Coffee Market Report April 03 2018

With the month of March completed the National Coffee Institute in Honduras have announced their preliminary coffee export figures for the month and have reported that the countries coffee exports for the month were 175,662 bags or 21.93% higher than the same month last year, at a total of 976,631 bags.   They have however stated that while they have always forecast rising coffee export volumes for the present October 2017 to September 2018 coffee year that they now foresee that due to some weather issues during the harvest, labour shortages and some incidences of Roya or Leaf Rust, that the coffee exports unlikely to reach the earlier 7.7 million bags target.  

The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of March were 17,917 bags or 10.66% lower than the same month last year, at a total of 150,496 bags.  This lower performance they report has contributed to the countries cumulative coffee exports for the first six months of the present October 2017 to September 2018 coffee year to nevertheless being 3.66% higher than the same period in the previous coffee year, at a total of 456,576 bags. 

The Trade Ministry in Brazil have reported that the countries coffee exports for the month of March were 246,596 bags or 9.9% lower than the same month last year, at a total of 2,244,802 bags.   This dip ahead of the larger new crop due to come into play in two to three months’ time is not unexpected as with the soft reference prices of the New York market having subdued internal market arabica coffee sales, while until the larger new conilon robusta coffee crop starts coming to the market the remaining stocks from the past crop are mostly directed to the countries domestic roasting industry. 

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of March were 208,486 bags or 74.51% lower than the same month last year, at a total of 71,337 bags.   This number and following a similarly modest export performance for the previous months has contributed to the cumulative coffee exports for the first six months of the present October 2017 to September 2018 coffee year to be 1,610,459 bags or 68.43% lower than the same period in the previous coffee year, at a total of 743,053 bags. 

There is however a new Sumatra robusta coffee crop harvest due to start during this month but to only really start coming to the fore in volume by May and a crop that shall assist to buoy export volumes for the rest of the year, but with presently many conflicting forecasts in terms of the potential size of the new Sumatra robusta coffee crop, which shall firstly need to satisfy the vibrant domestic roasting industry demand, prior to coming the consumer markets in any significant volumes.   With Indonesian robusta coffees unlikely to become price competitive within the consumer markets until well into the third quarter of this year. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.12 usc/Lb., while this equates to 33.01% 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 583 bags yesterday; to register these stocks at 1,947,184 bags.  There were meanwhile a smaller in number 102 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,376 bags. 

The commodity markets lacked participation of the London trade yesterday, with the British taking their traditional Easter Monday bank holiday, but with the North American markets tending to ease off in trade yesterday.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.52% lower; to see this index registered at 422.02.  The U.S. Dollar is steady and trading at 1.405 to Sterling, at 1.231 to the Euro and with the dollar buying 3.311 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 66.75 per barrel. 

The London market was closed yesterday to leave the New York market to trade solo for a shortened day’s trade, with the market initially showing some degree of buoyancy.   This was however short lived and the market and in line with the general easing of the overall macro commodity index slipped back into negative territory and to take a steady downside track for the day. 

The New York market finally ended the day on a soft note and with 87.5% of the earlier losses of the day intact, which does little to buoy confidence for the London market that is due to return to work today.   Thus one might expect that there might be some early origin price fixation selling pressure due for the London market and perhaps a hesitantly steady start due for the New York market for early trade today against the prices set in the London market on Thursday last week and within the New York market yesterday, as follows: 

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

MAY   1725 – 4                                                MAY    116.40 – 1.75

JUL    1750 – 1                                                 JUL    118.50 – 1.70 

SEP    1751 – 2                                                SEP    120.70 – 1.65

NOV   1755 – 2                                                DEC    124.10 – 1.60

JAN    1760 – 1                                                MAR   127.65 – 1.55

MAR   1771 – 1                                                MAY   130.00 – 1.55

MAY   1784 unch                                             JUL    132.15 – 1.50

JUL    1798 unch                                             SEP    134.05 – 1.50

SEP    1811 unch                                             DEC   136.80 – 1.55

NOV   1811 unch                                             MAR   139.45 – 1.55