Coffee Market Report February 01 2018

The International Coffee Organisation have reported that the global coffee exports for the month of December were 0.7% higher than the same month in the previous year, at a total of 10.62 million bags.   However, they report that following the dip in exports for the previous two months, they calculate that cumulative global coffee exports for the first three months of this new October 2017 to September 2018 coffee year were 6.7% lower than the same period in the previous coffee year, at a total of 28.36 million bags. 

This dip in exports for the first three months of the present coffee year does however provide little in the way of support for sentiment within the coffee markets, as it was very much expected and is only really related to the lack of demand from the well to perhaps even surplus stocked mainstream consumer markets, the slowing of export deliveries from Brazil and the late start for the new Vietnam crop, that having been related to any threat of short to medium term tightening global coffee supply. 

The latter Vietnam factor clearly illustrated by the report confirming that the cumulative arabica coffee exports were 4% lower over the first three months of the October 2017 to September 2018 coffee year, while the cumulative robusta coffee exports for these three months were 11.5% lower, when compared to the previous coffee year.  But the dip in the latter robusta coffee exports was even though the robusta coffee exports for the month of December were 5.1% higher than the same month in the previous year, which came with the delayed but now increasing in volume delivery of the new Vietnam crop. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.93 usc/Lb., while this equates to 34.41% 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 4,717 bags yesterday; to register these stocks at 1,970,042 bags.  There was meanwhile a larger in number 9,016 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,600 bags.  

The Certified Robusta coffee stocks held against the London market were seen to decrease by 85,500 bags or 4.49% over the week of trade leading up to Monday 29th. January, to register these stocks at 1,756,500 bags, on the day.   

The commodity markets were mixed yesterday, but with significant negative pressure in play within the Natural Gas and Sugar markets, they contributed towards the overall macro commodity index taking a softer track for the day.  The Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Wheat, Corn and Soybean markets had softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.32% lower; to register this index at 429.11.   The day starts with the U.S. Dollar near to steady and trading at 1.419 to Sterling, at 1.242 to the Euro and the dollar is buying 3.186 Brazilian Real, while North Sea Oil is steady and is selling at US$ 67.65 per barrel. 

The London market started the day yesterday with immediate buoyancy, while the New York market started the day trading marginally north of par, with the latter New York market remaining mostly close to par, while the London market started to build upon its gains into the early afternoon trade.   As the afternoon progressed the London market continued to attract both industry and speculative support and to maintain its renewed muscle, while the New York market traded around par but mostly to the south of par and setting the markets for a mixed end to the day.  

The London market ended the day on a very positive note and with 85% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 39.1% of the earlier losses of the day intact.   This close and despite the relatively impressive recovery for the London market is however unlikely to inspire confidence, as there remains quite some volumes of producer price fixation selling hanging over the market and thus, one would think that the markets are due little better than a steady start for early trade today against the prices set yesterday, as follows: 

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

MAR   1762 + 34                                            MAR   121.85 – 0.45

MAY   1747 + 30                                            MAY   124.20 – 0.45

JUL    1783 + 28                                             JUL   126.55 – 0.50 

SEP    1787 + 27                                            SEP    128.95 – 0.45

NOV   1792 + 28                                            DEC    132.35 – 0.50

JAN    1798 + 28                                            MAR   135.65 – 0.45

MAR   1811 + 28                                            MAY   137.65 – 0.45

MAY   1825 + 28                                             JUL   139.45 – 0.45

JUL    1855 + 28                                             SEP   141.15 – 0.45

SEP    1865 still to open                               DEC   143.90 – 0.45