Coffee Market Report

by | 01 Sep 2021

The late summer rains continue as usual over the main central highland’s coffee districts in Vietnam and the prospects for another large new crop that is due to start being harvested in October is on the cards.   While with farmers and internal traders having sold most of the past crop coffee stocks and the northern hemisphere post summer holidays coffee demand due to pick up in volume, there remains the prevailing severe shortfall on export capacities. Vietnam shall celebrate their National Day holiday tomorrow, which may lead to a somewhat muted close to the week from the worlds largest robusta producer. 

The November-to-December contract arbitrage between the London and New York markets narrowed yesterday to register this at 104.00 usc/Lb. This equates to 53.09% price discount for the London Robusta coffee market.  This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,625 bags yesterday, to register these stocks at 2,165,261 bags, with 94.22% of these certified stocks being held in Europe at a total of 2,040,127 bags and the remaining 5.78% being held in the USA at a total 125,134 bags.  Of this, a total 1,151,885 bags, or 53.20% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.29% of these certified coffees, originating from Honduras.  There was meanwhile a larger in number 1,797 bags increase to the number of bags pending grading to the exchange; to register these pending grading stocks at 4,078 bags. 

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 30,000 bags over the week of trade leading up to Monday 30th. August to see these stocks registered at 2,301,333 bags, on the day. 

It was a softer day on the commodity markets yesterday, as the US Dollar lost ground against a basket of other currencies, following on from the dovish comments made by the US Federal Reserve during last weeks symposium.   The London Robusta Coffee, Gold and Palladium markets ended the day on a positive note, while the Sugar, Cocoa, New York Arabica Coffee, Wheat, Corn, Soybean, Silver and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.373 Sterling, at 1.180 the Euro and with the US Dollar buying 5.149 Brazil Real.   

The New York and London markets started the day on yesterday trading on a modest close to par positive note. The New York market would slip back to trend on a softer path for the remainder of the morning session, while the London market would trend firmer to gain momentum early in the day which saw the market hit a ceiling during the late morning session.  The markets hesitantly traded south of par before coming under severe selling pressure early afternoon session, pressured by long liquidation selling to accentuate the losses for the day’s trade. As the afternoon progressed the New York market rebounded from the lows of the day to recover some of the earlier in the day losses, while the London market continued on a softer path to settle on a near to unchanged note for the day. 

The London market ended the day on a near to unchanged positive note and with 15.38% of the gains of the day intact, while the New York market ended the day on a negative note and with 66.16% of the losses of the day intact. This mixed close, with the New York market settling on a very soft note for the day and the London market settling near to unchanged on the day, does little to inspire to indicate direction, nor does this inspire confidence 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 USC/LB.                                                                                          

NOV     2026 + 8                                                  DEC     195.90 – 4.00

JAN      1994 + 11                                                MAR     198.50 – 3.90

MAR    1959 + 12                                                MAY     199.45 – 3.95

MAY     1947 + 13                                                 JUL      199.95 – 4.00

JUL      1942 + 15                                                SEP     200.35 – 4.00

SEP      1942 + 15                                                DEC     200.95 – 4.00

NOV     1947 + 15                                               MAR    201.40 – 4.10

JAN     1957 + 15                                                MAY     201.70 – 4.20