Coffee Market Report November 17 2017

There are mixed reports coming out of Brazil in terms of the volumes of rains for the last few days over the main coffee districts in South East Brazil, with some reports indicating that they were erratic and below average for the present.   Thus, while they indicate that more rain is needed to assist to set the forthcoming new 2018 crop, the forecasts seemingly indicate that there shall be further rains due over the coming two weeks and for the present, there are no frightening weather reports coming to the fore from Brazil.   This very evident, from the sideways direction that has prevailed over the past few days, within the speculatively net short-sold New York market. 

Meanwhile with a mid-week holiday interruption within Brazil and with reference prices of the New York market remaining soft, the internal coffee market in Brazil for the arabica coffees has been quiet this week and with the Brazil real having recovered to 3.27 to the dollar, it is likely to dampen interest in farm selling activity during trade today. 

There is another long weekend for some in Brazil due, with the Zumbi dos Palmares or Black Consciousness Day holiday on Monday, but with this an optional holiday, the indication is that many businesses shall remain open and it shall be a near normal trading day on Monday.   Further making it unlikely that there shall be any inspiration for pre-long weekend selling and for any noticeable increase in Brazil exporter price fixation hedge selling, due for the New York market today.   

The new Vietnam harvest is now progressing well and with good volumes of new crop coffees becoming available to the mills and exporters in Ho Chi Minh City and in sufficient quantities, to cover for the forecasts for some further rain interruptions in the coming days.   This factor contributing to the somewhat lacklustre nature of trade within the London market, which had a dull day yesterday. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 47.51 usc/Lb., while this equates to 36.5% 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 1,446 bags yesterday; to register these stocks at 1,910,258 bags.  There was meanwhile a larger in number 3,030 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 36,954 bags. 

The commodity markets had a mixed day yesterday and with most markets ending the day close to par, to see the overall macro commodity index taking a very much sideways track for the day.  The Sugar, Cocoa, Cotton, Orange Juice, Wheat, Gold and Silver markets had a day of buoyancy and the Coffee markets ended the day on a steady note, while the Oil, Natural Gas, Copper, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.02% higher, to see this Index registered at 418.58.  The day starts with the U.S. Dollar tending softer and trading at 1.323 to Sterling and at 1.181 to the Euro, while North Sea Oil is steady and is selling at US$ 60.90 per barrel. 

The London and New York markets started the day yesterday trading marginally south of par and maintaining this marginally softer stance, into the early afternoon trade.    As the afternoon progressed there were short spells of recovery within both markets, but these were mostly modest in nature and both markets had a somewhat lacklustre day of generally sideways trade, through to a close to par end for the day. 

The London market ended the day on a modestly negative note and with 28.6% of the earlier losses of the day intact, while the New York market ended the day on a steady note.   This close provides absolutely nothing in the way of direction but with the markets having been able to stay steady for the day and with the U.S. dollar tending softer this morning, one might expect to see the market start on a hesitantly steady note for early trade today, against the prices set yesterday, as follows: 

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

NOV   1884 – 10                                             DEC   126.70 – 0.05

JAN    1845 – 2                                              MAR   130.15 + 0.05

MAR   1822 – 4                                              MAY   132.35 unch

MAY   1827 – 2                                               JUL   134.70 unch 

JUL    1853 – 1                                              SEP    137.00 unch

SEP    1860 – 1                                              DEC   140.35 – 0.05

NOV   1865 – 2                                              MAR   143.60 – 0.05

JAN    1874 – 2                                              MAY   145.55 – 0.10

MAR   1882 – 2                                              JUL    147.40 – 0.15

MAY   1892 – 2                                              SEP    149.30 – 0.15