 0.20

JAN     1438 – 2                                     MAR    134.90 + 0.30

MAR    1454 – 2                                     MAY    135.75 + 0.30

MAY     1472 – 2                                     JUL        136.20 + 0.25

JUL      1488 – 2                                    SEP     136.50 + 0.25