Coffee Market Report

31 Dec 2021 | News

The current biennially bearing smaller production that has come from the Brazil coffee seasonal year July 2021 to June 2022, has thus far, from July to November reflected smaller month on month exports when compared to the previous biennially bearing record crop year.  Brazil has reported exports at a cumulative total of 12.61 million bags, in the first five months of the country’s coffee year. The current coffee export figures that are being reported from Brazil, are influenced by Covid related logistical restraints, though more so that this is a lower biennial bearing crop cycle and thus, when comparing the export performance from Brazil against the last, similar lower Brazil export year in 2019, the export performance is 14.56% lower, for the cumulative five months of the 2019/20 lower bearing cycle. The export reports for the month of December, are likely to follow in the new week. 

The climate in Brazil as the new July 2022 to June 2023 crop sets on the trees, continues to report good rainfall and dispersion across the vast Brazil Coffee growing areas, which is welcomed after a comparatively drier month of November, this would indicate conducive weather for the continued development of the new coffee crop.  This crop, which has been forecast to be at a median total of 63 million bags for the forthcoming biennially higher bearing crop year; an estimated 41 million bags natural arabica coffees, and 22 million bags Conilon Robusta coffees.  

The harvest in Vietnam which was initially delayed by a continuation of the rain season into November, is well underway, with new crop coffees moving from the interior to the ports, although the continued significant increases in ocean freight costs from this area to the world, and continual scarcity of equipment and congestion challenges are showing limited signs of subsiding as the year draws to a close. 

The main coffee importing consumer blocs in the northern hemisphere, are for the most part reporting slow trade within this week, heading into the New Year weekend and so too the coffee futures market volumes relatively muted.

The March 2022 to March 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 121.67 usc/Lb. This equates to 53.15% 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 325 bags yesterday, to register these stocks at 1,541,074 bags, with 95.99% of these certified stocks being held in Europe at a total of 1,479,408 bags and the remaining 4.01% being held in the USA at a total 61,666 bags.  Of this, a total 701,957 bags, or 45.55% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.44% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 6,700 bags pending grading on the day.

It was a mixed day on the commodity markets yesterday. The Sugar, Cocoa, Coffee, Wheat and Corn markets ended the day on a firmer note, while the Coffee, Soybean, Gold, Silver, Platinum and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.349 Sterling, at 1.134 the Euro and with the US Dollar buying 5.694 Brazil Real.   

The New York market started the day yesterday trading on a modest near to par firmer note, while the London market started the day yesterday trading on a near to par negative note both markets continued to oscillate around par for the remainder of the early morning session.   The New York market was seen to attract a degree of buying support in technical trade, whilst the London market followed suit. As the afternoon progressed the New York market started to add more value and quickly trigger buy stops along the way to accentuate 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 turn positive, gaining momentum throughout the session.  The London market encountered resistance late in the day to drop back losing some of the earlier gains of the day to settle on a firmer note.  The New York market continued to be driven by technical sentiment, continued to trigger speculative buy stops along the way before hitting a ceiling late in the day, to limit the gains and see the market settle on a firmer note at the close.

The London market ended the day on a positive note and with 77.78% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 76.74% of the gains of the day intact. This firmer close with the markets gaining momentum late in the day and settling near to the highs of the day might inspire some degree of follow through confidence to possibly set the markets for a steady start to early trade today, against the prices set yesterday, as follows:         

LONDON ROBUSTA US$/MT                      NEW YORK USC/LB.              

                                                                                                                

MAR     2364 + 21                                              MAR     228.90 + 3.30

MAY      2304 + 12                                               MAY     228.95 + 3.30

JUL       2283 + 5                                                JUL        228.35 + 3.30

SEP       2276 + 3                                                SEP       227.60 + 3.40

NOV      2274 + 3                                                  DEC       226.05 + 3.30

JAN       2272 + 3                                                  MAR      225.40 + 3.25

MAR      2266 + 2                                                  MAY      224.75 + 3.10

MAY      2259 + 2                                                  JUL        223.90 + 3.00