Coffee Market Report

14 Jan 2022 | News

The analysts Safras & Mercado have reported that Brazil coffee farmers have already sold around 82% of the estimated total production of 56.50 million bags from this current Brazil Coffee crop.  The pace of sales at this time across a five-year average is reported to be around 74%, thus illustrating that current crop sales are picking up pace, over and above that of the recorded five-year average.  This selling activity has been assisted to a degree by the higher value to be had in against the futures terminal markets, as well as the contributory factor of the soft Brazil Real to the US Dollar.  This, latter factor assisting to support record price returns in local Brazil Real terms to producers, which one might anticipate within prevailing market conditions, will continue to encourage Brazilian farmers to maintain, and expand farms with new coffee planting, with a view to increased coffee production potential in the years to come.  

The weather conditions within Brazil meanwhile have reported heavy rainfall across the Brazil coffee belt during the first week of January, in isolated areas, devastating floods.  Weather conditions have stabilised and are forecast for the most part, to remain warm and dry heading into the latter half of the month. 

The Vietnam Customs Authority have reported that Vietnam’s coffee exports for the month of December have registered 57.60% higher from the previous month, at 2,822,483 bags. This number is proving to be substantially higher than the 2.16 million bags that had been initially forecast for the month’s coffee exports.  This sees the cumulative export performance from Vietnam, the largest producer of robusta coffee at 1,032,050 bags or 19.71% higher than the same period in the previous year, at a total 6,267,850 bags in the first three months of the current October 2021 to September 2022 coffee year.  The severe congestion within the global context that has been prevalent within Asia from the outset of pandemic related shipping restraints, remains an influential factor when collating, comparing and reporting coffee export statistics from this region. 

The General Statistics office of Vietnam have at the same time reported the export volume for the 2021 calendar year to be 26 million bags of mainly robusta coffee, and the value of the country’s coffee exports for the 2021 calendar year, shall be 13.30% higher than the 2020 calendar year, at a total of approximately 3.60 billion US Dollars. 

The U.S. Governments National Weather Service’s Climate Prediction Centre have updated their forecast to report that La Niña weather phenomenon, which traditionally brings excessive rains to the Pacific Rim, is anticipated to dissipate, with a more weather neutral environment expected toward April this year. 

The March 2022 to March 2022 contract arbitrage between the London and New York markets widened yesterday to register this 135.53 usc/Lb. This equates to 57.19% 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 20,240 bags yesterday, to register these stocks at 1,412,316, with 95.70% of these certified stocks being held in Europe at a total of 1,351,525 bags and the remaining 4.30% being held in the USA at a total 60,791.  Of this, a total 634,895 bags, or 44.95% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 47.51% of these certified coffees, originating from Honduras.  There was meanwhile a 2,025 bags increase to the number of bags pending grading to the exchange; to register 10,220 bags pending grading on the day.

It was a softer day on the commodity markets yesterday, as the US Dollar steadied, leading to wide spread consolidation throughout the commodity basket, the lastest USA inflation data overshadowing the prospects of consumer demand growth.   The Silver market was unchanged on the day, while the Sugar Cocoa, Coffee, Wheat, Corn, Soybean Gold, Platinum and Palladium markets ended the day on a negative note.  The day starts with the U.S. Dollar trading at 1.373 Sterling, at 1.148 the Euro and with the US Dollar buying 5.529 Brazil Real. 

The New York market started the day yesterday trading on a softer note, while the London market started the day yesterday trading on a firmer 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 selling pressure, whilst the London market followed suit in a more sedate manner. As the afternoon progressed the New York market started to gain support briefly to see the market turn firmer and hit a ceiling for the day.   

The afternoon session saw both the London and the New York markets attracted a degree of long liquidation pressure to see the markets trend softer for the remainder of the day. The markets continued on this softer path to see both the New York and the London markets settle near to the lows of the day in a negative note respectively. 

The London market ended the day on a negative note and with 88.24% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 85.56% of the losses of the day intact. This softer close, with the markets settling near to the lows of the day, does little to 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.                                                                                                                    

MAR      2237 – 45                                              MAR      237.00 – 3.85

MAY      2202 – 31                                             MAY       236.95 – 3.70

JUL        2192 – 29                                              JUL        236.05 – 3.70

SEP       2189 – 27                                              SEP        235.15 – 3.65

NOV       2187 – 25                                                 DEC       233.60 – 3.60

JAN       2184 – 25                                               MAR      232.80 – 3.55

MAR      2177 – 25                                                MAY      231.95 – 3.60

MAY      2170 – 25                                  JUL      230.65 – 3.60