The International Coffee Organisation ICO have reported that the global coffee exports for the month of August were 0.11% lower than the same month in the previous year, at a total of 10.12 million bags. This they say, has contributed to the cumulative global coffee exports for the first eleven months of the October 2020 to September 2021 coffee year to be 1.87% higher than the same period in the previous year, at a total of 118.96 million bags. The cumulative increase in exports over the eleven-month period, fuelled by Brazil which contributed 32.36% 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 0.15% higher, from their previous forecast, owing to the prospect of further easing of international Covid-19 related lockdowns and restrictions, the subsequent economic recovery which may lead to growth in world coffee consumption, to an estimated 167.26 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, with the inelasticity of world consumption expected to tighten the demand and supply ratios of coffee. Albeit that 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 167.26 million bags, up 0.15% from their previous estimate in August of 167.01 million bags. This indicating that the global coffee markets will be in a surplus supply of 2.38 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 eleven months of the seasonal coffee year October 2020 to September 2021 are seen to have increased by 2.00% year on year from Africa to a total 12.78 million bags, this fuelled by a large increase in exports from Uganda, Tanzania and Kenya respectively.
There was a decline in exports from Asia as the largest robusta producer, Vietnam, registered a 8.12% decline in exports, when compared to the same eleven months of the previous coffee year. This, balanced in part by increased exports from India, which registered a 8.10% increase year on year.
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 eleven months of the cumulative coffee year posted an increase of 4.10% to a total 15.89 million bags. Exports from Honduras, the region’s largest producer grew by 5.00%, while exports from Nicaragua fell by 5.90%.
Speculative concerns that the recently rising market might inspire some internal market selling resistance and non-deliveries of new crop coffees by farmers within some producer countries, this is fuelling speculative concern over short term coffee supply. Thus some more weight being added within the coffee markets buoying prices, albeit that the coffee markets remain vulnerable to negative correction should the market start to falter and bring good volumes of catch up origin selling into play.
The November-to-December contract arbitrage between the London and New York markets widened yesterday to register this at 115.90 usc/Lb. This equates to 54.37% 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 2,210 bags yesterday, to register these stocks at 1,914,494 bags, with 95.33% of these certified stocks being held in Europe at a total of 1,825,022 bags and the remaining 4.67% being held in the USA at a total 89,472 bags. Of this, a total 1,046,975 bags, or 54.67% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 40.10% of these certified coffees, originating from Honduras. There was meanwhile an increase of 1,250 bags to the number of bags pending grading to the exchange; to register 37,244 bags pending grading on the day.
It was a mixed day on the commodity markets yesterday, rising inflation fears were weighed down by the US Dollar gaining further ground against a basket of other currencies. The Coffee, Wheat, Gold and Platinum markets ended the day on a positive note, while the Sugar, Cocoa, Soybean, Corn, Silver and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.361 Sterling, at 1.155 the Euro and with the US Dollar buying 5.533 Brazil Real.
The New York market started the day yesterday trading on a firm note, while the London market started the day yesterday trading on a modest close to par softer note. The markets would quickly garner support to see the both the New York and London market trend firmer for the remainder of the session. As the afternoon progressed the New York market started to add more value and with buy stops triggered along the way, accentuating the gains for the day. The London market followed suit with the influence of further weight being added within the New York market, to likewise add more value and gain momentum throughout the session. Both markets were seen to hit a resistance level during the late afternoon session as the markets dropped back from the highs of the day, to see both markets settle on very firm notes at the close.
The London market ended the day on a very positive note and with 88.24% of the gains of the day intact, while the New York market ended the day on a likewise very positive note and with 81.65% of the gains of the day intact. This very firm close is a supportive factor for confidence in the market, there is likely to be some degree of follow through support for early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK USC/LB.
NOV 2144 + 45 DEC 213.15 + 8.90
JAN 2151 + 47 MAR 216.05 + 8.85
MAR 2097 + 29 MAY 216.90 + 8.75
MAY 2073 + 26 JUL 217.35 + 8.65
JUL 2069 + 27 SEP 217.55 + 8.60
SEP 2072 + 27 DEC 217.65 + 8.55
NOV 2076 + 27 MAR 217.85 + 8.65
JAN 2082 + 27 MAY 218.10 + 8.70