The Brazilian National Statistics Agency IBGE have come to the fore with an updated forecast of the countries 2020 coffee crop. The report suggests that the larger biennially bearing Brazil 2020 production, for which harvest is just about completed, is estimated to be 19.40% higher when compared against their biennial lower bearing 2019 production; and the July 2020 to June 2021 harvest to come in at a cumulative total of 59.60 million bags, this up 600,000 bags from their previous estimate of 59 million bags. In this report, the Brazilian National Statistics Agency IBGE forecast that the countries 2020 arabica coffee production, which is primarily natural arabica coffee, will be 30% higher than last year, to forecast the arabica crop, at 45 million bags. The report forecasts that Brazil Conilon robusta coffee production, at a relatively modest in comparison to independent forecasts, to be 5.80% lower than last year; at a forecast total of 14.60 million bags. The IBGE is traditionally very conservative in terms of their estimates, and generally considered to be anywhere between 10% and 20% below reality while this latest forecast, is unlikely to render support for market sentiment.
With the harvest just about completed, one might anticipate that independent forecasts and reports, will start to come to the fore, as the Brazil 2020 crop harvest finishes. This, while many independent forecasters have reported field work estimates ahead of this harvest, with these forecasts varied and mostly stating estimates above 60 million bags, with a general median at around 65 million bags, in potential and is likely to be reviewed higher as time goes by, for what is already recognised to be a upcycle biennial bearing record production, for this Brazil July 2020 to June 2021 crop year.

With very limited supply of current crop robusta coffee stocks within Vietnam meanwhile, internal market price resistance is slowing sales and trade remains lacklustre within Vietnam for the present. Weather conditions have been ideal meanwhile, providing good conditions for the development of the new October 2020 to September 2021 coffee crop ahead of the harvest which traditionally starts next month.

Although the new April 2020 to March 2021 new crop from Indonesia was initially slow to come to the fore, after a later start to the seasonal harvest this year, new crop coffees are flowing to the internal market within Indonesia. The internal competition between their growing domestic roasting and soluble manufacturers and the export market, is seen to be subsiding as coffee supply to adequately fuel both sectors, is becoming more apparent.

The U.S. Governments National Weather Service’s Climate Prediction Centre has forecasted meanwhile, that there is a 75% chance for a La Niña phenomenon to develop later this year. The La Niña being a phenomenon that brings with it excessive rains for the Pacific Rim countries and in terms of coffee, having an impact upon the climatic conditions within Colombia, Indonesia and Peru, while it can also influence dry conditions for the arabica coffee districts in South East Brazil. Thus if the La Niña is to come into play and aside from concerns over excessive rain damage for the coffee crops in Colombia, Peru and Indonesia, it would bring forth concerns over the threat of drought damage for the next 2021 Brazil crop, which may as the time nears for the onset of spring and summer rains in Brazil, to set the flowering and next crop potential for 2021, become a factor that shall be closely watched by the market.

The November to December contract arbitrage between the London and New York markets broadened yesterday; to register this at 67.17 usc/Lb. This equates to 50.99% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 18,897 bags yesterday to register these stocks at 1,133,161 bags, with 93.7% of these certified stocks being held in Europe at a total of 1,060,382 bags and the remaining 6.3% being held in the USA at a total of 72,779 bags. There is meanwhile a smaller in number 1,995 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,339 bags.
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LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

NOV 1423 + 7 DEC 131.70 + 2.85
JAN 1436 + 8 MAR 132.60 + 2.95
MAR 1448 + 7 MAY 133.45 + 3.00
MAY 1461 + 7 JUL 134.35 + 3.05
JUL 1475 + 8 SEP 135.15 + 3.15
SEP 1489 + 8 DEC 135.90 + 3.15
NOV 1502 + 8 MAR 136.70 + 3.20
JAN 1513 + 8 MAY 137.20 + 3.30