Coffee Market Report

17 Jun 2022 | News

The Indonesian government trade data from Sumatra, the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of May were 116,902 bags or 70.83% lower than the same month last year, at a total of 43,888 bags. This contributes to the islands cumulative robusta coffee exports for the first eight months of the current October 2021 to September 2022 coffee year to be 640,483 bags or 25.25% lower than the same period in the previous year, at a total of 1,895,759 bags. Although the export figures reported are seen to be somewhat lower than the previous coffee year, the volume of exports over the last eight months is seen to be in line when compared to a five-year average over the same period.

The Ugandan Coffee Development Authority UCDA have reported that their country’s coffee exports for the month of May were 38,258 bags or 7.76% lower than the same month last year, at a total of 455,166 bags.   Uganda Robusta exports registered a 18.35% decrease when compared to the same month last year, to total 350,312 bags and Arabica exports registered a comparative increase by 62.86% to a total 104,854 bags exported in May this year. The UCDA likewise report that the cumulative exports for the first eight months of the current October 2021 to September 2022 coffee year to be 150,066 bags or 3.86% lower than the same period in the previous year, at a total of 3,741,349 bags.

The July 2022 to July 2022 contract arbitrage between the London and New York markets widened yesterday to register this at 137.10 usc/Lb. This equates to 59.11% 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 9,123 bags yesterday, to register these stocks at 998,627 bags, with 95.37% of these certified stocks being held in Europe at a total of 952,418 bags and the remaining 4.63% being held in the USA at a total 46,209.  Of this, a total 485,398 bags, or 48.61% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 42.18% of these certified coffees, originating from Honduras.  There was meanwhile no change to the number of bags pending grading to the exchange; to register 11,049 bags pending grading on the day.

It was a follow through firmer day on the commodity markets yesterday, with the US Federal Reserve’s aggressive stance on inflation, supporting the greater commodity basket and the leading in influence oil markets tracking firmer on the day. The Coffee, Cocoa, Sugar, Corn, Soybean, Wheat, Good, Silver, Platinum and Palladium markets ended the day on a firmer note.  The day starts with the U.S. Dollar trading at 1.231 Sterling, at 1.052 the Euro and with the US Dollar buying 5.054 Brazil Real.

The New York market started the day yesterday trading on a modest near to par softer note, while the London market started the day trading on a near to steady firmer note. The New York market was seen to trend softer during the early morning session before hitting a floor to rebound and gain support to see the market trend firmer into the late morning session while the London market traded either side of par for the remainder of the morning session. As the afternoon progressed both the New York and London markets started to add more value and quickly trigger buy stops along the way to accentuate the gains for the day. The markets encountered resistance late in the day, which saw both the New York and London markets drop back from the late afternoon highs. This would see the New York market settle on a very firm note as the market continued to be driven by technical sentiment ahead of first notice day on the 22nd June, while the London market followed suit to also settle on a firmer note at the close.

The London market ended the day a positive note with 86.54% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 76.67% of the earlier gains of the day intact. This follow through firmer close for the markets, with a positive trend building throughout the later afternoon session might indicate some degree of direction and one might think that the markets will be pressured for a follow through steady start to early trade today, against the prices set yesterday, as follows:   

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

JUL      2091 + 45                                    JUL       231.95 + 3.45

SEP      2104 + 49                                    SEP      231.80 + 3.30

NOV     2097 + 44                                  DEC     230.75 + 3.10

JAN      2081 + 36                                    MAR     229.10 + 2.85

MAR     2071 + 33                                   MAY     227.55 + 2.75

MAY     2066 + 34                                  JUL      225.65 + 2.70

JUL      2063 + 34                                 SEP     223.50 + 2.70

SEP     2057 + 34                                 DEC     221.55 + 2.65