Coffee Market Report June 20 2018

We apologise for the delayed report today, which has been related to a major server failure during the day and with it, the usual frustrations of lack of communication.    Thus, we now forward a shortened factual report, for yesterday’s trade. 

There is presently little in the way of striking fundamental news coming to the coffee markets, which remain bearish with the combination of generally good global coffee weather conditions and along with the forecasts for a bumper new Brazil coffee crop to impact over the second half of this year.    This bearish sentiment having been further fuelled by the recent negative impact of the news of the latest USDA coffee supply forecast, which anticipates a significant surplus coffee supply for the forthcoming October 2018 to September 2019 coffee year. 

The Australian Government Bureau of Meteorology has though while reporting that the conditions within the Pacific Ocean are presently neutral and free of either a La Niña or El Niño, now has an approximately 50% chance to see a new El Niño start to develop over the last quarter of this year.    This phenomenon should it develop, has the potential to bring with it some less than perfect weather conditions for the Pacific Rim coffee producing countries for the end of the year and into the new year, as it can if severe, also have some negative influences for coffee producers further afield.   But it is so far only a possibility and with the chances for a strong El Niño still questionable, the forecast has no influence upon coffee market sentiment. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.97 usc/Lb., while this equates to 34.34% 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 5,991 bags yesterday; to register these stocks at 2,058,261 bags.  There was meanwhile a smaller in number 2,369 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,148 bags. 

The commodity markets had a soft day yesterday and to see the overall macro commodity index taking a softer track for the day, with the softening index assisting to dampen spirits within most commodity markets for the day.   The WTI US Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat and Soybean markets ended the day on a weak note, while the Brent Oil, Coffee, Orange Juice, Corn, Gold and Silver markets ended the day on a more modestly softer note.   There is though something of a correction and the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is presently 0.52% higher; to see this index registered at 421.91.  While the U.S. Dollar is steady and trading at 1.319 to Sterling, at 1.158 to the Euro and with the dollar buying 3.728 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 75.72 per barrel. 

The London market ended the day yesterday on a marginally negative note but having recovered 90.9% of the earlier losses of the day by the close, while the New York market ended the day yesterday on a likewise marginally negative note and having recovered 82.9% of the earlier losses of the day by the close.  This close does little to inspire confidence within markets that lack fundamental supportive news, but seemingly the ability of the markets to experience a recovery yesterday has had some influence and the markets have so far today been trading on a positive note against the soft close yesterday, as follows: 

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

JUL    1696 – 5                                                JUL    114.10 – 0.35 

SEP    1685 – 2                                               SEP    116.40 – 0.30

NOV   1685 – 8                                               DEC    119.85 – 0.30

JAN    1693 – 8                                               MAR   123.35 – 0.30

MAR   1705 – 8                                               MAY   125.75 – 0.25

MAY   1717 – 8                                               JUL    127.95 – 0.25

JUL    1729 – 7                                               SEP    130.00 – 0.15

SEP    1743 – 6                                               DEC   132.95 unch

NOV   1757 – 6                                               MAR   135.85 + 0.10

JAN    1760 – 6                                               MAY   137.60 + 0.15