Coffee Market Report July 13 2017

The Brazilian Exporters Association Cecafé have reported that the countries green coffee exports for the month of June were 13.70% lower than the same month last year, at a total of 1.81 million bags.  These exports were mostly related to arabica coffees, with the exports of conilon robusta coffees having been 77.10% lower at a modest 19,000 bags and the 1.79 million bags of arabica exports, registered at a lower 10.94% on that of the same month last year.

The Brazil Exporters Association have in addition confirmed the total Brazil green coffee exports for the July 2016 to June 2017 coffee crop year to a total of 29.23 million bags, or 8.28% lower than the July 2015 to June 2016 crop year.  A situation that is driven mostly by the much lower output of conilon robusta production over the time, which in the previous crop year exports, accounted for 2.32 million bags of total green coffee exports from Brazil, versus this 2016/2017 export performance of an unseasonable weather induced lower Brazil robusta conilon crop and related exports that are posted to a total of 277,000 bags over these twelve months. The largest percentage of the lower robusta production traditionally serves to fuel the local roaster consumer market within Brazil in this year of lower production and a factor that is already well absorbed by the markets.

The general coffee trade and industry in Vietnam have, subsequent to the June export report, come forth with an estimate that this leading robusta coffee exporter to consumer markets is likely to export around 1.67 to 2.08 million bags of coffee by the end of this month.  While the physical coffee market remains lacklustre in nature and the declining internal market stocks contribute to internal market price resistance within Vietnam, there is evidence meanwhile of a similar internal price resistance towards short sold exported in Indonesia.

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 32.48 usc/Lb., while this equates to 25.46% 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 1,881 bags yesterday; to register these stocks at 1,542,380 bags.  There were 6,730 bags drawn down from the number of bags pending grading for this exchange; to register these pending grading stocks at 20,149 bags.

The commodity markets were mixed yesterday, with reaction to the comments from U.S. Federal Reserve Bank Chair, whose congressional testimony was received as mainly neutral to the likelihood (or not) of interest rate increase announcements going forward.  The U.S. Dollar which was on a backfoot for much of the day yesterday, recovered toward the close and the leading in influence oil markets had a generally steady day.  It was a similarly steady finish in Cocoa, Sugar, Coffee, Copper, Gold, Silver, Platinum and Palladium. A lower close registered for Cotton, Orange Juice, Wheat, Corn and Soybean markets on the day.  The Reuters Equal Weight Continuous Commodity Index registered a decrease at 0.1428% result on the day and registered at 401.01.  The day starts with the U.S. Dollar steady and trading at 1.291 to Sterling and at 1.144 to the Euro, while North Sea Oil is steady and is selling at US$ 46.63 per barrel.

The coffee markets started the day yesterday on a mixed mildly buoyant note, with generally good volume at the starting line for London which took an upward turn and remained in positive territory for the duration of the session.  The New York market bubbled along in the morning with moves either side of unchanged and range generally tight in a one cent range between the low and high before the America’s came to the floor. 

The fundamentals within the coffee markets remain lacklustre as the Brazil arabica harvest reaches full sway and the tighter internal stock situation within leading robusta exporter Vietnam already seemingly absorbed by the markets at this point, leaving direction in the hands of speculative and funds sectors of the markets, as well as the influence of the macro commodities mood.  The US. Dollar lost ground as the day progressed, while the Brazil Real firmed against the greenback and the coffee markets registered a more positive day as the New York broke through the ceiling set earlier in the session.  The rest of the day set a higher low which held this market within a steady to modestly higher range for the afternoon session and to the close.  The London market which had established a positive range at the outset of the day fell back slightly by the midsession to recover some of the lost ground toward the latter half of the session and take a leaflet from the more positive outcome in New York and another push higher at the end of the session in the market, to close on the high of the day.  The coffee markets finished the day in positive territory, after another modest to fair volume day, as follows:

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

JUL    2131 + 24                                       JUL   126.00 + 1.55  
SEP    2097 + 25                                       SEP   127.60 + 0.70
NOV   2077 + 20                                       DEC   131.15 + 0.70
JAN    2056 + 17                                       MAR   134.60 + 0.75
MAR   2039 + 14                                       MAY   136.85 + 0.70
MAY   2041 + 12                                       JUL    139.10 + 0.70
JUL    2057 + 11                                       SEP    141.20 + 0.75
SEP    2067 + 11                                       DEC    144.10 + 0.75
NOV   2074 + 11                                       MAR    146.85 + 0.75
JAN    2081 + 11                                       MAY    148.45 + 0.75