Coffee Market Report June 14 2017

The International Coffee Organisation have reported that global coffee exports for the month of April were 5.3% lower than the same month last year, at a total of 9.5 million bags.   This decline they say, is related mostly to the 13.5% dip in Brazil coffee exports and followed by the 6.9% dip in Vietnam coffee exports, which impacted upon global coffee supply for the month. 

The International Coffee Organisation have furthermore reported that despite this dip in April global coffee supply the cumulative global coffee exports for the first seven months of the present October 2016 to September 2017 coffee year are still 3.1% higher than the same period in the previous coffee year, at a total of 69.5 million bags.   These exports having contributed to the significant consumer market stocks, which continue to impact upon the presently bearish sentiment within the New York market. 

This prevailing sentiment within the New York market is seemingly ignoring the fact that the world’s largest producer Brazil is presently harvesting what it generally accepted to be a smaller new arabica coffee crop and likewise, that the world second largest producer Vietnam is steadily liquidating its now relatively modest robusta coffee stocks.    The latter factor well illustrated by the buoyancy noted for the prompt delivery months of the London robusta coffee market that is inverted in nature and likewise, by the narrowing of the arbitrage between the London and New York markets. 

Following the report from the U.S. weather forecasters that foresee little chance for a new El Niño phenomenon developing within the Pacific Ocean on the short term, the relatively close at hand Australian weather authorities have likewise reported that sea temperatures within the Pacific Ocean are normal, but that there is some cooling being reported within areas experiencing relatively strong trade winds.  This latter data indicating that an El Niño phenomenon might develop late in the year, but with all indications so far, that this would only be a mild El Niño and would therefore, not be threatening to climatic conditions for the Pacific rim countries and including the coffee producing countries. 

In terms of the physical coffee markets trade remains generally lacklustre in nature and ahead of the seasonally slow summer roasting season for the main northern hemisphere consumer market countries, while with most companies in Brazil due to take the optional Corpus Christi holiday tomorrow and many remaining closed on Friday for an extended long weekend, there is little activity expected out of this leading producer until next week.  Albeit that with the prevailing soft nature of the related reference prices of the New York market and he relatively steady nature of the Brazil Real that is presently trading at 3.31 to the U.S. dollar, there is anyhow no inspiration for Brazil’s arabica coffee farmers to be showing any degree of new crop selling aggression. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 36.12 usc/Lb., while this equates to 28.08% 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 6,095 bags yesterday; to register these stocks at 1,517,323 bags.  There was meanwhile a larger in number 8,415 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 12,574 bags. 

It was another mixed day for the commodity markets yesterday, with overall macro commodity index taking a softer track for the day.   The Oil, Orange Juice, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, 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 0.19% lower, to see this Index registered at 401.98.  The day starts with the U.S. Dollar near to steady and trading at 1.277 to Sterling and at 1.121 to the Euro, while North Sea Oil is steady in early trade and selling at $ 47.05 per barrel. 

The London market and New York markets started the day yesterday on a steady note and both markets stayed close to par, into the early afternoon trade.  However, as the afternoon progressed the both markets started to lose some weight and fell back into negative territory, to take something of an erratic sideways track for the rest of the day. 

The London market ended the day on a negative note and with 72.7% of the modest losses of the day intact, while the New York market ended the day on a negative note and with 62.2% of the more substantial losses of the day intact.   This close does little to inspire but one might nevertheless expect to see a cautious steady start due for early trade today against the prices set yesterday, as follows: 

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

JUL    2022 – 8                                              JUL     126.40 – 1.20 

SEP    2040 – 8                                              SEP    128.65 – 1.15

NOV   2026 – 12                                            DEC    132.10 – 1.20

JAN    2003 – 13                                            MAR   135.55 – 1.25

MAR   1987 – 12                                            MAY   137.90 – 1.20

MAY   1987 – 13                                            JUL    140.05 – 1.25

JUL    2000 – 13                                            SEP    142.10 – 1.25

SEP    2012 – 13                                            DEC   144.70 – 1.20

NOV   2019 – 13                                            MAR   147.25 – 1.15

JAN    2026 – 13                                            MAY   148.30 – 1.15