Coffee Market Report April 06 2017

With the month of March past, the Indonesia government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month were 61,778 bags or 28.33% higher than the same month in the previous year, at a total of 279,823 bags.   This contributes to the cumulative Sumatran robusta coffee exports for the first six months of the present October 2016 to September 2017 coffee year to being 90,282 bags or 5.16% higher than the same period in the previous coffee year, at a total of 1,840,996 bags. 

It has to be noted though that while robusta coffee exports for the present 2016/ 2017 coffee year from Sumatra are so far keeping pace with the volumes exported during the previous 2015/2016 coffee year, that this latter 2015 to 2016 coffee year registered 50.49% lower exports than the previous 2014/ 2015 coffee year and that the 2015/2016 coffee year was in reality a dismal coffee year for the island.  However, with the new crop now starting and forecasted to be a larger new crop, one can expect that the islands monthly export volumes shall continue to improve and that by October, one shall see a much-improved performance for the present 2016/2017 coffee year.   But unlikely to match the 5.3 million bags exported during the 2015/2015 coffee year.   

The Colombian Coffee Federation have reported that the countries coffee production for the month of March was 76,000 bags or 8.05% higher than the same month last year, at a total of 1,020,000 bags.   This improved performance has contributed to the countries cumulative coffee production for the first six months of the present October 2016 to September 2017 coffee year to being 652,000 bags or 8.87% higher than the same period in the previous coffee year, at a total of 7,999,000 bags. 

In terms of coffee exports from Colombia the Coffee Federation have reported that the countries coffee exports for the month of March were 70,000 bags or 6.48% higher than the same month last year, at a total of 1,150,000 bags.   This contributes to the countries cumulative exports for the first six months of the present October 2016 to September 2017 coffee year to being 605,000 bags or 8.86% higher than the same period in the previous coffee year, at a total of 7,433,000 bags. 

These are impressive figures and it would appear that Colombia is well on target for the forecasted 15 million bags crop for the present coffee year, which is related to the recent years of an extensive replanting program of aged trees and along with improved farm husbandry and inputs.   While the increased volumes of mostly fine washed arabica coffee exports from Colombia this year and accompanied by overall increased supply from the Central American producer bloc, continues to impact negatively upon speculative sentiment within the related New York arabica coffee market. 

These washed arabica coffee exports do however come on top of the steady volumes of mostly natural arabica coffees that have been coming to the consumer markets from Brazil, which follows the countries bumper arabica coffee harvest last year and has contributed to the present surplus supply of overall arabica coffee.  But with most of the trade, industry and official forecasts pointing to a biennial bearing dip in the size of the pending new Brazil arabica coffee crop, it does so far indicate that by the second half of this year there might no longer be a surplus arabica coffee supply.   Albeit that for the present and with the main stream consumer markets in Europe, North America and Japan holding relatively large volumes of coffee stocks, there would appear to be no short term concerns on the part of the consumer market industry buyers.  

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.76 usc/Lb., while this equates to 29.22% 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 3,390 bags yesterday; to register these stocks at 1,367,569 bags.  There was meanwhile a larger in number 7,075 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 54,149 bags. 

The commodity markets were mixed in trade yesterday, but with buoyancy for many markets and the overall macro commodity index took a positive track for the day.   The Oil, Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas, Sugar, New York arabica Coffee, 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 0.26% higher, to see this Index registered at 416.92.  The day starts with the U.S. Dollar near to steady and trading at 1.249 to Sterling and at 1.067 to the Euro, while North Sea Oil is steady and is selling at $ 53.15 per barrel. 

The London and New York markets both started the day yesterday with early buoyancy and with both markets taking a positive track into the early afternoon trade, but as the afternoon progressed the London market came under pressure and drifted back to par and even took some dips south of par, which was followed by the New York market which likewise fell back to trade around par.   The London market did however recover and move back into modest positive territory in late trade, but with the New York market tending to flounder and move south in late trade.  The London market ended the day on a very positive note and with 100% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 64.3% of the earlier losses of the day intact.  This mixed close does little to inspire and might suggest that the markets are due for little better than a steady start for early trade today against the prices set yesterday, as follows: 

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

MAY     2153 + 6                                                MAY   137.30 – 0.45

JUL      2179 + 2                                                JUL    139.60 – 0.45

SEP      2188 + 2                                               SEP    141.90 – 0.50

NOV     2189 + 4                                                DEC   145.30 – 0.50

JAN      2186 + 3                                               MAR   148.45 – 0.55

MAR     2188 + 2                                               MAY   150.60 – 0.55

MAY     2192 + 3                                                JUL    152.35 – 0.50

JUL      2198 + 3                                                SEP    153.90 – 0.50

SEP      2206 + 3                                                DEC   156.05 – 0.50

NOV     2213 + 3                                                MAR   158.15 – 0.55