Coffee Market Report April 18 2018

It is noted that despite the good volumes of new crop robusta coffees that have been flowing into the consumer markets over the past three months, that they have had no impact upon the steadily declining certified robusta coffee stocks held against the London market.   This market continuing to register and inverted structure for the first few delivery months, with discounts rather than the normal premiums that should apply for this year’s delivery months and into the March 2019 delivery month, against the July 2018 delivery month. 

This aside and with the farmers and internal traders in Vietnam continuing to be orderly rather than aggressive in their selling of their new crop robusta coffee stocks and showing some degree of price resistance, the prevailing export prices for Vietnam robusta coffees are not low enough to encourage tendering new crop coffee stocks to the London terminal market.   But one might speculate that by July this year and with the internal market in Brazil having taken in their short to medium term requirements from the farmers of the new and larger conilon robusta coffee crop, that there shall start to be good volumes of conilon robusta coffees coming to the consumer markets and potentially as the taste profile is not desired by many of the European roasters, would make the London terminal market stocks an attractive home for these conilon robusta coffees. 

In the meantime, and despite the potential of speculative and fund exhaustion in terms of the extensive net short sold situation within the New York market, the funds were seen to be sellers again and keeping pressure upon the market yesterday.   This market also under pressure from complacency on the part of the consumer market industries and the significant volumes of new crop washed arabica coffees from Mexico, Central America and Colombia that have still to be price fixed against the New York market and soon to be followed, by the new crop coffees from Peru.  With the market trading yesterday at twenty five month lows and offering reference prices that can only be described as a disaster for the arabica coffee producers globally, with many now making losses with their new crop coffee sales. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.12 usc/Lb., while this equates to 32.71% 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 5,142 bags yesterday; to register these stocks at 1,959,624 bags.  There were meanwhile a larger in number 5,413 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 89,569 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 16,667 bags or 1.25% over the week of trade leading up to Monday 16th. April, to see these stocks registered at 1,318,667 bags, on the day.  

The commodity markets were mixed in trade yesterday and with many markets flat for the day, to see the overall macro commodity index taking something of a sideways track for the day.  The London robusta Coffee, Orange Juice, Soybean and Silver markets had a day of buoyancy and the U.S. Oil markets was steady for the day, while the Brent Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Gold markets had softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% higher; to see this index registered at 428.64.  The day starts with the U.S. Dollar tending softer and trading at 1.431 to Sterling, at 1.238 to the Euro and with the dollar buying 3.409 Brazilian Real, while North Sea Oil is posting some early buoyancy and is selling at US$ 72.40 per barrel. 

The London market started the day yesterday with modest buoyancy, while the New York market started the day hesitantly trading either side of par and with the markets maintaining this uncertain stance into the early afternoon trade.   As the afternoon progressed both markets slipped back into negative territory but while the London market soon picked up support and recovered to move up into positive territory and posting significant gains, the New York market continued to suffer from selling pressure and to remain well south of par for the day. 

The London market ended the day on a very positive note and with 86.2% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 56% of the earlier losses of the day intact.  This close maintains a negative picture for the charts of the New York market but one would think that this market must be somewhat oversold and that this market shall be due for a steady start, but with perhaps negative producer fixation pressure due for the London market for early trade today against the prices set yesterday, as follows: 

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

MAY   1715 + 14                                             MAY   113.55 – 0.70

JUL    1754 + 25                                              JUL    115.85 – 0.70 

SEP    1740 + 22                                             SEP    118.10 – 0.55

NOV   1740 + 19                                             DEC    121.60 – 0.55

JAN    1743 + 20                                             MAR   125.15 – 0.50

MAR   1753 + 20                                             MAY   127.60 – 0.45

MAY   1765 + 20                                              JUL    129.90 – 0.45

JUL    1778 + 19                                              SEP    132.00 – 0.35

SEP    1791 + 19                                              DEC   135.00 – 0.35

NOV   1795 + 19                                              MAR   138.00 – 0.20