Coffee Market Report

03 Jan 2022 | News

The Ivory Coast as west Africa’s leading robusta coffee producer, have reported that their coffee exports for the month of November were 42,766 bags or 97.05% lower than the same month last year, at a total of 1,300 bags.  This has contributed to their country’s cumulative coffee exports for the first three months of the October 2021 to September 2022 coffee year to be 151,433 bags or 79.23% lower than the same period last year, at a total of 39,700 bags. This relatively modest in comparison export performance is perhaps related to internal dynamics rather than an indication of problems with the new crop, which has been forecast in excess of 1.40 million bags, of which an estimated 1.30 million bags robusta coffee are expected to fuel the export market over the 12-month period. 

Meanwhile with their new robusta coffee crop having started the government in the Ivory Coast is anticipated dictate the minimum farm gate price for new crop coffees to their farmers, minimum farm gate prices which one would assume will be increased by the government in line with the increase in value against the London Robusta market over the past 12 months.  One would not expect to see this factor stall delivery to the market of this year’s new robusta coffee crop from the Ivory Coast, as the internal and interior market that is relatively informal may be anticipated to continue to barter for coffee purchases and maintain a flow of coffee to their traditional markets in North Africa and some of the Southern European countries.

Coffee exports from Cameroun, with their traditional December to November coffee year, have been reported for robusta coffee exports for the month of October to be 586 bags or 4.01% higher than the same month in the previous year, at a total of only 15,200 bags. These export figures are difficult to directly relate to production levels, across smallholder growing areas and within the relatively informal collection systems.  The new crop coffees are however now coming into play and with a forecasted new crop of in excess of 280,000 bags, one would expect that the country’s export volumes shall soon start to accelerate.

This new crop from Cameroun can be expected to be joined within the consumer markets by a relatively good supply of new crop Ivory Coast coffees, which come to the market through both the official ports of Abidjan and San Pedro and informally through their neighbouring countries.  With these two West African countries forecasted to contribute an estimated 1.50 million bags of robusta coffees to the consumer markets for the present October 2021 to September 2022 coffee year, and along with the dominant player Uganda and the smaller robusta coffee producers in West, Central and East Africa, a total of approximately 6.50 million bags of African robusta coffees to contribute toward robusta supply to the consumer markets in this coffee year.

The latest Commitment of Traders report from the New York Arabica and London Robusta markets will be released in the coming days, due to the holiday being observed today, on the 3rd January 2021.

The March 2022 to March 2022 contract arbitrage between the London and New York markets narrowed on Friday to register this at 118.60 usc/Lb. This equates to 52.45% 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 remain unchanged on Friday, 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 on Friday, within the thin volumes of trade across the commodity sector ahead of the New Year Holiday. The Sugar, Soybean, Corn, Wheat, Gold, Silver and Platinum markets ended the day on a firmer note, while the Cocoa, Coffee and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.350 Sterling, at 1.134 the Euro and with the US Dollar buying 5.570 Brazil Real.   

The New York and London markets started the day on Friday trading close to par on a modest softer note, both markets oscillated around par briefly before attracting a degree of selling pressure to see the market set on a softer path for the remainder of the morning session. The markets would carry this softer trend through to the early afternoon session.

As the afternoon progressed both the New York and London markets hit a floor to limit the losses for the day, this saw the markets bounce off the lows of the day and recover to a degree some of the losses of the day. the New York market was seen to settle on a softer note at the close, while the London market settled on a near to par unchanged note for the day.

The London market shall be closed for the today, 3rd January 2022, with the New York market trading solo for a shortened day of trade.  

The London market ended the day on a modest near to unchanged negative note and with 21.43% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 57.89% of the losses of the day intact. This follow through softer close does little to inspire confidence albeit that the New York market recovered some of the earlier losses of the day, one might think that the New York market trading solo for a shortened day is due for a hesitant steady start to early trade today, against the prices set on Friday, as follows:   

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

MAR      2370 – 3                                                MAR      226.10 – 2.75

MAY      2310 – 2                                               MAY       226.00 – 2.80

JUL        2291 – 2                                                JUL        225.25 – 2.80

SEP       2282 – 4                                                 SEP        224.50 – 2.70

NOV      2279 – 5                                                    DEC       223.15 – 2.55

JAN       2274 – 5                                                   MAR      222.60 – 2.50

MAR      2267 – 5                                                   MAY      221.35 – 2.55

MAY      2260 – 5                                     JUL       220.65 – 2.55