Coffee Market Report January 10 2018

The International Coffee Organisation and despite the evidence of a smaller 2017 Brazil coffee crop which they include within the October 2017 to September 2018 global coffee supply calculations, have nevertheless forecast that global coffee supply shall be 0.7% higher than the previous coffee year, for this new and present coffee year.   This coffee supply they now foresee to be 158,780,000 bags, which is a modest 1,183,000 bags surplus over their estimated global coffee demand for the same period. 

This report from what is a traditionally conservative organisation and ahead of the many reports that forecast a much lager new Brazil crop for this year and with so far, no threatening weather-related factors for any of the leading coffee producer bloc’s, does little to support speculative confidence within the coffee markets.   While in terms of the funds and with many other more exciting commodities to bet on such as the oil markets, there is seemingly little reason to trigger aggressive buying activity into coffee. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 47.01 usc/Lb., while this equates to 37.56% 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 5,024 bags yesterday; to register these stocks at 1,997,094 bags.  There was meanwhile a smaller in number 4,355 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,079 bags.  

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 26,000 bags or 1.29% over the week of trade leading up to Monday 8th. January, to see these stocks registered at 1,988,000 bags, on the day. 

These certified washed arabica coffee crop remain dominated by the Mexican and Central American coffees, which contribute 63.77% of the stocks and followed by Peru with an 11% share and Colombia, with an 10.89% share of the stocks.  This dominant South and Central American share of the stocks followed by an 8.67% share that is related to East and Central African coffee, a 3.47% share related to Brazil coffees, a 1.81% share held by Indian coffees and a 0.39% share held by coffees from Papua New Guinea.   While in terms of the location of the coffees, the European warehouses of the exchange and mostly in the certified warehouses of the exchange in Antwerp and some smaller quantities in Bremen, Hamburg and Barcelona, hold a dominant 74.23% of the stocks and a likewise, dominant 91.64% share of the coffees pending grading for the exchange.  

The commodity markets once again encountered some renewed muscle coming into play for the U.S. dollar, but with some markets able to shrug off this negative influence and to see the overall macro commodity index nevertheless, taking a modest positive track for the day.   The Oil, Natural Gas, London robusta Coffee, Cotton, Wheat and Corn markets had a day of buoyancy and the New York arabica Coffee market ended on a steady note, while the Sugar, Cocoa, Copper, 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 0.15% higher; to register this index at 422.52.   The day starts with the U.S. Dollar steady and trading at 1.352 to Sterling, at 1.193 to the Euro and 3.248 to the Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 70.15 per barrel. 

The London and New York markets started the day yesterday on a softer note and with both markets taking a softer track into the early afternoon trade, but with the London market starting to bounce back towards par.  As the afternoon progressed there was a relatively sharp positive correction for the London market, which triggered many buy stops and accentuated the gains, to see the London market move back into relatively strong positive territory, while the New York market continued a softer track.  However, while the London market continued to hold on to most of its gains into later trade, the New York market finally attracted sufficient support to move back towards par for the day.   

The London market ended the day on a very positive note and with 79.2% of the earlier gains of the day intact, while the New York market ended the day on a steady note.   This close might inspire some degree of belief that the markets despite the lack of supportive fundamental news might be close to the lower end of the prevailing price trading range and this may inspire some degree of hesitant confidence, towards a steady start for early trade today and against the prices set yesterday, as follows: 

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

JAN    1744 + 36 

MAR   1724 + 38                                            MAR   125.15 unch

MAY   1726 + 34                                            MAY   127.55 + 0.05

JUL    1758 + 29                                             JUL    129.85 + 0.05 

SEP    1762 + 25                                            SEP    132.15 + 0.05

NOV   1766 + 21                                            DEC    135.50 + 0.05

JAN    1772 + 20                                            MAR   138.80 + 0.05

MAR   1782 + 20                                            MAY   140.80 + 0.05

MAY   1805 + 20                                             JUL   142.70 + 0.05

JUL    1837 + 20                                             SEP   144.55 + 0.05