- Demand has recovered to pre-pandemic levels, and as out-of-home consumption starts to pick up, we could see more traditional consumption patterns.
- Imports into consuming regions have improved, suggesting stronger demand.
- London airports reached 0.62 in the week to July 19th, as airports become busier as people look to get a summer holiday.
- London stations have reached 0.72 up 0.03 on the week and this suggests an increase in commuting and internal travel. This is all but confirmed when you look at sales in the West End as the index increased to 0.77.
- Unemployment levels are rising in the 15-24 age bracket is high, and millennials consume large amounts of coffee. This could dampen demand in the near term, however, it is only a segment of consumers.
- The employment rate for 15–24-year-olds in Q2 2021 in the UK, US, EU 27 are 50.3%,49.8% and 30.8%, for the OECD the employment rate is 39.9%, according to the OECD.
- Demand for coffee is price inelastic and this suggests that as prices rise there will be a limited reduction in demand.
- In 1975, there was a frost in Brazil, and this caused the NY contract to rally to 333.60cts/lb in 1977, the delay was due to the limited communication channels and data availability, in 1994 when we had a draught the certs went to 25,000.
- Brazil exported 45.5m bags between July 2020 and June 2021, this could be revised higher in the coming months.
- Brazil output needs to reach 67m bags to cover local and global demand, using the 56.402m bags for 2021/22 there will be a 10.598m bag deficit in Brazil alone.
- From July 2020 to June 2021 Colombian exports declined 2% y/y with exports at 12.629m bags, down from 12.849m bags in the same period prior, for the Colombian coffee year, exports are flat at 9.479m bags compared to 9.498m bags.
- In Nicaragua, some of the low altitude trees have started to be harvest, but worker availability is a threat to picking.
- Ho Chi Minh stocks stand at 5,968,000 bags, as of the end of July, down 533,000 M/M but up 2,808,000 bags Y/Y.
- 1.1445m bags of ICE certified stocks is from Brazil and is semi-washed coffee, in our opinion this coffee will be consumed. Honduras coffee in stocks is now at 846,891 bags.
- The z-score for the current net position is 1.40, the record is 1.60, the long position z-score is 1.107 with the record at 2.73.
- The Robusta commitment of traders’ shows a net long of 23,037, down from -2,056 as of August 3rd. The long position stands at 25,680 which also declined from the week before.
Global growth accelerated in H1 2021, led by China and the US, as the vaccination rates picked up sharply and the lift of lockdown restrictions unleashed some of the pent-up demand. China, in particular, experienced a sharp rebound in manufacturing at the beginning of the year, and while we continue to see strong positive growth, it is moderating month-on-month. Commodity prices skyrocketed, driven by expectations of strong demand. Therefore, as we move through the second half of 2021, expect to see recoveries diverge, exemplified by some economies already hiking rates, while others continue to provide record levels of support. This divergence is further exemplified by the take up of the vaccine, as we see some economies struggle with the access and distribution of the jabs.