Coffee Market Report October 04 2017

The Colombian Coffee Federation have reported that the country’s coffee production for the month of September was 194,000 bags or 18.76%% higher than the same month last year, at a total of 1,228,000 bags.   This has contributed to the countries production for the just completed October 2016 to September 2017 coffee year to being 625,000 bags or 4.46% higher than the same period in the previous coffee year, at a total of 14,634,000 bags. 

In terms of coffee exports from Colombia the Coffee Federation have reported that the country’s coffee exports for the month of September were 96,000 bags or 9.23% higher than the same month last year, at a total of 1,136,000 bags.   This contributes to the country’s exports for the jut completed October 2016 to September 2017 coffee year to being 1,192,000 bags or 9.7% higher than the same period in the previous coffee year, at a total of 13,483,000 bags. 

This improved performance from Colombia and despite some weather-related problems for the mid-year Mitaca crop harvest, sets the country on route for the forecasted larger new crop of more than 15 million bags, for this new October 2017 to September 2018 coffee year.   This factor and accompanied by forecasts for a larger overall new crop from neighbouring Central America and Mexico, is proving to be a negative factor for sentiment within the New York market, for the present. 

The Coffee Board of India and despite some earlier scare stories of a dip in production from farmers organisations, have forecasted that India is due for an overall 12.3% increase in coffee production for the new October 2017 to September 2018 coffee year, which they estimate shall total 5.84 million bags.    In this respect, they foresee a 14% increase in robusta coffee production and an 8.5% increase in arabica coffee production for this new coffee year, with a ratio of 70.6 to 29.4 robusta to arabica coffees. 

This news from India and following rainfall reports out of the main arabica coffee districts within Brazil and the forecasts for growing Colombian and Central American coffee supply, all add to the prevailing bearish nature of the volatile New York arabica coffee market. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.55 usc/Lb., while this equates to 28.34% 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 10,800 bags yesterday; to register these stocks at 1,820,201 bags.  There was meanwhile a larger in number 11,018 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 77,541 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 108,167 bags or 4.37% over the week of trade leading up to Monday 2nd. October, to see these stocks registered at 2,365,500 bags, on the day.  

The commodity markets had a mixed day yesterday, with the overall macro commodity index taking a sideways track for the day.   The Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat and Soybean markets had a day of buoyancy and the Silver market was steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Corn and Gold markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.03% higher, to see this Index registered at 406.73.  The day starts with the U.S. Dollar near to steady and trading at 1.328 to Sterling and at 1.177 to the Euro, while North Sea Oil is steady and is selling at US$ 55.65 per barrel. 

The London market started the day close to par yesterday, while the New York market started the day with some early corrective buoyancy, with this mixed stance following through to early afternoon trade.   As the afternoon progressed the London market continued to take a steady tract and started to add a little value, while the New York market came off the boil and once again suffered from selling pressure and limited industry buying support, to take a softer track for the day. 

The London market ended the day on a modestly positive note and with 41.7% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 97.2% of the earlier losses of the day intact.   This close and accompanied by a host of fundamentally negative reports and forecasts this week, does little to inspire and one would think that the markets are due for little better than a steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV    2021 + 14                                            DEC   125.45 – 1.75

JAN    1982 + 5                                              MAR   129.00 – 1.75

MAR   1964 + 4                                              MAY   131.40 – 1.75

MAY   1971 + 3                                              JUL    133.70 – 1.70 

JUL    1997 + 2                                              SEP    135.95 – 1.75

SEP    2004 + 1                                              DEC   139.35 – 1.70

NOV   2012 + 1                                              MAR   142.65 – 1.70

JAN    2021 + 1                                              MAY   144.65 – 1.70

MAR   2026 + 1                                              JUL    146.60 – 1.75

MAY   2031 + 1                                              SEP    148.50 – 1.75