Coffee Market Report February 24 2017

The Coffee Board of India has reported that the countries coffee exports for this year so far up to Tuesday 21st. February were 42,733 bags or 5.9% higher than the same period last year, at a total of 766,667 bags.   These exports were even a more impressive 15.9 million U.S. Dollars or 15.39% higher in value than the value of the exports for the same period last year, at a value of 119.2 million U.S. dollars. 

Despite some disappointment within Vietnam over the news that the authorisation to allow for the import of up to 1 million bags of robusta coffees into Brazil has been suspended, there are reports that the farmers and internal traders within Vietnam remain confident in the medium to longer term prices for robusta coffees.   In this respect reports are of some degree of price resistance within the internal market, which is with the present lacklustre performance of the reference prices of the London market slowing sales to the countries exporters. 

Meanwhile ahead of the start of the new robusta crop in Indonesia in April, there is lacklustre internal market trade of robusta coffees.  With exporters only expecting to see some upturn in the volumes of new business in late April or May this year, which with the lack of competition from Indonesia and only relatively modest volumes of robusta coffees coming to the market from India and Uganda, leaves the Vietnamese farmers with their now much reduced new crop stocks, quite some muscle in terms of their price demands to the countries exporters. 

On the arabica coffee front and with the carnival atmosphere already coming to mind in Brazil ahead of the Monday to Wednesday holidays next week, there is presently little excitement in terms of physical trade for the present.   This lack of buying arabica coffee aggression being somewhat accentuated by the fact that consumer market coffee stocks are presently good and with the main European, North American and Japanese markets all holding extensive stocks.   

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 52.20 usc/Lb., while this equates to 34.81% price discount for the London robusta coffee market.  This broadening arbitrage is now becoming more of an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen increase by 1,962 bags yesterday; to register these stocks at 1,334,826 bags.  There were meanwhile a larger in number 7,350 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,045 bags. 

The U.S. dollar was marginally softer yesterday and this despite the support of speculation for another interest rate hike in the near future which has recently been assisting to buoy confidence in the currency, to see the markets and the overall macro commodity index taking something of a sideways track in mixed trade yesterday.   The Oil, Natural Gas, Cocoa, Cotton, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Sugar, Coffee, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.003% lower, to see this Index registered at Friday’s level of 427.99.  The day starts with the U.S. Dollar steady and trading at 1.255 to Sterling and at 1.058 to the Euro, while North Sea Oil is steady and is selling at $ 55.70 per barrel. 

The London market started the day yesterday on a softer note, while the New York market started the day with modest buoyancy.   The London market did however soon recover to trade around par, while the New York market retained its buoyancy and with the markets taking this track into the early afternoon trade, but within an environment of mostly thin and lacklustre trade.  As the afternoon progressed the New York market started to falter and to finally move back into negative territory and accompanied by a softening within the London market and with both markets heading towards taking a softer stance, for the close of the day.   The London market ended the day on a softer note and with 46.2% of the earlier losses of the day intact, while the New York market ended the day on a softer note and with 86.4% of the earlier losses of the day intact.    This close provides for little in the way of direction and one might suspect that there shall only be a hesitant near to steady start for early trade today against the prices set yesterday, as follows: 

LONDON ROBUSTA US$/MT                          NEW YORK ARABICA USc/Lb. 

MAR     2124 – 6                                                MAR   147.85 – 1.35

MAY     2155 – 6                                                MAY    149.95 – 0.95

JUL      2170 – 6                                                 JUL    152.20 – 1.00

SEP      2177 – 6                                                SEP    154.45 – 1.00

NOV     2179 – 7                                                 DEC   157.55 – 0.95

JAN      2180 – 7                                                MAR   160.50 – 0.95

MAR     2183 – 7                                                MAY   162.25 – 0.95

MAY     2184 – 7                                                 JUL    163.80 – 0.90

JUL      2185 – 7                                                 SEP    165.30 – 0.85

SEP      2193 – 7                                                 DEC   167.45 – 0.80