The International Coffee Organisation ICO have reported that the global coffee exports for the month of July were 1.70% higher than the same month in the previous year, at a total of 10.65 million bags. This they say, has contributed to the cumulative global coffee exports for the first ten months of the October 2020 to September 2021 coffee year to be 2.20% higher than the same period in the previous year, at a total of 108.96 million bags. The cumulative increase in exports over the ten-month period, fuelled by Brazil which contributed 34.18% of the total exports to consumer markets.
The International Coffee Organisation ICO have come forth to marginally revise their forecast for global consumption for the current October 2020 to September 2021 coffee year, by 0.34% lower, owing to the international Covid-19 related lockdowns, which have come about during this current coffee year, due to new variants and waves of infections in many consumer and producer countries alike, to an estimated 167.01 million bags in the twelve-month cycle.
The International Coffee Organisation foresee that global consumption is still nevertheless forecast to grow by 1.9% year on year when compared to previous 2019/2020 coffee year, with some degree of upward increase of consumption in mature coffee markets in the retail supermarket and online space for at-home consumption, although the HORECA industries continue to suffer through the limitations and restrictions of several irregularly enforced out-of-home outlet closures through the time, oscillating between the on again and off again localised lockdown policies. Over the last ten coffee years the average growth of world coffee consumption has been around 1.9% per year, thus the ICO report that their forecast is for an international coffee consumption growth that may expected during the 2020/2021 year is on track to match this figure.
Thus, the ICO has reported that against an estimated global coffee supply of 169.64 million bags, global coffee consumption is estimated at approximately 167.01 million bags, down 0.34% from their previous estimate in July of 167.58 million bags. This indicating that the global coffee markets will be in a surplus supply of 2.63 million bags for the October 2020 to September 2021 coffee year. This 2020/21 coffee year mostly already completed, and with the markets intently focused on the 2021/22 coffee year and perhaps more significantly, the 2022/23 coffee potential for production and consumption demand forecasts, to come.
Within the ICO report, cumulative global exports for the first ten months of the seasonal coffee year October 2020 to September 2021 are seen to have decreased by 0.30% year on year from Africa to a total 11.50 million bags, this caused by a large decrease in exports from leading arabica producer Ethiopia, as well as Ivory Coast. Uganda however has comparatively registered 20.50% increase in exports over the first ten 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 9.80% decline in exports, when compared to the same ten months of the previous coffee year. This, balanced in part by increased exports from Indonesia, which registered a 4.90% increase year on year, 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 ten months of the cumulative coffee year posted an increase of 1.40% to a total 14.60 million bags. Exports from Honduras, the region’s largest producer grew by 0.60%, while exports from Nicaragua fell by 7.80%.
The November-to-December contract arbitrage between the London and New York markets widened yesterday to register this at 95.94 usc/Lb. This equates to 50.44% 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 increase by 475 bags yesterday, to register these stocks at 2,162,122 bags, with 94.26% of these certified stocks being held in Europe at a total of 2,037,963 bags and the remaining 5.74% being held in the USA at a total 124,159 bags. Of this, a total 1,152,510 bags, or 53.31% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 39.12% of these certified coffees, originating from Honduras. There was meanwhile no change to the number of bags pending grading to the exchange; to register these pending grading stocks at 1,797 bags.
It was a softer day on the commodity markets yesterday, the US Dollar gained further ground against a basket of other currencies as well as higher US Treasury yields. The Soybean markets ended the day on a positive note, the Corn market was unchanged on the day, while the Sugar, Cocoa, Coffee, Wheat, 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 1.181 the Euro and with the US Dollar buying 5.321 Brazil Real.
The New York and London markets started the day yesterday trading on a modest close to par firmer note. The markets continued to oscillate around par before gaining some support to trend firmer for the remainder of the morning session. The markets hesitantly traded south of par before coming under selling pressure during the early afternoon session, pressured by long liquidation selling to accentuate the losses for the day’s trade. The markets rebounded from the lows of the day to recover some of the earlier in the day losses late in the day, to see both the New York and London markets settle on a negative note at the close.
The London market ended the day yesterday on a negative note and with 64.86% of the losses of the day intact, while the New York market ended the day yesterday on a likewise negative note and with 63.56% of the losses of the day intact. This softer close 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 2078 – 24 DEC 190.20 – 3.75
JAN 2049 – 20 MAR 192.90 – 3.75
MAR 1994 – 18 MAY 193.85 – 3.80
MAY 1977 – 16 JUL 194.45 – 3.75
JUL 1970 – 14 SEP 194.95 – 3.70
SEP 1968 – 14 DEC 195.65 – 3.75
NOV 1971 – 15 MAR 196.25 – 3.70
JAN 1981 – 15 MAY 196.60 – 3.70