Coffee Market Report October 12 2016

The National Coffee Association in Guatemala has reported that the country’s coffee exports for the month of September were 48,116 bags or 26.52% lower than the same month last year, at a total of 133,349 bags.   This contributed to the exports for the October 2015 to September 2016 coffee year to have been 29,800 bags or 1.02% higher than the previous coffee year, at a total of 2,956,616 bags. 

The Brazil Exporters Association Cecafé have announced that due to the ongoing strike by officials of the revenue services within the country’s leading coffee export port of Santos that they are unable to quote specific customs export data for the month of September but with the numbers at hand, it would appear that the green coffee exports for the month were 24.4% lower than the same month last year, at a total of 2.2 million bags.   This number and with the registrations of exports of value added soluble and ground coffee calculated in terms of their green coffee equivalent would increase the coffee exports for the month to 2.5 million bags. 

It must be noted though that at this time last year the green coffee exports from Brazil included a significant number of exports of conilon robusta coffees which this year, following the dismal smaller conilon robusta coffee crop, is no longer the case.    In this respect the exports of conilon robusta coffees for the month of September were seen to have been 305,400 bags or 90.9% lower than the same month last year, at a total of 30,500 bags.  Thus one might comment that the dip in green coffee exports for the month of September does not indicate any tightness of supply of Brazil arabica coffees to the consumer markets, for the present. 

Brazil have their National Nossa Senhora de Aparecida religious holiday today, which shall remove participation by Brazil exporters from the coffee market today, which might with the lack of price fixation selling by exporters for the day, prove to be something of a supportive factor for the fortunes of the New York market for the day.   Albeit that it is not the producers but the fund and speculative sectors of the market, are the main drivers of the direction that this presently buoyant market takes.   

The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 60.53 usc/Lb., while this equates to a 39.25% price discount for the London robusta coffee market.  This arbitrage is perhaps becoming a less attractive factor for the 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 registered were seen to decrease by 60 bags yesterday; to register these stocks at 1,256,280 bags.  There were meanwhile a larger in number 2,999 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,496 bags. 

The Certified Robusta coffee stocks held against the London market were seen to decrease by 17,833 bags or 0.78% over the week of trade leading up to Monday 10th. October, to register these stocks at 2,286,833 bags, on the day. 

The commodity markets and with the dollar showing follow through muscle for the day were mostly on a back foot for the day yesterday, with the overall macro commodity index taking a softer track for the day.  The Sugar, Cocoa, London robusta Coffee, Wheat, Corn, Wheat and Soybean markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, New York arabica Coffee, Cotton, Copper, Orange Juice, 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 0.34% lower; to see this Index registered at 417.77.   The day starts with the U.S. dollar near to steady in early trade and trading at 1.227 to Sterling and 1.104 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and trading at 50.65 per barrel. 

The London market started the day yesterday with a degree of modest buoyancy, while the New York market started the day on a modestly softer note.  The markets retained this stance into the early afternoon trade, when increased selling pressure started to come to the fore for the New York market.   But while the New York market started to lose some more weight the London market following a dip back to par, took a steady upside track and to set a 20 month high in value.    The New York market did however hit something of support base and to take a modestly negative sideways track for the rest of the day, while the London market retained its positive stance.   The London market ended the day on a positive note and with 81.2% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 87.2% of the earlier losses of the day intact.    This mixed close does not however detract from the positive picture that the charts project and the ability of the New York market to retain much of the previous day’s gains is likely to inspire some degree of confidence, to perhaps set the markets for a steady start for early trade today against the prices set yesterday, as follows: 

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

NOV     2028 + 11                                               DEC   150.80 – 2.05

JAN      2059 + 13                                              MAR   154.20 – 2.05

MAR     2065 + 11                                              MAY   156.30 – 2.05

MAY     2067 + 11                                               JUL   158.20 – 2.00

JUL      2070 + 11                                               SEP   159.85 – 2.00

SEP      2077 + 11                                              DEC   162.05 – 2.10

NOV     2085 + 11                                              MAR   164.10 – 2.05

JAN      2095 + 11                                              MAY   165.30 – 1.95

MAR     2102 + 11                                               JUL   166.30 – 1.95

MAY     2105 + 11                                               SEP   167.30 – 1.95