Coffee Market Report November 02 2017

The Trade Ministry in Brazil have reported that the country’s coffee exports for the month of October were 330,529 bags or 11.11% lower than the same month last year, at a total of 2,644,261 bags.   This dip in exports perhaps not so much a reflection upon the more modest nature of this year’s new arabica coffee crop, but more related to the relatively lacklustre nature of coffee trade within the country, because of the prevailing soft nature of the reference prices of the New York market. 

The Coffee Institute in Honduras have reported that the country’s coffee exports for the month of October were 2,831 bags or 4.34% lower than the same month last year, at a total of 62,328 bags. 

The Coffee Institute in Costa Rica have reported that the country’s coffee exports for the month of October were 18,242 bags or 56.02% lower than the same month last year, at a total of 14.321 bags. 

The dip in exports for both Honduras and Costa Rica are really no reflection on the prospects for the new crop, a presently the weather conditions over Central America are good for the development of the new crop and forecasts remain for an overall larger new crop for this important fine washed arabica producer bloc.   However, with the prevailing soft nature of the New York market, one might expect to see some degree of internal market price resistance coming into play, to slow the export volumes out of the region. 

The Karnataka Planters Association that represents a region that accounts for approximately 72% of India’s coffee production have disputed the Coffee Board of India new crop forecast for coffee supply for this new October 2017 to September 2018 coffee year to be 12.31% higher than the previous coffee year, at approximately 5.84 million bags.  Stating that in their view and they foresee that the new crop shall rather be little more than 5.2 million bags, due to the negative effects of pests and disease upon the coffee farms.  But many might see this report on the part of the Karnataka Planters Association to be somewhat market manipulative in nature, rather than an indicator of problems for the Indian coffee farming industry, as the report has had no positive influence upon international coffee market sentiment. 

The Ethiopian Coffee and Tea Development and Market Authority in Ethiopia have reported that the country’s coffee exports for the first three months of the country’s financial year that started on the 9th. July this year, were 12,083 bags or 1.28% lower than they had forecast, at a total of 930,417 bags.   This proving to be a slow start towards the 4.5 million bags of coffee exports, that the forecast for the 2017 to 2018 financial year. 

Today is the Dia de Finados or All Souls Day public holiday in Brazil, with many commercial houses due to take advantage of this holiday, to take a bridge day on Friday and to extend it into a long weekend.    Thus, the Brazilian exporters are due to have little impact upon the fortunes of the New York coffee exchange for the rest of the week, which might assist to settle the market and perhaps even influence some degree of stability and modest recovery for the market. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.58 usc/Lb., while this equates to 32.19% 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 863 bags yesterday; to register these stocks at 1,910,877 bags.  There was meanwhile a larger in number 2,700 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 49,125 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index showing a degree of buoyancy for the day.   The Cocoa, Copper, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Coffee, Cotton and Orange Juice markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.5% higher, to see this Index registered at 417.39.  The day starts with the U.S. Dollar tending softer and trading at 1.328 to Sterling and at 1.165 to the Euro, while North Sea Oil is steady and is selling at US$ 60.70 per barrel. 

The London market started the day yesterday on a modestly softer note, while the New York market started the day close to par and with the both markets maintaining this stance, into the early afternoon trade.  As the afternoon progressed the London market remained south of par and the New York market briefly recovered and moved back into positive territory, to soon come under pressure and to slip back into negative territory and with stop loss selling accentuating the losses and with the London market likewise slipping into lower territory.   Both markets did however bounce back from the lows and particularly so the New York market, but to nevertheless see the markets end the day on a soft note. 

The London market ended the day on a very negative note and with 83.3% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 55.1% of the earlier losses of the day intact.   This close does little to inspire confidence, but one might think that the combination of the partial recovery for the New York market from what were significant losses yesterday and the lack of Brazil price fixation selling pressure, shall assist to buoy the fortunes of the New York market and perhaps too the London market in sympathy for early trade today, against the prices set yesterday, as follows: 

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

NOV   1887 – 15                                             DEC   122.95 – 2.15

JAN    1838 – 40                                            MAR   126.45 – 2.15

MAR   1814 – 46                                            MAY   128.85 – 2.10

MAY   1821 – 46                                            JUL    131.15 – 2.20 

JUL    1847 – 45                                            SEP    133.45 – 2.15

SEP    1855 – 44                                            DEC   136.85 – 2.15

NOV   1864 – 44                                            MAR   140.15 – 2.10

JAN    1873 – 44                                            MAY   142.15 – 2.10

MAR   1872 – 44                                            JUL    144.10 – 2.10

MAY   1877 – 44                                            SEP    146.00 – 2.10