Coffee Market Report June 08 2017

The Vietnam Customs Authorities have reported that the countries coffee exports fort the month of May were marginally higher than their earlier estimate, at a total of 2.03 million bags.   This figure would indicate that the countries coffee exports for the first five months of this year, would total approximately 11.83 million bags.   

One might speculate that with the internal market stocks having declined to relatively low levels and with the greater part of exporter stocks already related to forward contract commitments and following the smaller crop that was harvested over October 2016 to January 2017, that export volumes for this month and through to October this year, shall continue to be relatively modest.  To result in Vietnam coffee export volumes for the next seven months to mostly be between 1.5 million and 1.8 million bags per month.   

The well-respected U.S Department of Agriculture Foreign Agriculture service USDA have upgraded their earlier assessment of the last Honduras coffee crop by a significant 14.3%, to now assess this crop to have been 6,287,000 bags.   Assessing that this crop shall assist to fuel exports of 6,133,000 bags during the present October 2016 to September 2017 coffee year and against this, one might note that the countries National Coffee Institute had already reported exports of 5.02 million bags for the first eight months of this present coffee year.   The USDA report thus indicating, potential exports of 1.1 million bags over the four months from June to September this year. 

Further to this the USDA have forecasted that the new Honduras coffee crop that shall be harvested between October 2017 to February 2017 and with this new crop now starting to develop upon the trees, shall be 3.66% lager than the past 2016/2017 crop, at a total of 6,517,000 bags.   This crop to ensure that Honduras shall maintain its dominance within the regional Mexico and Central American producer bloc, while remaining the second only to Colombia in terms of consumer market supply of fine washed arabica coffees.  

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 37.74 USc/Lb., while this equates to 29.47% price discount for the London Robusta coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,627 bags yesterday; to register these stocks at 1,497,915 bags.  There was meanwhile a lager in number 8,497 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,751 bags. 

It was a mixed day on the commodity markets yesterday but with the Oil markets under pressure, the overall macro commodity index took a soft track for the day.  The Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Soybean markets nevertheless had a day of buoyancy and the Natural Gas market was steady, while the Oil, Cocoa, London robusta Coffee, 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 0.35% lower, to see this Index registered at 402.53.  The day starts with the U.S. Dollar near to steady and trading at 1.294 to Sterling and at 1.124 to the Euro, while North Sea Oil is tending softer in early trade and selling at $ 47.20 per barrel. 

The coffee markets opened the day yesterday with the London market taking a modestly softer track, while the New York market showed some early buoyancy and with the market retaining this stance into the early afternoon trade.  As the afternoon progressed the London market recovered and moved back to join the New York market in positive territory, but this was short lived and the London market fell back into negative territory, while the New York market lost some weight and moved back towards par. 

The London market ended the day on a soft note and with 81.2% of the earlier losses of the day intact, while the New York market ended the day on steady note and with only 13.6% of the earlier gains of the day intact.  This close has done little to inspire and the day has started with the London market taking an erratic steady stance, while the New York market is once again showing some degree of hesitant buoyancy and providing little indication for where the markets might go later in the day, against the prices set yesterday, as follows:   

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

JUL    1972 – 13                                            JUL     125.75 + 0.20 

SEP    1991 – 13                                            SEP    128.05 + 0.15

NOV   1989 – 14                                            DEC    131.60 + 0.15

JAN    1974 – 14                                            MAR   135.05 + 0.15

MAR   1960 – 13                                            MAY   137.35 + 0.20

MAY   1958 – 12                                            JUL    139.55 + 0.25

JUL    1969 – 12                                            SEP    141.60 + 0.30

SEP    1982 – 12                                            DEC   144.10 + 0.30

NOV   1989 – 12                                            MAR   146.60 + 0.35

JAN    1996 – 12                                            MAY   147.65 + 0.35