Coffee Market Report September 21 2017

Yesterday was another day devoid of striking coffee market news, with the industry buyers remaining complacent in terms of readily available short to medium term supply, while the speculative and fund sectors of the market await the rainfall reports from Brazil early in the coming month.   But there is some degree of caution on the part of the latter sector of the market, as with the dry weather this month and following the early flowerings that came with the spell of rains in Brazil in August, there shall have been some degree of damage done to the prospects for the forecasted large new Brazil crop next year. 

But while there shall be no reason for the markets to react to Brazil weather until early next month and the evidence of rains or lack of them, one would suspect that the Brazil weather forecasts in the coming week shall already start to have an impact upon sentiment and market direction.   Albeit that it shall only be post the first half of next month and the reality of rainfall reports, that there shall actually be some degree of factual data to relate to the early assessments towards the prospects for the coming years Brazil crop. 

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 44.24 usc/Lb., while this equates to 32.4% 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 1,924 bags yesterday; to register these stocks at 1,810,345 bags.  There was meanwhile a larger in number 18,407 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 47,615 bags. 

These Certified washed arabica stocks remain dominated by Mexico and Central America and heavily weighted by the 759,331 bags contribution from Honduras, with this producer bloc contributing 1,035,825 bags or 57.22% to the stocks.   Followed by Peru with a 245,646 or 13.57% contribution, Colombia with 219,707 bags or 12.14% contribution, the African producers with 198,277 bags or 10.95% contribution and the balance made up by relatively small volumes contributed by Brazil, India and Papua New Guinea. 

While in terms of the distribution of these stocks the European warehouses of the exchange in Antwerp, Barcelona, Bremen and Hamburg are presently holding 1,356,474 bags or 74.93% of the stocks, as against the 453,871 bags being held within the Houston, Miami, New Orleans, New York and Virginia warehouses of the exchange.    With the bags pending grading for the exchange being likewise dominated by the coffees within the European warehouses of the exchange, which account for 35,231 bags or 73.99% of these coffees. 

It was a better day for the commodity markets yesterday, with most of markets taking a positive track for the day and likewise, the overall macro commodity index took a positive stance for the day.   The Oil, Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the Copper market was steady, while the Natural Gas market experienced a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.76% higher, to see this Index registered at 411.89.  The day starts with the U.S. Dollar tending showing a degree of buoyancy and trading at 1.349 to Sterling and at 1.188 to the Euro, while North Sea Oil is steady and is selling at US$ 57.15 per barrel. 

The London and New York markets started the day yesterday with early buoyancy, but with the New York market slipping back to par, for early afternoon trade.  The faltering of the New York market soon started to effect confidence and the market triggered sell stops and the market fell to register losses of 2.40 usc/Lb., while the London market followed the trend and fell back to par.   However, the London market managed to retain its buoyancy and the New York market once again attracted support at the lows and moved back to and trough par and to post modest gains and a sideways positive track for the rest of the day, while the London market took a steady upside track through to the close. 

The London market ended the day on a very positive note and with 94.5% of the earlier gains of the day intact, while the New York market ended the day a positive note and with 57.1% of the earlier gains of the day intact.   The close does contribute to some degree of confidence, but with the firmer nature of the dollar and the lack of fundamental supportive news for the markets, it is unlikely that the markets shall have little better than a follow through steady start for early trade today, against the prices set yesterday, as follows: 

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

SEP    2058 + 52

NOV   2035 + 52                                             DEC   136.55 + 1.20

JAN    2004 + 47                                            MAR   140.10 + 1.20

MAR   1991 + 41                                            MAY   142.40 + 1.20

MAY   1999 + 39                                            JUL    144.65 + 1.25 

JUL    2027 + 39                                            SEP    146.85 + 1.30

SEP    2035 + 38                                            DEC   150.10 + 1.35

NOV   2045 + 38                                            MAR   153.30 + 1.40

JAN    2054 + 38                                            MAY   155.30 + 1.45

MAR   2059 + 38                                            JUL    157.20 + 1.50