Coffee Market Report October 11 2017

The exporters association in Brazil Cecafé have commented upon the unusually low volume of coffee exports during the month of September and while noting that there has been some contribution to this lower volume from the smaller arabica coffee crop this year, they note that farmers are showing price resistance and are holding back new crop coffee stocks.   Further commenting that many farmers following the erratic and often dry weather over August and September this year, no longer believe in the prospects of a super coffee crop of approximately 60 million bags for 2018.  

It is however early days still within the traditional Brazil spring and summer October to April rain season and while it has been mostly dry during September and perhaps damaging to some of the early flowering that came with a short spell of August rains, there have been rains and so long as the second half of October is accompanied by more rains, there are still prospects for and improved arabica coffee crop in 2018.   With most within the market now focused upon the Brazil weather reports that shall be forthcoming, over the next two weeks. 

Meanwhile tomorrow shall be the Nossa Senhora de Aparecida public holiday in Brazil and with many commercial enterprises taking Friday as a bridge holiday and an extended long weekend, which can be expected to slow coffee trading activity out of Brazil for the second half of the week.   Albeit that trade is already somewhat lacklustre in nature. 

In terms of coffee demand within the growing eastern European markets it is interesting to note the that Russian customs have reported that the countries coffee imports for the first eight months of this year were 258,333 bags or 14.71% higher than the same period in the previous year, at a total of 2,015,000 bags.  This might not of course be entirely related to consumption growth but could be related to a number of factors, such as the advantageous purchasing of relatively soft in prices coffee and the declining market share held by imported coffee brands. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.14 usc/Lb., while this equates to 31.4% 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 3,966 bags yesterday; to register these stocks at 1,842,615 bags.  There was meanwhile a similar in number 3,988 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 64,580 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 66,833 bags or 2.83% over the week of trade leading up to Monday 9th. October, to see these stocks registered at 2,298,667 bags on the day. 

The commodity markets were relatively robust yesterday, to see the overall macro commodity index taking an upside track for the day.   The Oil, Sugar, Cocoa, London robusta Coffee, Copper, Gold and Silver markets had a day of buoyancy, while the New York arabica coffee market followed the trend, but to end only on a steady note for the day.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.03% higher, to see this Index registered at 412.58.  The day starts with the U.S. Dollar near to steady and trading at 1.318 to Sterling and at 1.177 to the Euro, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 56.65 per barrel. 

The London and New York markets started the day yesterday with modest early buoyancy and, to see both markets taking a positive stance into the early afternoon trade.  As the afternoon progressed the markets posted further gains but faltered in late trade and slipped back into negative territory, but to bounce off the lows and to see the London market end the day on a positive note and the New York market on a steady note for the day. 

The London market ended the day on a positive note and with 58.3% of the earlier gains of the day intact, while the New York market ended the day on a steady note and with only 2.9% of the earlier gains of the day intact.  This close might be seen to be somewhat neutral and provides little indication for direction, which might indicate that 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    2007 + 5                                              DEC   131.00 + 0.05

JAN    1981 + 7                                              MAR   134.70 + 0.10

MAR   1966 + 7                                              MAY   137.05 + 0.05

MAY   1975 + 6                                              JUL    139.40 + 0.05 

JUL    2001 + 7                                              SEP    141.70 + 0.05

SEP    2006 + 7                                              DEC   145.05 unch

NOV   2010 + 7                                              MAR   148.35 unch

JAN    2012 + 7                                              MAY   150.35 unch

MAR   2017 + 7                                              JUL    152.30 – 0.05

MAY   2022 + 7                                              SEP    154.15 – 0.10