Coffee Market Report April 20 2017

The National Coffee Council of El Salvador have reported that the countries coffee exports for the month of March were 15,006 bags or 28.96% higher than the same month last year, at a total of 66,819 bags.  This improved performance has contributed to the countries cumulative exports for the first six months of the present October 2016 to September 2017 coffee year to being 5,410 bags or 3.3% higher than the same period in the previous coffee year, at a total of 169,336 bags. 

Today is the start of the annual four-day Speciality Coffee Association of America conference and exhibition, which attracts global support and this year is being held within Seattle.   But with the news of the somewhat dramatic reversal in the fortunes of the New York arabica coffee market yesterday, likely to take some of the lustre out of the event, for many of the producer exporters attending the conference.  

The Brazil Real lost a bit of value against the U.S. dollar, which assisted with the prospects for some increased Brazilian to cap exuberance within the New York market, once the Americas came upon the field of play yesterday.  But with Brazilian farmers already relatively well sold in terms of their past crop arabica coffee stocks, one might not expect that even a marginally weaker Brazilian Real would have much impact upon the fortunes of the market.  Albeit that the speculative sector within the New York market tends to react to the threat of increased selling out of Brazil, whenever the Real losses some weight. 

The Brazil market is however due for another public holiday tomorrow, as the country celebrates their Tiradentes Day holiday, to commemorate the independence from Portuguese rule and taxation hero Joaquim José da Silva (nicknamed the Tooth Puller), who led the protests in February 1789 and his subsequent execution on the 21st. April 1792.   But one would not think that the prospects of an early closing today and a holiday tomorrow and along with lower reference prices within the terminal markets, shall actually bring much in the way of internal market arabica coffee selling into play within Brazil. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 42.04 usc/Lb., while this equates to 29.89% 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 decrease by 3,164 bags yesterday; to register these stocks at 1,408,018 bags.  There was meanwhile a smaller in number 165 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,292 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 10,833 bags or 0.38% over the week of trade leading up to Monday 17th. April, to see these stocks registered at 2,808,833 bags, on the day. 

The commodity markets were mixed in trade yesterday against a steady U.S. dollar, but with many markets tending negative and the overall macro commodity index taking a negative track for the day.   The Natural Gas, Orange Juice, Corn and Soybean markets had a day of buoyancy, while the Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, 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 0.84% lower, to see this Index registered at 414.62.  The day starts with the U.S. Dollar tending softer and trading at 1.280 to Sterling and at 1.072 to the Euro, while North Sea Oil is near to steady and is selling at $ 50.95 per barrel. 

The London and New York markets opened the day yesterday on a steady note and trading close to par, but with the New York market soon attracting support and showing modest buoyancy, while the London market struggled to maintain par.   The markets retained this stance into the early afternoon trade and with the London market taking a modestly softer sideways track, while the New York was trading just above par.   However, as the afternoon progressed the New York market and with perhaps the combined influences of the weaker Brazil Real and the negative nature of the overall macro commodity index started to come under pressure and drifted back into negative territory, while the London market started to extend its losses.   Late in the day though it all fell apart for the New York market and with the market falling back sufficiently to trigger sell stops and the market falling below the 50-day moving average, the bears within the market took the New York market sharply lower. 

The London market ended the day on a soft note and with 69.6% of the losses of the day intact, while the New York market ended the day on a very soft note and with 89.9% of the earlier losses of the day intact.   This somewhat unexpected collapse within the New York market does little to inspire confidence and contributes to a negative technical picture for the market and one might think that there shall be a follow through soft start for the London market and perhaps some corrective buoyancy for the New York market for early trade today, against the prices set yesterday, as follows: 

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

MAY     2146 – 17                                              MAY   138.00 – 4.90

JUL      2174 – 16                                              JUL    140.65 – 4.90

SEP      2183 – 16                                             SEP    143.00 – 4.85

NOV     2184 – 14                                              DEC   146.45 – 4.85

JAN      2181 – 13                                             MAR   149.85 – 4.85

MAR     2179 – 13                                             MAY   151.95 – 4.90

MAY     2181 – 13                                              JUL    153.80 – 4.80

JUL      2189 – 13                                              SEP    155.55 – 4.70

SEP      2197 – 13                                              DEC   157.85 – 4.60

NOV     2204 – 13                                              MAR   160.05 – 4.50