Coffee Market Report June 30 2017

The respected analysts Safras & Mercado who have forecasted the new Brazil coffee crop have estimated that so far 44% of this new crop has been harvested, as against a 47% factor at the same time last year.  Of this they estimate 75% of the new conilon robusta coffee crop has been harvested, as against 88% having been harvested at the same time last year.  While they estimate that 35% of the new arabica coffee crop has been harvested, as against a 36% factor at the same time last year. 

There are however concerns being voiced in terms of the bolder screen 17 plus bean percentages from some of the arabica coffee districts, where beans from the coffees harvested so far within the South Minas district in Brazil are seen to be overall smaller than average.    But there are many farms still to be harvested and while it is a concern, there remains the possibility that the bolder bean percentages might improve.   But it is a factor that is in terms of the smaller Brazil arabica coffee crop that is due this year, indicating that there shall be increased price premiums demanded for the bolder bean arabica coffees for the coming ten months. 

It has been mostly dry over the main coffee districts in Brazil that is assisting to accelerate the harvest, while meteorologists are forecasting that a new cold front is due to impact upon south east Brazil for this coming weekend and to carry on through to Tuesday next week.  So far, these reports indicate that there is unlikely to be any chance of frost for the main coffee districts, but there are many who are keeping a cautious eye upon the threat that this cold front might bring. 

Historically the most threatening time for frost over the Brazil coffee districts has been at times of clear nights around the time of the full moon, if accompanied by a cold front and therefore, one would be looking towards the follow-on weekend and the full moon that is due on the 9th. July.   Thus, if closer to the date a follow on cold front comes into play, one might expect that it would bring with it more intense market supportive debate over the threat of frost and it is probable that next week’s Brazil weather forecasts shall be closely watched.   

Meanwhile today the markets are due to encounter furher second quarter book squaring activity, which one might think shall leaning towards some degree of support for the New York market.    While with the New York market due to close on Tuesday next week for the U.S.A. Independence Day holiday and with many players likely to take Monday off for an extended long weekend, it is a factor that also contribute to some further prior to long weekend activity coming into play. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 29.64 usc/Lb., while this equates to a 23.46% 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 2,630 bags yesterday; to register these stocks at 1,508,677 bags.  There were meanwhile a larger in number 4,799 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 66,179 bags. 

The commodity markets were mixed in trade yesterday, but with the softer U.S. dollar assisting to buoy the fortunes for many markets, overall macro commodity index taking a positive track for the day.  The Oil, Sugar, Coffee, Copper, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas, Cocoa, Cotton, 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 0.60%higher, to see this Index registered at 395.04.  The day starts with the U.S. Dollar steady and trading at 1.301 to Sterling and at 1.143 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at $ 46.90 per barrel. 

The coffee markets started the day yesterday with the London market trading around par and the New York market showing a degree of buoyancy, to see both markets taking a steady track into the early afternoon trade.  As the afternoon progressed the London market moved higher to join the New York market in positive territory, while the New York market with buy stops being triggered to accentuate the gains, added more value.   The London market continued to add value and took a positive track for the day, while the New York market slipped back in value in late trade. 

The London market ended the day on a very positive note and with 95.2% of its earlier gains of the day intact, while the New York market ended the day on a positive note and with 55.7% of the earlier gains of the day intact.  The positive upside track for trade yesterday and the overall positive close assists to support confidence and contributes to a more positive picture for the charts and thus, one might expect to see a follow through steady to positive start for early trade today against the prices set yesterday, as follows: 

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

JUL    2122 + 43                                            JUL     124.75 + 2.00 

SEP    2132 + 40                                            SEP    126.35 + 1.95

NOV   2107 + 35                                             DEC   129.85 + 2.00

JAN    2080 + 29                                            MAR   133.35 + 2.00

MAR   2061 + 20                                            MAY   135.65 + 1.95

MAY   2063 + 18                                            JUL    137.80 + 1.95

JUL    2080 + 17                                            SEP    139.80 + 1.90

SEP    2097 + 16                                            DEC   142.60 + 1.90

NOV   2098 + 5                                              MAR   145.30 + 1.90

JAN    2105 + 5                                              MAY   146.95 + 1.90