Coffee Market Report November 23 2017

The National Coffee Association in Guatemala Anacafe and with the lower grown coffee districts already starting with the new crop harvest, have forecast that with expectations of a larger new crop, that the country can expect to see coffee exports for the present October 2017 to September 2018 coffee year to increase by 4.8% and be something in the order of 3.68 million bags.   This more positive production and export forecast from Guatemala is mostly mirrored by their neighbouring producers in terms of Mexico and the other Central American countries, to indicate that with forecasts for improved production from Colombia and Peru, that there is the potential for surplus supply of fine washed arabica coffees for this new coffee year. 

One would suggest though that with relatively tight supply of Brazil natural arabica coffees following this year’s relatively modest crop and this to remain the case until the advent of the new arabica coffee crop that shall only start to come to the market in July next year, that there shall be increased interest from consumer market industries in lower grown coffees from Central America to supplement their Brazil arabica coffee requirements within their blends.   Thus, it is perhaps fortuitous that there is the potential for increased coffee supply from the Latin America washed arabica coffee producers for the present coffee year, as it contributes towards overall fair arabica coffee supply for the coffee year. 

The international banking group Société Générale have forecast in their latest commodity report that focuses on the status of the markets for the next six months, that they foresee that the New York arabica coffee market shall be trading at around 130.00 usc/Lb.   While in terms of the London robusta coffee market, they foresee a price of approximately $ 1,850.00 per metric ton.   This report and with price indications little different from the prevailing market trading range, is unlikely to have any influence upon market sentiment.    Albeit that the present price trading range is related to speculative short selling and that any hiccups in weather for any of the major producer blocs, would likely to bring with is a sharp short covering rally for the markets. 

Today is the Thanksgiving holiday for the U.S.A. and with the New York market close for the day, with many in the U.S.A. due to take a bridging day holiday tomorrow and to extend this into a long weekend.   Thus, with many players within the influential New York market off the field of play until Monday, one would expect to see lacklustre trade for the London market today and for both markets tomorrow. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 47.89 usc/Lb., while this equates to 37.71% 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 231 bags yesterday; to register these stocks at 1,921,642 bags.  There was meanwhile a larger in number 1,879 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,346 bags. 

The commodity markets encountered a softer U.S. dollar yesterday, which was beneficial for most of the markets, to see the overall macro commodity index taking an upside track for the day.    The Oil, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Natural Gas and London robusta Coffee markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.67% higher, to see this Index registered at 423.11.  The day starts with the U.S. Dollar tending softer and trading at 1.332 to Sterling and at 1.183 to the Euro, while North Sea Oil is near to steady and is selling at US$ 63.15 per barrel. 

The London market started the day yesterday marginally below par, while the New York market started the day with modest buoyancy and with the markets maintaining this mixed stance, into the early afternoon trade.   As the afternoon progressed the London market and with volumes of trade increasing and including speculative and fund short selling, started to trigger sell stops and to extend the losses of the day and falling to sixteen-month lows, while the relatively thin in trade New York market and with a degree of support coming from the positive nature of the overall macro commodity index, maintained a sideways positive track for the day. 

The London market ended the day on a very negative note and with 91.7% of the earlier losses of the day intact, while the New York market ended the day on a hesitantly positive note and with 30.4% of the earlier gains of the day intact.   The London market with the New York market closed for the Thanksgiving holiday today, shall be trading solo and one would expect, that it shall be a relatively quiet day for this market, but with perhaps some corrective profit taking buying and advantageous industry price fixation buying coming to the fore, to provide for some degree of buoyancy for the market, against the prices set yesterday, as follows: 

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

NOV   1785 – 33                                             DEC   124.55 + 0.70

JAN    1757 – 44                                            MAR   127.00 + 0.35

MAR   1744 – 39                                            MAY   129.25 + 0.35

MAY   1755 – 35                                             JUL   131.60 + 0.35 

JUL    1781 – 35                                            SEP    133.90 + 0.35

SEP    1789 – 35                                            DEC   137.25 + 0.30

NOV   1798 – 33                                            MAR   140.55 + 0.35

JAN    1808 – 33                                            MAY   142.55 + 0.35

MAR   1825 – 28                                            JUL    144.50 + 0.40

MAY   1855 – 11                                            SEP    146.35 + 0.35