Coffee Market Report June 06 2018

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of May was 287,000 bags or 31.85% higher than the same month last year, at a total of 1,188,000 bags.   This has contributed to the countries cumulative production for the first eight months of the present October 2017 to September 2018 coffee year to be 146,000 bags or 1.51% lower than the same period in the previous coffee year, at a total of 9,544,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of May were 121,000 bags or 14.4% higher than the same month last year, at a total of 961,000 bags.   This has contributed to the countries cumulative coffee exports for the first eight months of the present October 2017 to September 2018 coffee year to be 404,100 bags or 4.39% lower than the same period in the previous coffee year, at a total of 8,804,900 bags. 

The evidence that following a rain effected more modest Colombian main crop over the first five months of the present October 2017 to September 2018 coffee year, that the follow on Mitaca crop harvest that has started is seemingly coming to the fore in good volume, might well contribute towards the prevailing bearish sentiment within the New York market.  But one shall need to see the production figures for this and the coming month, to really assess if the Colombian coffee production of mostly fine washed arabica coffees shall indeed catch up with the pervious coffee years production levels. 

The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported that they forecast that the coffee production in Tanzania for the countries new July 2018 to June 2019 coffee year shall be 150,000 bags or 13.04% higher than the countries previous crop, at a total of 1.3 million bags.  This new crop they forecast to be made up from an approximate 53.85 to 46.5 ratio of arabica and robusta coffees, which they anticipate shall with a modest domestic consumption leave approximately 1.23 million bags available for export to the consumer markets. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 44.14 usc/Lb., while this equates to 35.43% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday; to register these stocks at 2,023,681 bags.  There were meanwhile 2,515 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 47,990 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 17,833 bags or 1.36% over the week of trade leading up to Monday 4th. June, to see these stocks registered at 1,294,833 bags on the day. 

The commodity markets had a mixed day yesterday and with a modest easing of the U.S. dollar impacting within selected markets, to see the overall macro commodity index taking something of a sideways track for the day.  The U.S. Oil, Sugar, Copper, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note and the London robusta Coffee market ended the day on a steady note, while the Brent Oil, Natural Gas, Cocoa, New York arabica Coffee, Cotton and Orange Juice markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.04% lower; to see this index registered at 432.48.  The day starts with the U.S. Dollar steady and trading at 1.341 to Sterling, at 1.172 to the Euro and with the dollar buying 3.806 Brazilian Real, while North Sea Oil is tending softer in early trade and is selling at US$ 74.20 per barrel. 

The London and New York markets started the day yesterday trading around par but with both markets soon slipping south of par and to take a modestly softer track, into the early afternoon trade.  As the afternoon progressed the New York market noting the weakening nature of the Brazil Real that threatened increased Brazil price fixation selling pressure, started to come under pressure and with sell stop being triggered, swiftly moved further into negative territory.  This was followed by less dramatic selling pressure within the London market that took the market deeper into more modest negative territory, but with the London market recovering its losses towards the close. 

The London market ended the day on a steady to positive note and with 25% of the earlier modest gains of the day intact, while the New York market ended the day on a very negative note and with 87% of the earlier losses of the day intact.   This close does little to inspire, but one might expect to see some degree of cautious hesitancy coming to the fore, to set the markets for a steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1747 + 2                                                JUL    119.45 – 2.05 

SEP    1733 + 1                                               SEP    121.75 – 2.00

NOV   1737 + 1                                               DEC    125.30 – 1.95

JAN    1743 unch                                           MAR   128.85 – 1.90

MAR   1754 – 1                                               MAY   131.15 – 1.85

MAY   1765 – 1                                                JUL    133.20 – 1.85

JUL    1777 – 1                                                SEP    135.10 – 1.75

SEP    1790 – 2                                                DEC   137.75 – 1.65

NOV   1804 – 2                                                MAR   140.30 – 1.65

JAN    1814 – 2                                               MAY    141.95 – 1.60