Coffee Market Report November 22 2017

The coffee markets are presently drifting in the doldrums at present, with the physical coffee market lacklustre and featureless, while in terms of the speculative and short sold sectors of the market, there is nothing in the way of striking fundamental news to react to.   Presently the only threatening issues for the market are not an issue, with rainfall reports and forecasts coming to the fore from Brazil, while the rain season in Vietnam is over and aside interruptions from the odd scattered showers it is mostly dry and the new Vietnam robusta coffee crop is in full harvest. 

There is of course the issue of the potential for a La Niña to develop within the Pacific Ocean and bringing with it damaging weather for the Pacific rim coffee producing countries such as Colombia, Peru and Indonesia, but more critical perhaps in terms of the need for Brazil to have a catch up and coffee stock replenishing larger new 2018 crop, dry weather for the South East of Brazil.   This is perhaps the only factor that could for the short term bring some excitement to the coffee markets which are for the present, looking to drift within the present trading range into the new year.    Albeit that there is presently no certainty that there shall be a strong La Niña due for the first quarter of the New Year, as is evident by the bearish nature of the speculative sector of the markets.  

Today is the eve of the Thanksgiving holiday for the U.S.A. and with the New York market due to be closed tomorrow, with many in the U.S.A. due to take a bridging day holiday on Friday and to extend this into a long weekend.   Thus, with many players most likely to have an early close for the day today in the U.S.A., one might not expect to see too much excitement for trade within the volatile New York market today and again on Friday, when the market shall have a normal trading hours day.   

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 45.77 usc/Lb., while this equates to 36.14% 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 8,831 bags yesterday; to register these stocks at 1,921,873 bags.  There was meanwhile a smaller in number 7,467 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 25,225 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 22,500 bags or 1.05% over the week of trade leading up to Monday 20th. November, to see these stocks registered at 2,169,333 bags, on the day. 

The commodity markets once again encountered renewed muscle for the U.S. dollar yesterday and were mixed in trade, to see the overall macro commodity index taking something of a sideways track for the day.  The Oil, Cocoa, New York arabica Coffee, Copper, Wheat, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Sugar, London robusta Coffee, Cotton, Orange Juice, Corn and Wheat markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.27% higher, to see this Index registered at 420.31.  The day starts with the U.S. Dollar steady and trading at 1.325 to Sterling and at 1.174 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 63.30 per barrel. 

The London and New York markets started the day yesterday with modest buoyancy and trading marginally north of par, while the New York market started the day on a positive note and with the markets maintaining this stance, into the early afternoon trade.  As the afternoon progressed the London market came under some pressure and dropped back into modest negative territory, but with the New York market maintaining its positive nature and for a spell, extending its gains and assisting to inspire a brief positive recovery for the London market.   The London market nevertheless stayed mostly within negative territory and headed towards a soft close, while the New York market shed much of its gains but nevertheless ended the day within positive territory. 

The London market ended the day on a negative note and with 64.3% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 34.6% of the earlier gains of the day intact.   This close provides little in the way of direction and one might expect to see little better than a cautious and hesitant steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1818 – 17                                             DEC   123.85 + 0.95

JAN    1801 – 9                                              MAR   126.65 + 0.90

MAR   1783 – 8                                              MAY   128.90 + 0.90

MAY   1790 – 6                                               JUL   131.25 + 0.85 

JUL    1816 – 5                                              SEP    133.55 + 0.90

SEP    1824 – 6                                              DEC   136.95 + 0.90

NOV   1831 – 7                                              MAR   140.20 + 0.90

JAN    1841 – 7                                              MAY   142.20 + 0.85

MAR   1853 – 3                                              JUL    144.10 + 0.80

MAY   1866 unch                                          SEP    146.00 + 0.75