Coffee Market Report March 30 2017

With the month of April due to start the trade in Vietnam and following what was apparently very active export activity this month and an indicated coffee export volume of 3 million bags, are forecasting a more modest export volume for the coming month.   In this respect the private trade predictions are for Vietnam coffee exports during April to be between 1.7 million and 2.2 million bags, but it is early days and with the new crop Indonesian robusta coffees still mostly to the fore, one might still expect that the Vietnam coffee exports in April might still top these early forecasts. 

There are nevertheless and with the relatively buoyant prices being dictated by the London market, already some early new crop robusta coffees coming to the market within the internal trade in Indonesia.   But with the main harvest still to kick in and to start picking up in volume in the coming weeks, one might not expect to see a surge in Indonesian robusta coffee exports before May and June this year. 

Meanwhile both the Australian Department of Meteorology and the U.S. Government Climate Prediction Centre are forecasting a 50% plus chance for a new El Niño phenomenon to occur within the Pacific Ocean for the second half of this year, which would threaten hot and dry weather conditions for the Pacific rim countries.   Which in terms of coffee and should the El Niño occur in any intensity, would directly affect the coffee growing conditions for Colombia, Peru and Indonesia and to a lesser extent, have some influence on global weather conditions in general.   However, for the present it is just a possibility and is a factor that is not yet having any influence upon coffee market sentiment, albeit the many shall undoubtedly keep a close eye upon the developing weather news and forecasts.  

The May to May contracts arbitrage between the London and New York markets broadened yesterday, to register this at 40.83 usc/Lb., while this equates to 29.31% price discount for the London robusta coffee market.  This once again narrowing arbitrage is now becoming less 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 to increase by 5,833 bags yesterday; to register these stocks at 1,351,047 bags.  There was meanwhile a similar in number 5,607 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 47,572 bags. 

The commodity markets were mixed in trade yesterday but with the influential Oil markets further recovering, it assisted for the overall macro commodity index to take a steady to modestly positive track for the day.   The Oil, Natural Gas and New York arabica Coffee markets had a day of buoyancy and the London robusta Coffee and Copper markets were near to steady, while the Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Soybean,  Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower, to see this Index registered at 419.36.  The day starts with the U.S. Dollar steady and trading at 1.243 to Sterling and at 1.076 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at $ 51.80 per barrel. 

The London market started the day yesterday on marginally softer note, while the New York market started the day on a steady note.    The New York market did though soon drift lower and to join the London market in modest negative territory and with both markets, taking this track into the early afternoon trade.  As the afternoon progressed the New York market started to recover and to move into modest positive territory, which was followed by a recovery for the London market that moved back to par.   The New York market continued to take something of a sideways track in modest positive territory, while the London market maintained an erratic sideways track either side of Par through to the close.  The London market ended the day on a steady note and with 37.5% of the earlier modest gains of the day intact, while the New York market ended the day on an uncertain positive note and with only 31% of the earlier gains of the day intact.    This close was somewhat uncertain and provides little in the way of direction, but one might expect to see a cautious and 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     2146 + 3 

MAY     2171 + 3                                                MAY   139.30 + 0.45

JUL      2190 + 1                                                JUL    141.70 + 0.50

SEP      2199 – 1                                                SEP    144.05 + 0.50

NOV     2202 – 2                                                 DEC   147.35 + 0.50

JAN      2198 – 1                                                MAR   150.60 + 0.55

MAR     2198 – 1                                                MAY   152.70 + 0.55

MAY     2201 – 1                                                 JUL    154.55 + 0.60

JUL      2209 + 1                                                 SEP    156.20 + 0.60

SEP      2217 + 1                                                 DEC   158.25 + 0.65

NOV     2200 unch                                              MAR   160.25 + 0.60