Coffee Market Report

06 Jan 2022 | News

The harvest in Vietnam is progressing well, adding to the prospects of some degree of pressure upon the London coffee market, which is coming from price fixation hedge selling on the part of exporters in Vietnam, as they build up new crop robusta coffee stocks. This is related to farmers’ measured sales to build up cash resources with less than four weeks left, ahead of the weeklong Tet New Year (Year of the Tiger) celebrations, which kick off on the 1st February this year. 

This aside, there is little in the way of striking fundamental news coming to the markets from the main producer blocs and, within Brazil, the focus shall now be with the new crop developing, and upon the varied state, commercial industry and independent forecasts that are soon due to come forth on the prospects of the new 2022 Brazil crop, which begins harvest in April in the Conilon robusta areas, and traditionally mid-year, in the main arabica growing areas.  

The March 2022 to March 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 126.47 usc/Lb. This equates to 54.57% 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 3,444 bags yesterday, to register these stocks at 1,531,803, with 95.97% of these certified stocks being held in Europe at a total of 1,470,137 bags and the remaining 4.03% being held in the USA at a total 61,666 bags.  Of this, a total 698,713 bags, or 45.61% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.40% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 0 bags pending grading on the day.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 12,667 bags over the week of trade leading up to Monday 3rd. January to see these stocks registered at 1,638,000 bags, on the day.

It was a softer day on the commodity markets yesterday, as the markets continue to watch for signs of the and timing of the US Federal Reserve’s stance on interest rate increases and the likelihood thereof.  The Corn, Wheat and Platinum markets ended the day on a firmer note, the New York Arabica Coffee market remained unchanged on the day, while the Sugar, Cocoa, London Robusta Coffee, Soybean, Gold, Silver and Palladium markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.353 Sterling, at 1.131 the Euro and with the US Dollar buying 5.709 Brazil Real.   

The New York market started the day yesterday trading on a modest near to par firmer note whilst the London market started the day yesterday trading on a modest near to par softer note, both markets in weighed by selling pressure were set on a softer path during the early morning session.  The markets would bounce off the early morning lows during the mid-session to see both the New York and London markets attempt to gain a degree of traction.  

As the afternoon progressed both markets hit a ceiling limiting the gains for the day, the markets dropped back from the modest highs of the day and trended softer into the late afternoon. This saw the New York market drop back and settle unchanged for the day, while the London market continued to trend softer to settle near to the lows of the day at the close.

The London market ended the day on a negative note and with 77.78% of the losses of the day intact, while the New York market ended the day unchanged from the previous close. This mixed but overall softer close, does little to indicate direction albeit that the New York market was seen to consolidate to some degree after the rally on Tuesday. One might therefore think that the markets are due for a hesitant steady start to early trade today, against the prices set yesterday, as follows:  

   

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

MAR      2321 – 28                                               MAR      231.75  Unch

MAY      2270 – 23                                             MAY       231.80  Unch

JUL        2256 – 20                                              JUL        231.35 + 0.15

SEP       2252 – 17                                              SEP        230.85 + 0.30

NOV       2249 – 16                                                 DEC       229.80 + 0.45

JAN       2244 – 16                                                MAR      229.40 + 0.55

MAR      2237 – 16                                                MAY      228.95 + 0.60

MAY      2230 – 16                                   JUL      228.30 + 0.65