Coffee Market Report August 10 2017

The General Department of Customs in Vietnam have reported that the country’s coffee exports of mostly robusta coffees for the month of July, were at the lower end of trade expectations for the month, at a total of 1,683,333 bags.   This volume was approximately 8.18% below the earlier estimate made by the Customs Department, but with stocks from the last crop having sharply declined over the past few months, it was not an unexpected relatively modest number. 

Cecafé the exporters association in Brazil have reported that the country’s green coffee exports for the month of July were 7.93% lower than the same month last year, at a total of 1.51 million bags.  This decline they appropriate to low carryover stocks into the new crop that is now mostly harvested and to the lacklustre nature of the internal market for new crop coffees, but they do expect that coffee exports shall start to pick up in volume in September. 

A report from Costa Rica has indicated that the country has seen the land under coffee reduced by 10.42% over the two years from 2014 to 2016, to see coffee farm coverage by the end of last year totalling just over 84,000 hectares.   This decline one might think, would be related to rising costs of production and against what have been relatively soft prices for arabica coffees in recent times, which would inspire farmers to look towards more stable and profitable crop alternatives.  

The physical coffee market remains within somewhat of doldrums for the present, with the combination of the good levels of coffee stocks and the summer holidays within the main northern hemisphere consumer countries, causing lacklustre origin demand.   With little excitement within the market expected before early September, when the industries start to work on their winter roasting programs.  

The November to December contracts arbitrage between the London and New York markets broadened yesterday, to register this at 49.49 usc/Lb., while this equates to a 33.86% 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 6,174 bags yesterday; to register these stocks at 1,571,119 bags.  There were meanwhile a smaller in number 4,912 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 110,076 bags. 

The commodity markets had a mixed but overall modestly positive day yesterday, with the overall macro commodity index taking a steady to buoyant track for the day.   The Oil, Natural Gas, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the New York arabica Coffee market was steady, while the Sugar, Cocoa, London robusta Coffee, Cotton and Copper markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.35% higher, to see this Index registered at 409.07.  The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.298 to Sterling and at 1.173 to the Euro, while North Sea Oil is steady and is selling at $ 52.70 per barrel. 

The coffee markets came under pressure yesterday and with both markets suffering from relatively sharp losses and with the London market posting losses of $ 40.00 per metric ton, while the New York market posting losses that peaked at 2.55 usc/Lb.   The New York market did however bounce back from the lows and experienced an almost complete recovery, while the London market posted only a partial recovery for the day. 

The London market ended the day on a soft note and with 65% of the earlier losses of the day intact, while the New York market ended the day on a relatively steady note and having recovered 94.1% of the earlier losses of the day.   This close and with the ability of the New York market to shrug off the negative pressure through the day might be seen to be somewhat constructive for confidence and one might expect to see a steady start due for early trade today, against the prices set yesterday, as follows: 

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

SEP    2136 – 28                                            SEP    142.65 – 0.10

NOV   2131 – 26                                             DEC   146.15 – 0.15

JAN    2111 – 24                                            MAR   149.70 – 0.10

MAR   2103 – 18                                            MAY   151.95 – 0.10

MAY   2112 – 14                                            JUL    154.15 unch

JUL    2131 – 12                                            SEP    156.20 + 0.05

SEP    2140 – 12                                            DEC   159.05 unch

NOV   2148 – 12                                            MAR   161.90 + 0.05

JAN    2154 – 12                                            MAY   163.55 + 0.05

MAR   2159 – 12                                            JUL    166.15 + 0.20