Coffee Market Report June 15 2017

There was little in the way of news coming to the coffee markets yesterday, with the markets mixed and with the New York market continuing to suffer from the prevailing bearish sentiment, while the London market continues to attract support from the perception of the prospects for tighter supply of robusta coffees.  

There are however continued delays for forward sold export commitments from Colombia, which comes with the delayed deliveries from many farmers, who have experienced unseasonal rain interruptions for their new Mitaca harvest.   This is something of a frustration for the consumer market industries but not proving to be a disaster so far, as there is presently more than sufficient alternative fill-in fine washed arabica coffee supply within the market, in terms of new crop Central American stocks and new crop Peru coffees.  

Meanwhile the influence of Brazil where the country takes the Corpus Christi holiday today and with many companies extending the holiday for tomorrow, to make for an extended long weekend, is off the field of play.  It is likewise the case in terms of physical coffee trade, with many European markets also taking the holiday and to be followed on Monday, when the world’s number three producer Colombia shall take a delayed Corpus Christi holiday.   This pointing towards lacklustre physical coffee trade for arabica coffees, for the next couple of trading days.   

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.49 usc/Lb., while this equates to 27% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,700 bags yesterday; to register these stocks at 1,512,623 bags.  There was meanwhile a larger in number 11,285 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,859 bags. 

These certified stocks of which 68.73% are being held within the European based certified warehouses of the exchange in Antwerp, Barcelona, Bremen and Hamburg, as against the minimal share held within the U.S.A. based warehouses in Houston, Miami, New Orleans, New York and Virginia, remain dominated by the Central and South American producers.   

In this respect, the producer bloc of Mexico and Central America and dominated by the contribution from Honduras, account for 44.74% of the stocks.   Followed by Colombia with a 19.03% share of the socks, Peru with a 15.46% share of the stocks and Brazil with a 4.44% share of the stocks.   The Latin Americans while holding a combined 83.67% share, are followed by the African producers with a 13.59% share, the Indians with a 2.22% share and Papua New Guinea with a 0.52% share of the stocks. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 12,667 bags or 0.45% over the week of trade leading up to Monday 12th. June, to register these stocks at 2,797,833 bags, on the day.  

The commodity markets had a mixed day yesterday but with the influential oil markets taking something of a tumble, the overall macro commodity index took a softer track for the day.   The Cocoa, London robusta Coffee, Wheat, Gold and Silver markets had a day of buoyancy and the Soybean market was steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice and Corn markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.56% lower, to see this Index registered at 399.74.  The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.274 to Sterling and at 1.122 to the Euro, while North Sea Oil is steady in early trade and selling at $ 45.65 per barrel. 

The London market and New York markets started the day yesterday on a steady note and with the London market tending to the better side of par and the New York market close to par and taking a relatively steady track, into the early afternoon trade.   As the afternoon progressed the London market started to attract support and to head up into positive territory and followed by a recovery for the New York market, but while the London market managed to hold on to much of its fundamentally inspired gains the New York market and perhaps influenced by the negative nature of the overall macro commodity index faltered, to slip back into negative territory in late trade.   

The London market ended the day on a positive note and with 57.1% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 81.8% of the earlier losses of the day intact.  This mixed close does little to inspire and might be expected to influence only a near to steady start for the London market and perhaps a corrective steady start 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. 

JUL    2038 + 16                                            JUL     125.55 – 0.85 

SEP    2056 + 16                                            SEP    127.75 – 0.90

NOV   2037 + 11                                            DEC    131.15 – 0.95

JAN    2011 + 8                                              MAR   134.65 – 0.90

MAR   1992 + 5                                              MAY   136.95 – 0.95

MAY   1990 + 3                                              JUL    139.20 – 0.85

JUL    2005 + 5                                              SEP    141.30 – 0.80

SEP    2018 + 6                                              DEC   143.90 – 0.80

NOV   2030 + 11                                            MAR   146.45 – 0.80

JAN    2037 + 11                                            MAY   147.60 – 0.70