Coffee Market Report April 12 2018

The respected Brazilian analysts Safras & Mercado have forecast that this year’s new coffee crop shall be 19.57% larger than last year’s coffee crop, to total approximately 60.5 million bags.   In this respect they foresee that the new arabica coffee crop shall be 16% larger than last year’s arabica coffee crop at 44.8 million bags, while they foresee that this year’s new conilon robusta coffee crop shall be 30% larger than last year’s conilon robusta coffee crop, at a total of 15.7 million bags. 

Safras & Mercado have at the same time estimated that so far 89% of the previous 2017 coffee crop has been sold, which is a percentage factor they say is little changed from the same time last year but is above the five-year average of 86% having been sold by early April.   While they assess that with a large new coffee crop on the nearby horizon that farmers are interested sellers of their remaining arabica coffee stocks but are showing some degree of price resistance towards the relatively modest prices that exporters are offering, in line with the soft reference prices of the New York market. 

This report comes to the fore in line with many other forecasts that have been made for a bumper new Brazil coffee crop, while there have been some forecasts that have pegged the forthcoming new Brazil coffee crop even higher, with some talking as high as 65 million bags.   This new Brazil crop and with little in the way of threatening news coming to the fore from any of the other leading coffee producers or coffee producing blocs, continues to fuel the bearish sentiment on the part of the speculative and fund sectors of the coffee terminal markets. 

Meanwhile the Australian Governments Bureau of Meteorology has reported that presently there is no evidence of any significant La Niña or El Niño phenomena within the Pacific Ocean and that with conditions neutral, no threat to Pacific Rim countries weather conditions and likewise further afield.   This news and with many leading coffee producers usually affected by the weather conditions created by the La Niña or El Niño phenomena, further adding to speculative bearish sentiment and to coffee consumer industries complacency, for the present. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 41.60 usc/Lb., while this equates to 34.59% 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 535 bags yesterday; to register these stocks at 1,953,970 bags.  There were meanwhile a larger in number 65,415 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 78,481 bags. 

The commodity markets had another mixed day yesterday but with many markets showing a degree of buoyancy, to see the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Soybean, Gold and Silver markets had a day of buoyancy, while the Sugar, London robusta Coffee, Copper, Wheat and Corn markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.43% higher; to see this index registered at 427.52.  The day starts with the U.S. Dollar steady and trading at 1.418 to Sterling, at 1.236 to the Euro and with the dollar buying 3.374 Brazilian Real, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 72.40 per barrel. 

The London market started the day yesterday trading either side of par, while the New York market started the day modestly south of par and with the London market soon attracting support to move into positive territory and with the New York market remaining close to par into the early afternoon trade.   As the afternoon progressed the London market moved back to close to par and towards a late in the day fall back into negative territory, while the New York market with perhaps some influence from the positive nature of the overall macro commodity index started experience buoyancy and took a positive track for late in the day trade. 

The London market ended the day on modestly negative note and with 33.3% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 77.8% of the earlier gains of the day intact.    This mixed close and with only modest losses for the London market might assist towards some degree of confidence and one might expect to see a hesitantly steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1702 – 7                                               MAY   118.15 + 0.55

JUL    1734 – 2                                                JUL    120.25 + 0.70 

SEP    1726 – 3                                               SEP    122.30 + 0.65

NOV   1728 – 7                                               DEC    125.60 + 0.60

JAN    1730 – 7                                               MAR   129.10 + 0.60

MAR   1739 – 6                                               MAY   131.45 + 0.55

MAY   1751 – 6                                                JUL    133.60 + 0.55

JUL    1764 – 6                                                SEP    135.50 + 0.55

SEP    1777 – 6                                                DEC   138.30 + 0.50

NOV   1782 – 6                                                MAR   141.05 + 0.45