Coffee Market Report December 07 2017

The coffee export volumes from Vietnam and mostly related to robusta coffees, are starting to pick up with the steady delivery of new crop coffees, following the state authorities estimate late last month that November exports would register relatively modest 1.42 million bags.   While many private traders had been estimating November coffee exports to be a little more robust, at between 1.5 million and 1.6 million bags. 

It is early days though in terms of what was a delayed harvest new crop in Vietnam and one might expect that despite some interference by holiday activity this month, that coffee exports for the month shall once again exceed 2 million bags.   To be followed by increasing volumes of coffee exports, for the follow-on months. 

In the meantime, the Australian Government Bureau of Meteorology has reported that a weak La Niña phenomenon is now very much on the cards, with conditions within the Pacific Ocean conducive for this to continue for a couple of months.   The emphasis is though, on the weak nature of this phenomenon at present and by nature, it would indicate little threat for the present for the Pacific rim coffee producing countries. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 46.99 usc/Lb., while this equates to 37.26% 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 2,445 bags yesterday; to register these stocks at 1,932,418 bags.  There was meanwhile a smaller in number 1,831 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,796 bags. 

The commodity markets and with the U.S. dollar showing some renewed muscle were mostly on the back foot again yesterday, to see the overall macro commodity index taking a softer track for the day.  The Copper and Cotton markets had a day of buoyancy, while the Oil, Sugar, Cocoa and Coffee markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.13% lower; to register this index at 410.64.   The day starts with the U.S. Dollar steady and trading at 1.336 to Sterling and at 1.179 to the Euro, while North Sea Oil is near to steady and is selling at US$ 61.95 per barrel. 

The London and New York markets started the day marginally south of par yesterday, but with moth markets soon attracting pressure and moving deeper into negative territory, for the early afternoon trade.   As the afternoon progressed and with trade remaining relatively thin and lacklustre, both markets extended their losses and moved deeper into negative territory.  However, while the London market managed to bounce back from the lows in late trade and to move back closer to par, the New York market remained mostly near to the bottom and on a sideways negative track for the remainder of the day. 

The London market ended the day on a modestly negative note and having recovered 83% of the earlier losses of the day by the close, while the New York market ended the day on a negative note and with 83% of the earlier losses of the day intact.   This close and with the dollar maintaining a degree of muscle does little to inspire and one might expect to see another hesitant slow and near to par start for early trade today, against the prices set yesterday, as follows: 

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

JAN    1758 + 1                                              DEC   124.85 – 1.10

MAR   1744 – 3                                              MAR   126.10 – 1.30

MAY   1752 – 5                                              MAY   128.25 – 1.30

JUL    1784 – 6                                              JUL     130.55 – 1.25 

SEP    1793 – 6                                              SEP    132.80 – 1.25

NOV   1802 – 5                                              DEC    136.20 – 1.20

JAN    1810 – 5                                              MAR   139.45 – 1.20

MAR   1820 – 12                                            MAY   141.45 – 1.20

MAY   1845 – 14                                            JUL    143.40 – 1.15

JUL    1877 – 14                                            SEP    145.30 – 1.15