Coffee Market Report November 16 2017

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 154,706 bags or 2.15% during the month of October, to register these stocks at 7,035,013 bags at the end of the month.   It must be noted though that this is only the third month this year that these stocks have fallen and despite this further and relatively sharp dip in stocks for the month of October, they remain substantial. 

These stocks do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 560,000 bags per week, would conservatively have been at least 1.1 million bags. If one is to consider the additional unreported stocks the end month stocks, this would equate to more than 14 weeks of roasting activity, which most would consider to be more than a safe reserve. 

One would think that with slower sales out of a well sold Vietnam ahead of their still to start in unrest new crop and the slow start to sales and exports out of a somewhat price resistant internal market in Brazil over the past couple of months, one might expect to see the U.S.A. stocks decrease further during this month and possibly to continue to decline during the month of December.   It is most likely that it shall be the same for the leading European consumer market bloc, that they shall see their likewise substantial stocks continuing to fall during this month and in December. 

However, by January 2018 one might expect that with increasing volumes of new crop Central American, Colombian, Vietnam, Ugandan and Indian coffees coming into the markets and despite the prospects of a more modest supply of Brazil arabica coffees through to July next year, that there should not be any dramatic fall in the consumer market stocks for the coming year.  However, with consumer stocks still relatively high one might expect to see some restraint in trade and industry buying activity, which could result in the main stream consumer market stocks returning towards more normal levels, at the equivalent of around 12 weeks of industries roasting activity demand. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 47.27 usc/Lb., while this equates to 36.33% 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 1,530 bags yesterday; to register these stocks at 1,908,812 bags.  There was meanwhile a larger in number 3,691 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 39,984 bags. 

The commodity markets were mostly tending softer yesterday, with the overall macro commodity index taking a softer track for the day.  The London robusta Coffee, Cotton, Orange Juice, Corn, and Soybean markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Copper, Wheat, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.14% lower, to see this Index registered at 418.50.  The day starts with the U.S. Dollar steady and trading at 1.317 to Sterling and at 1.178 to the Euro, while North Sea Oil is steady and is selling at US$ 61.20 per barrel. 

The London and New York markets started the day yesterday trading with a degree of buoyancy and marginally north of par, but while the London market retained its modest buoyancy, the New York market slipped back into negative territory by the early afternoon trade.  As the afternoon progressed the New York market moved back into positive territory and with the London market adding more value, but this was short lived that the New York market once again came under pressure and moved sharply back into negative territory.  Thereon the London market that had briefly lost some of its gains, continued a steady upside track for the day, while the New York market bounced back from the lows and to then take something of a sideways negative track through to the close. 

The London market ended the day on a positive note and with 84.6% of the earlier gains of the day intact, while the New York market ended the day on a softer note, but having recovered 76.7% of the earlier sharp losses of the day.   This close once again provides for little in the way of direction, but perhaps against the evidence of the large short sold position within the New York market and its ability to once again recover from the relatively high-volume downside pressure yesterday it might assist to inspire some degree of confidence, to set the markets for another steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1894 + 16                                             DEC   126.75 – 0.30

JAN    1847 + 11                                            MAR   130.10 – 0.35

MAR   1826 + 13                                            MAY   132.35 – 0.35

MAY   1829 + 12                                            JUL    134.70 – 0.35 

JUL    1854 + 15                                            SEP    137.00 – 0.40

SEP    1861 + 19                                            DEC   140.40 – 0.45

NOV   1867 + 24                                            MAR   143.65 – 0.45

JAN    1876 + 28                                            MAY   145.65 – 0.40

MAR   1884 + 15                                            JUL    147.55 – 0.40

MAY   1894 + 15                                            SEP    149.45 – 0.40