Coffee Market Report June 13 2018

The Brazil Exporters Association Cecafé have reported green coffee exports for the month of May, to a total 1.46 million bags. This sees the cumulative green coffee exports for the calendar year, to a total 10.60 million bags, which they note is 8% lower than that of the same time in the previous year. The green coffee exports for May are meanwhile, anticipated to have been affected by the disruptive truckers strike, which the Association anticipates has led to a delay in shipments of between 400,000 to 500,000 bags in the month. With the month of June the last month in the coffee marketing year, the overall decline in coffee exports from the July 2017 to June 2018 Brazil crop year when compared to the larger biennial bearing crop of the previous year, is unlikely to have any influence on the markets. This ahead of the new biennial bearing crop that is due for a much larger new crop and one that shall include good volumes of both Arabica and Conilon robusta coffees, to fuel a significant increase in coffee export volumes for the forthcoming July 2018 to June 2019 crop year.

The International Coffee Organisation (ICO) have released their latest report in which the overall total coffee exports in April 2018 are seen to have increased by a cumulative 7.1% to 10.18 million bags compared to the same month last year. This brings the cumulative export figure for the first seven months of the October 2017 to September 2018 coffee year to a total 70.647 million bags, of which Arabica coffee stood at 44.568 million bags, a figure not much changed on the same time last year, whereas Robusta coffee exports registered an increase of 908,000 bags or 3.6% above that of the same time last year. It is noted meanwhile, within the report that Vietnam is anticipated to reach 17 million bags of mainly robusta coffee exports over the first seven months of this coffee year. This is the highest volume of exports recorded over the period from this largest robusta coffee producer to continue to fuel supply to consumer markets year.

The International Coffee Organisation have in their report, estimated world production in the October 2017 to September 2018 coffee year to reach 159.66 million bags, or 1.2% higher than the same period last year, with Arabica coffee production anticipated to decline by 4.6% to 97.43 million bags and Robusta production expected to grow by 12.1% to 62.24 million bags year on year.

The September 2018 to September 2018 contracts arbitrage between the London and New York markets widened yesterday, to register this at 41.71 usc/Lb., while this equates to 34.90% 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 5,453 bags yesterday; to register these stocks at 2,043,603 bags. There was meanwhile a drawdown of 2,179 bags in the number of bags pending grading for this exchange; to register these pending grading stocks at 28,769 bags.

The commodity markets had another mixed day yesterday, the first day of U.S. Federal Reserve meetings over and the second day of meetings anticipated by the markets to result in further interest rate hike forecasts later today. It was a positive day for Oil, Sugar, Cocoa, arabica Coffee, Cotton, Wheat, Corn and Soybean markets, but a softer day for Copper, Orange Juice, robusta Coffee, Gold, Silver, Platinum and Palladium markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.48% higher, to see this index registered at 435.62. The day starts with the U.S. Dollar steady and trading at 1.336 to Sterling, at 1.175 to the Euro, with the US Dollar buying 3.716 Brazilian Real, while North Sea Oil is tending softer in early trade and is selling at US$ 74.01 per barrel.

The London and New York markets started the day on a buoyant note yesterday and narrowly positive at the outset. After a mildly positive early morning, the London robusta market lost some ground by midmorning to be trading below par toward the middle of the day. The positive early morning in New York similarly took a softer track as the America’s opened their business day although in a choppy session this market which broke through par earlier in the day, managed to clamber back into positive and then trigger stops, to move comfortably back into positive territory for the latter half of the session. An attempt to the higher in London pushed this market back to par in the early afternoon but this market took a softer track again toward the end of the day. Both markets held within a narrow range for the day yesterday, although hefty volumes were traded as the first notice day for the prompt month in New York, draws near. The markets finished on a positive note in New York, off of the days’ high while a fair volume day in London saw this market finish the day in negative territory, around middle of the days range, to set the close yesterday, as follows:

London Robusta US$/MT New York Arabica Usc/Lb.
JULY  1,729 - 6                 JULY  117.35 + 0.25
SEPT 1,715 - 8                 SEPT  119.50 + 0.30
NOV   1,718 - 8                 DEC   123.05 + 0.30
JAN   1,726 - 8                  MAR   126.45 + 0.30
MAR  1,738 - 7                  MAY   128.75 + 0.30
MAY   1,751 - 7                 JULY   130.90 + 0.30
JULY  1,764 - 7                 SEPT  132.85 + 0.35
SEPT 1,777 - 7                 DEC    135.50 + 0.45
NOV   1,791 - 7                 MAR   138.10 + 0.50
JAN    1,807 - 7                 MAY   139.75 + 0.50