Coffee Market Report November 30 2017

The internal arabica coffee market in Brazil has been slow over the recent weeks and if reflected by the past few months of relatively low volume export reports, with the combination of the smaller arabica coffee crop this year and the soft nature of the reference prices of the New York market, being the main reasons cited.    However, in the meantime for those consumer market industry buyers who have dedicated interest in Brazil natural arabica coffees for their blends, there has been sufficient new crop supply being shipped.

Meanwhile and with Brazil arabica coffee export differentials having firmed against the internal market price resistance for new crop sales, there is evidence of fair volumes of mainstream consumer market buying up of the often aged and lower cupping quality washed arabica coffees, out of what was earlier in the year significantly high consumer market arabica coffee stocks.   This was to have been expected that many roasters would be supplementing some of their traditional Brazil arabica coffee requirements with readily available spot arabica coffee stocks and one would guess that this factor shall assist to both take the bite out of tighter Brazil arabica coffee supply due for the next seven months and to reduce the private consumer market trade stocks, to more normal levels.

Nevertheless, the prospects for lower arabica coffee export volumes over the next seven months and still some uncertainty in terms of the medium-term Brazil weather prospects, has seemingly halted the bearish speculative pressure that has recently been encountered within the New York arabica coffee market, with the short-sold nature of this market assisting to have halted the value slide.  

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 52.40 usc/Lb., while this equates to 39.64% 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 795 bags yesterday; to register these stocks at 1,921,346 bags.  There was meanwhile a similar in number 759 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,620 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 14,500 bags or 0.67% over the week of trade leading up to Monday 27th. November, to see these stocks registered at 2,154,833 bags on the day.

The commodity markets had a mixed day yesterday, to see the overall macro commodity index taking a sideways track for the day.    The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Copper, Orange Juice, 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 0.01% higher; to register this index at 422.45.   The day starts with the U.S. Dollar steady and trading at 1.347 to Sterling and at 1.186 to the Euro, while North Sea Oil is steady and is showing a degree of early buoyancy and is selling at US$ 63.75 per barrel.

The London market started the day yesterday on a positive note, while the New York market started the day trading around par and with the markets maintaining this stance into the early afternoon trade.  As the afternoon progressed and with little in the way of origin selling in play for the New York market, this market moved up to join the London market within positive territory and with both markets gaining in confidence, towards a positive close for the day.

The London market ended the day on a very positive note and with 100% of the gains of the day intact, while the New York market ended the day on a positive note and with 79.7% of the earlier gains of the day intact.  This overall positive close does assist to paint a more positive picture for the charts and one might think that this shall inspire a degree of hesitant confidence, for a follow through steady start for early trade today, against the prices set yesterday, as follows:

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

NOV   1793 + 20                                             DEC   129.60 + 2.15
JAN    1766 + 23                                            MAR   132.20 + 2.35
MAR   1759 + 24                                            MAY   134.40 + 2.35
MAY   1769 + 22                                            JUL    136.65 + 2.35 
JUL    1800 + 22                                            SEP    138.90 + 2.30
SEP    1807 + 21                                            DEC   142.20 + 2.25
NOV   1814 + 19                                            MAR   145.40 + 2.20
JAN    1822 + 19                                            MAY   147.40 + 2.20
MAR   1839 + 19                                            JUL    149.25 + 2.20
MAY   1868 + 19                                            SEP    151.10 + 2.15