Coffee Market Report April 26 2018

The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of March were 76,570 bags or 18.68% lower than the same month last year, at a total of 333,346 bags.  This following a good performance in October and November last year, results in the cumulative coffee exports for the first six months of the present October 2017 to September 2018 coffee year to still be 83,806 bags or 3.72% higher than the same period in the previous coffee year, at a total of 2,336,996 bags. 

The dip in terms of Ugandan coffee exports is however meaningless in terms of rising global coffee supply for the short the medium term, which comes with the significantly larger Vietnam new crop and soon to be followed by the significantly larger new Brazil crop.    With the latter Brazil crop continuing to influence speculative negative sentiment and assisted to a degree, by the softer nature of the Brazil Real that indicates that despite the soft reference price of the dollar-based coffee terminal markets, that Brazilian farmers shall still be willing sellers of new crop coffees. 

One might nevertheless still speculate that Brazils farmers are experienced businessmen and that even though they shall bring in a surplus new coffee crop this year, that the countries arabica coffee farmers who presently have minimal stocks in hand, shall not look to become excessively aggressive sellers of new crop coffees.  Rather that they shall look to more controlled selling volumes and to limit discounts, while building up stocks to cater for any possible weather-related issues that might develop for what is more than likely to be a biennially bearing lower new coffee crop, for next year.   

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.97 usc/Lb., while this equates to 32.8% 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 5,574 bags yesterday; to register these stocks at 1,987,914 bags.  There were meanwhile a larger in number 10,860 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,824 bags. 

The commodity markets were mixed in trade yesterday and with the U.S. dollar showing some modest buoyancy for the day, to see the overall macro commodity index taking something of a sideways track for the day.  The Cocoa, Cotton, Wheat, Corn and Soybean markets had a day of buoyancy and the Orange Juice market was steady for the day, while the Oil, Natural Gas, Sugar, Coffee, Copper, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.1% higher; to see this index registered at 430.15.  The day starts with the U.S. Dollar steady and trading at 1.394 to Sterling, at 1.218 to the Euro and with the dollar buying 3.484 Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 74.40 per barrel. 

The London and New York markets started the day yesterday with a degree of buoyancy and with both markets taking a positive track towards the early afternoon trade, but with the markets starting to come under pressure and dipping back to south of par relatively early in the afternoon.   This reversal in the fortunes of both the London and New York markets brought with it further losses and with sell stops coming into play, to accentuate the losses and particularly so for the more speculative and volatile New York market.   But with both markets managing to bounce back from the lows in later trade, to set the markets for a more modestly softer end to the day’s trade. 

The London market ended the day on a negative note and with 73.32% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 56.9% of the earlier losses of the day intact.  This close and with the markets once again faltering as the day progressed is unlikely to inspire any confidence, but perhaps the ability for the markets to bounce off the lows later in the day might bring with it some degree of caution.  Making one think that the markets are due for 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   1724 – 18                                             MAY   116.85 – 1.65

JUL    1760 – 22                                             JUL    118.80 – 1.65 

SEP    1741 – 18                                             SEP    120.95 – 1.55

NOV   1740 – 20                                             DEC    124.45 – 1.55

JAN    1741 – 21                                             MAR   127.95 – 1.55

MAR   1750 – 23                                             MAY   130.25 – 1.50

MAY   1760 – 25                                              JUL    132.40 – 1.50

JUL    1773 – 25                                              SEP    134.30 – 1.45

SEP    1785 – 25                                              DEC   137.00 – 1.45

NOV   1802 – 25                                              MAR   139.70 – 1.45