Coffee Market Report September 30 2017

28th September, 2017.

Please note a correction, with apologies, the November to December contracts arbitrage between the London and New York markets on Tuesday registered at 41.57 usc/Lb., equating to 31.43% discount to the London Robusta market.  The arbitrage narrowed yesterday, to register this at 40.89 usc/Lb., while this equates to 31.62% 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 4,598 bags yesterday; to register these stocks at 1,805,417 bags.  There was meanwhile an increase by 10,596 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 80,606 bags.

The commodity markets were mixed in trade yesterday although mostly on the upward track, with the overall macro commodity index taking a firmer track for the day.  The speculative investor sector received the observations from the U.S. Federal Reserve Bank Chair around the prospects of an interest rate hike to come this year, as a positive indicator and the markets reacted accordingly. It was a firmer day for the U.S. Dollar and mixed but mainly softer result for the oil markets.  It was a firmer day for Cocoa, Corn, Cotton, Copper, Orange Juice, Soybeans, Wheat and Palladium markets and a softer day for Oil, Coffee, Sugar, Gold, Silver and Platinum markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.367% higher to see this Index registered at 406.78.  The day starts with the U.S. Dollar near to steady and trading at 1.337 to Sterling and at 1.173 to the Euro, while North Sea Oil is steady and selling at US$ 58.57 per barrel.

The London robusta market opened the day on a positive note and with New York slightly lower at the outset.  The first few hours of the morning session held steady with London slipping just below par and New York narrowly negative in relatively good morning volume of trade. The start of the business day in the America’s brought fresh seller activity to the floor as the U.S. Dollar posted a recovery against other major currencies and the coffee markets were in receipt of crop flowering supportive news for Brazil weather forecasts for good rains predicted to arrive as soon as the coming weekend.  The New York market slipped incrementally lower with buyers returning to the floor to maintain a steadily lower day albeit with a degree of buoyancy and although still in negative territory, a mild recovery in the afternoon but with another late in the day wave of sellers near to the end of the day.  The London market which was trading marginally below par through the morning, took a negative turn in the early afternoon, to follow New York but with limited volumes in this market and little in the way of nearby buyer support waiting in the wings, this fresh selling activity met with little resistance and the market gapped through technical levels through the afternoon toward the close, where the new floor was set and settled in the last half hour of the day.  With both markets treading to the close at around the low of the day, it was a good volume day for New York and a fair to good day in London, to set the close in both markets just above the lows of the day, as follows:

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

SEP    1970 – 51 
NOV   1950 – 49                                             DEC   129.35 – 2.90
JAN    1931 – 43                                             MAR  132.95 – 2.90
MAR   1925 – 39                                             MAY  135.30 – 2.90
MAY   1936 – 38                                             JUL    137.50 – 2.90 
JUL    1964 – 35                                             SEP   139.75 – 2.85
SEP    1973 – 34                                             DEC  142.95 – 2.90
NOV   1981 – 34                                             MAR  146.20 – 2.85
JAN    1990 – 34                                             MAY  148.20 – 2.85
MAR   1995 – 34                                            JUL    150.20 – 2.85