Coffee Market Report April 11 2018
The Coffee Exporters Association in Brazil Cecafé have reported that the countries green coffee exports for the month of March were 10.6% lower than the same month last year, at a total of 2.19 million bags. This dip in exports related to lacklustre and price resistant internal market selling on the part of the coffee farmers, whose stocks are declining ahead of the larger new crop that is shortly due to come into play.
Aside from the relatively modest green coffee exports for the month of March, Cecafé have reported that with the addition of the value added soluble coffee exports and calculated in terms of their green coffee equivalent, that the overall coffee exports for the month of march were 11% lower than the same month last year, at a total of 2,523,719 bags.
The Customs Authorities in Vietnam have reported that the countries coffee exports for the month of March were 11.2% higher than the earlier government forecast, at a total of 3,336,833 bags. This they say contributes to the countries cumulative coffee exports of mostly robusta coffee to being 17% higher than the same period in the previous year, at a total of 8,820,733 bags.
With expectations of coffee exports for this year of approximately 25 million bags, this number clearly indicates that there are good levels of coffee stocks within the country, while there remains some degree of price resistance on the part of the farmers. This one would speculate is the reason that so far this year, there has not been much in the way of new crop coffee volumes coming to the fore for certification for the London market stocks.
Over the recent years many of the coffee farmers in the Central Highlands of Vietnam have countered the volatility of coffee prices by farming both Coffee and Pepper, but with the farmers now becoming more diverse in terms of the multi cropping. In this respect many farmers are now and alongside their coffee and pepper crops planting out fruit and nut crops, such as Durian, Avocado, Litchi and Macadamia nuts. One might speculate that with most of the farms relatively small and with many of these alternative crops proving to be more profitable than coffee and that on many farms the aged coffee trees might no longer be replaced by new coffee trees, but by some of the alternative crop options. This is a factor that could cap the Vietnamese coffee crop volumes and perhaps even in time, result in some small decline in Vietnamese coffee production.
The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 40.81 usc/Lb., while this equates to 34.14% 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 3,747 bags yesterday; to register these stocks at 1,954,505 bags. There were meanwhile a larger in number 4,546 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,066 bags.
The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 5,833 bags or 0.43% over the week of trade leading up to Monday 9th. April, to see these stocks registered at 1,335,333 bags, on the day.
The commodity markets had a mixed day yesterday and against a weakening U.S. dollar, while with good support for the influential Oil markets, the overall macro commodity index took a positive track for the day. The Oil, Cotton, Copper, Wheat, Soybean, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Orange Juice and Corn markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.2% higher; to see this index registered at 425.7. The day starts with the U.S. Dollar near to steady and trading at 1.418 to Sterling, at 1.236 to the Euro and with the dollar buying 3.409 Brazilian Real, while North Sea Oil is steady and is selling at US$ 7.55 per barrel.
The London market started the day yesterday on a steady note and the New York market started the day on a marginally softer note and son joined by a softening in value London market, to see the London market marginally south of par and the New York market extending its losses into the early afternoon trade. As the afternoon progressed both markets remained under pressure and to the see the New York market taking a sideways softer track for the rest of the day, while the London market remained on a steady downside track.
The London market ended the day on very negative note and with 95.8% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 64.5% of the earlier losses of the day intact. This close paints something of a negative picture for the charts and with producer price fixation selling hanging over both markets, one might not expect to see little better than a hesitant near to steady start for early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1709 – 34 MAY 117.60 – 1.05
JUL 1736 – 23 JUL 119.55 – 1.00
SEP 1729 – 21 SEP 121.65 – 0.90
NOV 1735 – 19 DEC 125.00 – 0.90
JAN 1737 – 19 MAR 128.50 – 0.90
MAR 1745 – 19 MAY 130.90 – 0.90
MAY 1757 – 19 JUL 133.05 – 0.95
JUL 1770 – 19 SEP 134.95 – 0.95
SEP 1783 – 19 DEC 137.80 – 0.90
NOV 1788 – 19 MAR 140.60 – 0.90