Coffee Market Report December 01 2017

The majority of Brazil’s main coffee districts have reported average rainfall for the month of November, except for the north of the state of Espirito Santo, but this district that is the main conilon robusta producing area did was nevertheless in receipt of fair rains for the month.  While with forecasts for good rains for early December for South East Brazil, there are presently no fears being voiced on the prospects for the new crop.   This crop generally forecast to have the potential to be close to a bumper crop and with the potential, to bring to the fore surplus global coffee supply for the second half on next year. 

Meanwhile it is remains mostly dry within the main coffee districts in Vietnam and the new crop harvest is in full swing and with the potential for surging robusta coffee export volumes to start coming into play by January, but there is some degree of internal market price resistance for the new crop coffees against the prevailing soft reference prices of the London market.    But all indications are that with the expectations of a larger new crop form this harvest, that there is sufficient coffee coming into Ho Chi Minh City, to cover exporters short term demands.   

The International Coffee Organisation have reported that global coffee exports for the month of October were 11.4% lower than the same month last year, at a total of approximately 8.8 million bags.    This report was however not to be unexpected, in terms of the more modest export volumes that have been reported out of Brazil over the past few months, along with the modest nature of carry over stocks into the new Vietnam crop, which had in turn been rain delayed and along with some rain delays being experienced for the new Colombian main crop.   Thus, it is not a report that can be expected to contribute much in the way of support to market sentiment. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 50.30 usc/Lb., while this equates to 39.14% 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 267 bags yesterday; to register these stocks at 1,921,079 bags.  There was meanwhile a larger in number 473 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,147 bags. 

The commodity markets and despite the U.S. dollar tending softer later in the day, had a mostly softer day yesterday, to see the overall macro commodity index taking a softer track for the day.    The Sugar, Wheat, and Corn markets nevertheless had a day of buoyancy and the Copper market was steady for the day, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Orange Juice, Soybean, 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 0.76% lower; to register this index at 419.26.   The day starts with the U.S. Dollar steady and trading at 1.352 to Sterling and at 1.192 to the Euro, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 64.50 per barrel. 

The London and New York market started the day yesterday trading with a degree of early buoyancy but soon reverted to trading close to and either side of par and within and environment of very thin trade for both markets, to see the markets taking a marginally south of par track into the early afternoon trade.    As the afternoon progressed both markets started to take a softer track, but with the New York market bouncing back into positive territory for a brief period, before the New York market came under strong speculative and fund selling pressure and with both markets heading south for late trade.    

The London market ended the day on a very negative note and with 87.4% of the earlier losses of the day intact, while the New York market ended the day on a likewise very negative note and with 83.1% of the earlier losses of the day intact.   This close does little to inspire, but one might in terms of the soft nature of the U.S. dollar, to see some cautious corrective buoyancy due for the markets for early trade today, against the prices set yesterday, as follows: 

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

JAN    1726 – 40                                            DEC   126.30 – 3.30

MAR   1724 – 35                                            MAR   128.50 – 3.70

MAY   1736 – 33                                            MAY   130.65 – 3.75

JUL    1766 – 34                                            JUL    132.90 – 3.75 

SEP    1773 – 34                                            SEP    135.10 – 3.80

NOV   1783 – 31                                            DEC    138.45 – 3.75

JAN    1792 – 30                                            MAR   141.70 – 3.70

MAR   1809 – 30                                            MAY   143.70 – 3.70

MAY   1836 – 32                                            JUL    145.60 – 3.65

JUL    1836 opening                                     SEP    147.45 – 3.65