Coffee Market Report

08 Jun 2022 | News

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of May was 401,000 bags or 65.09% higher than the same month last year, at a total of 1,017,000 bags.   This has contributed to the country’s cumulative coffee production for the first eight months of the present October 2021 to September 2022 coffee year to be 1,004,000 bags or 11.14% lower than the same period in the previous coffee year, at a total of 8,005,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of May were 599,000 bags or 173.63% higher than the same month last year, at a total of 944,000 bags.   This has contributed to the country’s cumulative coffee exports for the first eight months of the present October 2021 to September 2022 coffee year to be 233,000 bags or 2.74% lower than the same period in the previous coffee year, at a total of 8,258,000 bags. The report has referenced the civil unrest and protests that took place between May and June 2021 as a contributing factor to the sharp increase in coffee production and exports for the month of May this year when compared to the same period in the previous year.  One might note that the ongoing shipment container shortages, as well as vessel space constraints would have likely contributed toward the irregular flow of exports, this is a factor that is still impacting upon export efficiencies from this region.  

The Agriculture Ministry in Brazil has reported that there has been a successful negotiation and acquisition of fertiliser shipments from Russia, noting that the priority of these fertilisers will more than likely be for rotational food crop allocations, apart from being the largest producer of coffee, Brazil is also, the largest sugar and soybean producer, as well as a primary participant in the global production and supply of wheat, corn, tomatoes and sorghum.  The nation has some reliance therefore, on imported fertilizers, annually Brazil can import over 85% of their total fertilizer needs.   

As the harvest of the biennially bearing larger 2023 Brazil coffee crop begins in the arabica areas, weather conditions are forecast to remain cool and dry. Forecasts are mostly for low temperatures to be somewhere in the lower teens in degrees Celsius, ahead of the arrival of the next winter full moon, due on ….th June, next week. 

The July 2022 to July 2022 contract arbitrage between the London and New York markets narrowed yesterday to register this at 136.49 usc/Lb. This equates to 58.79% price discount for the London Robusta coffee market. This wide arbitrage may 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 2,672 bags yesterday, to register these stocks at 1,025,680 bags, with 95.49% of these certified stocks being held in Europe at a total of 979,471 bags and the remaining 4.51% being held in the USA at a total 46,209.  Of this, a total 511,881 bags, or 49.91% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 41.06% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 2,600 bags pending grading on the day.

It was a mixed day on the commodity yesterday, with the US Dollar showing some degree of strength ahead of inflation data due to be released later this week. The Corn, Soybean, Gold and Silver markets ended the day on a firmer note, while the Coffee, Cocoa, Sugar, Wheat, Palladium and Platinum markets ended the day on a softer note.  The day starts with the U.S. Dollar trading at 1.257 Sterling, at 1.068 the Euro and with the US Dollar buying 4.871 Brazil Real.

The New York and London markets started the day yesterday trading on a modest near to par firmer note, both markets oscillated around par for the remainder of the morning session. During the mid-morning session, the markets encountered resistance to drop back from the early modest highs of the day and be seen to be set on a softer path for the remainder of morning session.  As the afternoon progressed the New York market attracted a degree of long liquidation pressure to see the market trend softer for the remainder of the afternoon session. The London market followed suit. The late afternoon session saw New York market continue to project in a negative direction, accentuating the losses for the day. This saw the market settle on a very soft note, near to the lows of the day at the close. While the London market followed the trend to likewise settle on a softer direction, albeit recovering some of the earlier losses late in the day. 

The London market ended the day a negative note with 75% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note with 79.41% of the earlier losses of the day intact. This softer close for the markets, does little to inspire confidence, and with the US Dollar showing some degree of buoyancy against the Brazil Real, one might think that the markets are due for a hesitant follow through start to early trade today, against the prices set yesterday, as follows:             

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

JUL      2109 – 24                                    JUL       232.15 – 5.40

SEP      2121 – 19                                    SEP      232.35 – 5.30

NOV     2112 – 16                                   DEC     231.70 – 5.30

JAN      2099 – 13                                    MAR     230.20 – 5.15

MAR     2092 – 14                                   MAY     228.55 – 5.05

MAY     2088 – 13                                  JUL      226.55 – 4.80

JUL      2085 – 13                                  SEP     224.10 – 4.65

SEP     2078 – 13                                 DEC     221.80 – 4.65