Coffee Market Report May 09 2018
The coffee markets remain devoid of new fundamental news and in terms of short to medium term production globally, this leaves the speculative and fund sectors of the markets with only the old news of the forecast for medium term surplus global coffee supply. But there is the traditional June and July frost season for Brazil to the fore and one might need to be caution in that while it is now twenty-four years since the there was any serious frost damage within the main coffee districts in Brazil, it is not an impossibility that it can happen again.
On the consumer market front a California judge has upheld a ruling that that coffee roasters and retailers must serve up a cancer warning with all coffees sold in California, in terms that consumers face the risk of consuming acrylamide in their coffee. This ruling that follows an earlier ruling that was related to the law suit brought to the fore by the Council for Education and Research on Toxics, has followed the many protests to the earlier ruling by many leading industry players and associations.
This latest ruling does however seemingly make the situation for the coffee industries quite complicated, as they now have the problem of having to work out ways to somehow limit the potential levels of acrylamide in their coffee products. So, as they can convince the California public and perhaps the consumers on a wider scale within the U.S.A. if other states find it politically correct to follow suit, that their individual products do not carry the risk of health issues due to acrylamide.
In the meantime, there have over the past couple of decades been dozens of studies by respected research units within academic facilities that have brought to the fore the positive health benefits of drinking coffee and one might suggest that to counter this negative for coffee decision within the California, that the coffee roasters and retailers should do more to highlight these positive reports.
The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.23 usc/Lb., while this equates to 31.96% 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 2,222 bags yesterday; to register these stocks at 1,992,686 bags. There were meanwhile a larger in number 8,580 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,049 bags.
The Certified Robusta coffee stocks held against the London exchange were seen to increase by 3,000 bags or 0.23% over the week of trade leading up to Monday 7th. May, to see these stocks registered at 1,285,667 bags, on the day.
The commodity markets were mixed in trade yesterday but with a robust U.S. dollar showing some more muscle through the day, many markets tended to come under pressure and to see the overall macro commodity index taking a modestly softer track for the day. The Sugar, Orange Juice, Wheat and Corn markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper, Gold and Silver markets ended the day on a softer track. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.23% lower; to see this index registered at 434.06. The day starts with the U.S. Dollar showing some early buoyancy and trading at 1.353 to Sterling, at 1.185 to the Euro and with the dollar buying 3.563 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 76.75 per barrel.
The London market started the day post Monday’s long weekend bank holiday with catch up producer price fixation selling hanging over the market and on a softer note, while the New York market started the day trading around par, but with the London market starting to recover and to see both markets close to par for early afternoon trade. As the afternoon progressed the London market attracted further selling and moved into negative territory, while the New York market following some initial support and moving into positive territory and with perhaps some influence from the negative nature of the overall macro commodity index, likewise moved south into negative territory. Setting both markets to join many other commodity markets, for a softer close for the day.
The London market ended the day on a negative note and with 52.8% of the earlier losses of the day intact, while the New York market ended the day of a likewise negative note and with 82.1% of the earlier losses of the day intact. This close does not inspire confidence but with many of the leading European consumer markets taking their Ascension Day Public holiday tomorrow and many individual industry employees possibly taking a day off on Friday to make it into a long weekend, there might well be some precautionary and advantageous industry price fixation buying support coming to the fore, following the softer close. Thus, one might expect to see perhaps some degree of buoyancy for early trade today against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1790 – 18 MAY 116.55 – 1.65
JUL 1794 – 19 JUL 119.60 – 1.15
SEP 1786 – 14 SEP 122.00 – 1.15
NOV 1787 – 12 DEC 125.40 – 1.20
JAN 1788 – 12 MAR 128.90 – 1.15
MAR 1794 – 12 MAY 131.20 – 1.15
MAY 1800 – 12 JUL 133.35 – 1.10
JUL 1812 – 12 SEP 135.25 – 1.10
SEP 1824 – 12 DEC 137.95 – 1.10
NOV 1838 – 13 MAR 140.65 – 1.15