Coffee Market Report April 13 2017

The new conilon robusta coffee crop harvest has started in the northern Rondônia coffee producing province in Brazil, but with some rain interruptions to the progress of this harvest.  This shall soon be followed by the new conilon robusta coffee harvest from the leading conilon producing state of Espirito Santo and thus for the medium term, the tight internal market supply of robusta coffees to the countries domestic roasters is no longer a problem.  Albeit that one might expect there to be some degree of price resistance on the part of the farmers, who have grown used to the premium prices that they have been receiving over the past few months of tight supply. 

Weather forecasts from south and central Vietnam are indicating hot weather and accompanied by severe thunder showers for this month and thus it would seem, that the new summer rain season is very much on track and shall be beneficial for the prospects of the next crop that shall be harvested from October to December this year.   Most early forecasts tending to indicate that following the small new crop that came in at the end of last year, that this new crop shall potentially be another large crop of at least 28 million bags. 

The physical coffee markets with most producer countries closed for business tomorrow for the Easter Friday and some already on holiday and with the main stream consumer market countries shall likewise be closed tomorrow, can be expected to be somewhat lacklustre in nature.   While with many of the European markets also closed for business for Easter Monday and only due back at work on Tuesday next week, one cannot expect much in the way of trading activity until later on in the coming week. 

In terms of the coffee terminal markets both the New York and London markets shall be closed tomorrow and with the London market also close on Monday, while the New York market shall be open with a late start and for a shortened day on Monday.    

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.58 usc/Lb., while this equates to 29.57% 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 8,565 bags yesterday; to register these stocks at 1,395,637 bags.  There was meanwhile a larger in number 11,325 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,500 bags. 

The commodity markets were mixed yesterday and with the U.S. dollar tending softer, but this did not assist to stop the overall macro commodity index from taking a softer track for the day.   The Natural Gas, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil, Sugar, Cocoa, Coffee, Cotton, Copper and Orange Juice markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% lower, to see this Index registered at 417.85.  The day starts with the U.S. Dollar tending softer and trading at 1.255 to Sterling and at 1.066 to the Euro, while North Sea Oil is showing some early buoyancy and is selling at $ 54.60 per barrel. 

The London market started the day yesterday on a steady note and with the New York market starting the day with immediate buoyancy and with the both markets maintaining this track into the early afternoon trade.  As the afternoon progressed the New York market started to attract more support and with buy stops being triggered to see the market post gains that the peaked at 1.75 usc/Lb. for the day, while the London market started to follow suit and to move up into modest positive territory.  However, in late in the day trade the New York market and with the added influence of the negative nature of the overall macro commodity index faltered and suffered a rather sharp reversal and attracting sell stops to accentuate the losses, suffered something of a collapse and dipped relatively sharply back into negative territory and followed by a steady backwards slide for the London market.   The London market ended the day on a soft note and with 80% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 78.3% of the losses of the day intact.   This close does little to inspire but one might expect that with a softer dollar in play that the markets might attract some corrective support and the possibility for a steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY     2157 – 19                                             MAY   138.30 – 1.90

JUL      2183 – 16                                              JUL    140.60 – 1.80

SEP      2190 – 13                                             SEP    142.85 – 1.85

NOV     2190 – 14                                              DEC   146.30 – 1.85

JAN      2186 – 13                                             MAR   149.70 – 1.75

MAR     2188 – 13                                             MAY   151.80 – 1.80

MAY     2192 – 13                                              JUL    153.60 – 1.80

JUL      2200 – 13                                              SEP    155.25 – 1.75

SEP      2208 – 13                                              DEC   157.40 – 1.75

NOV     2215 – 13                                              MAR   159.50 – 1.75