Coffee Market Report

by | 08 Apr 2021

The International Coffee Organisation ICO have reported that the global coffee exports for the month of February were 6.10% lower than the same month in the previous year, at a total of 10.47 million bags.  This they say, has contributed to the cumulative global coffee exports for the first five months of the October 2020 to September 2021 coffee year to be 2.50% higher than the same period in the year, at a total of 52.81 million bags. 

The International Coffee Organisation ICO have likewise maintained their earlier forecast for global coffee supply and demand for the current October 2020 to September 2021 coffee year, to report that against an estimated global coffee supply of 171.89 million bags, global coffee consumption is estimated at approximately 166.62 million bags.   This indicating that the global coffee markets will be in a surplus supply of 5.26 million bags for the October 2020 to September 2021 coffee year.

Within the ICO report, cumulative global exports for the first five months of the seasonal coffee year October 2020 to September 2021 are seen to have decreased by 12.20% year on year from Africa, to a total 4.90 million bags, this caused by a large decrease in exports from leading arabica producer Ethiopia, as well as Kenya. Uganda however has comparatively seen a 9.60% increase in exports over the first five months of the current October 2020 to September 2021 coffee year. There was likewise, a decline in exports from Asia as the largest robusta producer, Vietnam, registered a 16.40% decline in exports, when compared to the same five months of the previous coffee year.  This, balanced in part by increased exports from Indonesia, as this country which traditionally produces 80:20 Robusta: Arabica, recorded improved year on year production, assisted by conducive weather during crop development. 

The ICO report similarly includes within the total global exports, the cumulative export figures, from Mexico and the traditional washed arabica Central American bloc; Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador, to report that the first five months of the cumulative coffee year posted a decrease of 17.40% to a total 4.20 million bags.  This as parts of these regions were severely affected by hurricanes Iota and Eta. Exports from Honduras, the region’s largest producer fell by 30.70% to total 1.40 million bags, while exports from Nicaragua fell by 14.50% to total 750,000 bags. Guatemala exports also decreased by 14.40% to total 761,652 bags for the five-month period. In contrast Mexico recorded an increase in exports for the first five months of the current October 2020 to September 2021 coffee year of 20.80% to total 1 million bags. 

The quality washed arabica countries of Colombia, Central America, Mexico and Peru are collectively the largest washed arabica exporter bloc to consumer markets, were to some degree anticipated to reflect some impact as a result of the perpetual year on year soft reference prices of the coffee terminal markets. The negative financial impact upon coffee farmers that inevitably resulted in low farm inputs ahead of the new coffee crops, to which the harvest is already near to completion in Honduras, Nicaragua, and Mexico. The harvesting of the Colombian Mitaca midyear coffee crop has begun and will traditionally peak in the month of May.

The July-to-July contract arbitrage between the London and New York markets broadened yesterday: to register this at 67.51 usc/Lb. This equates to 52.46% 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 8,125 bags yesterday, to register these stocks at 1,863,200 bags, with 95% of these certified stocks being held in Europe at a total of 1,770,062 bags and the remaining 5% being held in the USA at a total 93,138 bags.  There was meanwhile a smaller in numbers 3,330 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,631 bags. 

It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a negative track for the day, this as strong economic data from the USA bolstered hopes of a swift economic recovery. The Sugar, Cocoa, Coffee, Gold, Silver and Platinum markets ended the day on a softer note.  The day starts with the U.S. Dollar, trading at 1.376 Sterling, at 1.188 the Euro and with the US Dollar buying 5.613 Real.   

The New York and London markets started the day yesterday trading close to par on a modest positive note. The markets quickly gained momentum, to see both the New York and London markets make significant gains early in the session, this was dampened quickly as the markets came under some degree of selling pressure. As the afternoon progressed the New York market rallied once again only to hit a ceiling limiting the gains for the afternoon session to see the market drop back from the highs of the day and settle on a unchanged note for the day. While the London market dropped back from the highs of the day to be set on a softer path for the day, this saw the market settle near to the lows of the day at the close.

The London market ended the day on a negative note and with 88.88% of the losses the day intact, while the New York market ended the day on unchanged from the previous days close. This modest near to par close does little to inspire confidence, albeit the New York market did manage to recover all of the losses from the day’s trade to settle unchanged from the previous days close, 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     1329 – 5                                      MAY     126.75 – 0.10                                                   

JUL      1349 – 8                                      JUL     128.70  Unch

SEP     1366 – 9                                      SEP     130.60 + 0.05

NOV     1382 – 9                                      DEC     133.05 + 0.15

JAN     1397 – 9                                      MAR    135.10 + 0.20

MAR    1413 – 9                                      MAY    136.10 + 0.20

MAY     1431 – 8                                      JUL        136.70 + 0.20

JUL      1449 – 7                                      SEP      137.05 + 0.10