Coffee Market Report April 14 2017

It is seemingly going to be a dry Easter weekend for the main coffee growing districts in Brazil, but with a cold front due to enter the southern arabica coffee districts for the second half of next week and to bring with it, light rains.   But it would seem that the dry and cold winter harvest season for Brazil’s main coffee districts is starting, with focus now on the cold fronts and the usual frost threat reports that start from late next month. 

There is evidence of a steady stream of new crop robusta coffees starting to come to the fore in Indonesia and somewhat just in time, with the internal market farm stock of robusta coffees being mostly sold.   Allowing for the consumer market roasters to start to look to Indonesia, for additional robusta coffee supplies and to supplement the potential medium term dip in robusta coffee import volumes out of Vietnam. 

The U.S. Government Climate Protection Centre have forecasted that there is no longer much chance for a new El Niño weather phenomenon to develop within the Pacific Ocean during the first half of this year, but there remains a chance that this might be forthcoming during the second half of this year.   Thus, with the prevailing neutral weather conditions, there are no weather-related issues to influence short term market sentiment. 

However, should the El Niño come about with any intensity it could be damaging to the Pacific Rim coffee producing countries and have some impact upon the prospects for the Colombian, Peru and Indonesian crops in the coming year.     Thus the possibility of this phenomenon, shall continue to be closely watched.  

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 42.68 usc/Lb., while this equates to 30.22% 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 3,824 bags yesterday; to register these stocks at 1,399,461 bags.  There was meanwhile a smaller in number 1,963 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 38,537 bags. 

The commodity markets were mixed yesterday and with the U.S. dollar tending to stabilise, to see the overall macro commodity index taking a somewhat sideways track for the day.   The Natural Gas, New York arabica Coffee, Copper, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil, Sugar, Cocoa, London robusta Coffee, Cotton, Orange Juice and Wheat markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.23% higher, to see this Index registered at 418.83.  The day U.S. Dollar is steady and trading at 1.250 to Sterling and at 1.061 to the Euro, while North Sea Oil is near to steady and is selling at $ 54.10 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 followed by a recovery for the London market, to see both markets taking a modestly positive track into the early afternoon trade.  As the afternoon progressed the New York market started to add some more value and the London market continuing with modest buoyancy, but with both markets finally hitting some resistance and to see the London market slipping back into negative territory and the New York market shedding most of the day’s gains.  The London market ended the day on a soft note but having recovered 67.7% of the earlier losses of the day, while the New York market ended the day on modestly positive note and with 36.1% of the earlier gains of the day intact.   This close does little to inspire but does assist to paint something of a positive picture for the more volatile New York market, which might assist to inspire a steady start for trade on Monday, when the New York market shall trade solo for a shortened day and ahead of the return to the field of play for the London market on Tuesday, against the prices set yesterday, as follows.  

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

MAY     2145 – 12                                             MAY   138.90 + 0.60

JUL      2173 – 10                                              JUL    141.25 + 0.65

SEP      2180 – 10                                             SEP    143.55 + 0.70

NOV     2181 – 9                                                DEC   147.00 + 0.70

JAN      2177 – 9                                               MAR   150.35 + 0.65

MAR     2175 – 13                                             MAY   152.50 + 0.70

MAY     2177 – 15                                              JUL    154.30 + 0.70

JUL      2185 – 15                                              SEP    155.95 + 0.70

SEP      2193 – 15                                              DEC   158.15 + 0.75

NOV     2200 – 15                                              MAR   160.30 + 0.80