Coffee Market Report March 30 2018

All the main coffee districts have received good rains for this month and this has been beneficial for the development of what is generally being forecast to be a bumper and surplus new crop, while with a forecast for a new cold front due next week the chances are that most of the main coffee districts shall start off the month of April with more rains.   Thus, with ground water retention levels good for most of the main coffee districts in Brazil, there is no longer any rain threat for the prospects of this new crop. 

The reports out of Brazil have indicated that it has been a quiet week for arabica coffee sales within the internal market, but that there have been good volumes of conilon robusta coffees being traded into the domestic roasting industry.   While with the new conilon robusta coffee crop now only a few weeks away from starting to be harvested, it is likely that internal market trade for these coffees shall remain active and with the chance that by June this year that there shall once again be conilon robusta coffees being sold into the consumer markets and is a factor that weighs negatively upon the medium-term prospects for the London market. 

The Brazilian coffee exporters association who are due to report the countries coffee exports for the month of March on the 10th. April have indicated that export registrations in hand, would indicate that the coffee exports for the month shall be approximately 2.6 million bags. 

The leading West African robusta coffee producing country the Ivory Coast has reported that the countries coffee exports for first two months of this year were 51,683 bags or 47.72% lower than the same period last year, at a total of 56,617 bags.   This with the new crop forecast at approximately 1.1 million bags is a relatively modest number and one might speculate that the dip in exports is more price related in terms of the prevailing soft reference prices of the London market, rather than being related to any problems with the new crop. 

The May 2018 to May 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 39.91 usc/Lb., while this equates to 33.78% 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 168 bags yesterday; to register these stocks at 1,947,767 bags.  There were meanwhile a larger in number 5,611 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,478 bags. 

The commodity markets encountered some renewed muscle for the U.S. dollar yesterday but with many markets nevertheless showing a degree of buoyancy, to see the overall macro commodity index on an upside track for the day.  The Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Corn, Soybean and Silver markets had a day of buoyancy and the Orange Juice market was steady for the day, while the Cocoa, London robusta Coffee and Gold markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.48% higher; to see this index registered at 424.23.  The U.S. Dollar is steady and trading at 1.404 to Sterling, at 1.232 to the Euro and with the dollar buying 3.304 Brazilian Real, while North Sea Oil is steady and is selling at US$ 70.10 per barrel. 

The London market started the day yesterday trading marginally south of par, while the New York market started the day trading with some modest buoyancy and with the markets taking this mixed stance into the early afternoon trade.   As the afternoon progressed the London market that had dipped deeper into negative territory and joined the New York market in positive territory but this was short lived and the London market fell back to trade around and mostly marginally south of par, while the New York market continued to remain mostly within positive territory and through to the close for the week and the month. 

The London market ended the day on a modestly negative note and 44.4% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with 40% of the earlier gains of the day intact.   Both markets are close for the Easter holiday today and with the London market to remain closed for the Easter Monday holiday next week, to see the New York market due to trade solo for a shortened day’s trade.  But with a lack of striking fundamental news coming to the fore for the coffee markets at present one might not expect the New York market to do much more than trade on a steady note on Friday against the prices set yesterday, as follows: 

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

MAR   1777 unch

MAY   1725 – 4                                                MAY    118.15 + 0.40

JUL    1750 – 1                                                 JUL    120.20 + 0.40 

SEP    1751 – 2                                                SEP    122.35 + 0.35

NOV   1755 – 2                                                DEC    125.70 + 0.25

JAN    1760 – 1                                                MAR   129.20 + 0.25

MAR   1771 – 1                                                MAY   131.55 + 0.25

MAY   1784 unch                                             JUL    133.65 + 0.25

JUL    1798 unch                                             SEP    135.55 + 0.30

SEP    1811 unch                                             DEC   138.35 + 0.35