Coffee Market Report June 22 2018

The respected Brazilian analysts Safras & Mercado have reported that so far approximately 18.8 million bags of the new Brazil crop has been harvested, which they estimate to be 31% of the new crop.  In this respect they estimate that 49% of the new conilon robusta coffee crop has been harvested, while they estimate that 25% of the new arabica coffee crop has been harvested.   Albeit they comment that much of the new arabica coffee crop that has already been harvested is still going through the drying process and has yet to enter the market, but this is only a very short delay for the drying to be completed. 

In terms of Brazil weather and with the main coffee districts now enjoying their traditional harvest friendly dry and cool weather conditions, there are forecasts for a new cold front to soon come into play.   However, this cold front while bringing cooler weather conditions, is not foreseen to be frost threatening.   

The physical coffee markets are presently slow and lacklustre in nature, with generally well covered consumer industry buyers tending to be generally side-lined from chasing new coffee supply while with the prevailing soft nature of the reference prices of the coffee terminal markets, many farmers are tending to show some degree of price resistance.   This scenario unlikely to change on the short term, as the main consumer industries within the northern hemisphere now head towards their slow summer holiday roasting season. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.09 usc/Lb., while this equates to 33.63% 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 318 bags yesterday; to register these stocks at 2,054,432 bags.  There was meanwhile a larger in number 5,175 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,378 bags. 

The commodity markets had a mixed day yesterday and with many markets tending to falter, to see the overall macro commodity index taking a modestly softer track for the day.   The WTI US Oil, Natural Gas, Sugar, London robusta Coffee, Cotton, Wheat, Corn and Silver markets ended the day on a positive note, while the Brent Oil, Cocoa, New York arabica Coffee, Copper, Orange Juice, Soybean and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.28% lower; to see this index registered at 420.23.  The day starts with the U.S. Dollar tending marginally softer and trading at 1.326 to Sterling, at 1.162 to the Euro and with the dollar buying 3.765 Brazilian Real, while North Sea Oil is near to steady in early trade and is selling at US$ 73.05 per barrel. 

The London market started the day yesterday trading marginally south of par and with the New York market following an early pip up, following suit and with both markets remaining marginally south of par into the early afternoon trade.   As the afternoon progressed the New York market attracted support and moved back up into modest positive territory, while the London market remained marginally below par but with the New York market once again faltering and heading back into negative territory.  But with the London market attracting late in the day support against a lack of producer price fixation selling activity, to climb back into positive territory. 

The London market ended the day on a positive note and with 85.7% of the earlier gains of the day intact, while the New York market ended the day on a negative note but having recovered 71.4% of the earlier losses of the day by the close.    This close does little to inspire and one might think that the markets are due for another hesitant and slow near to steady start for early trade today against the prices set yesterday, as follows: 

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

JUL    1717 + 11                                              JUL    112.60 – 1.05 

SEP    1701 + 6                                               SEP    116.25 – 0.40

NOV   1698 + 4                                               DEC    119.70 – 0.40

JAN    1703 + 4                                               MAR   123.25 – 0.35

MAR   1714 + 3                                               MAY   125.60 – 0.35

MAY   1727 + 4                                               JUL    127.90 – 0.30

JUL    1739 + 4                                               SEP    129.90 – 0.30

SEP    1752 + 5                                               DEC   132.85 – 0.25

NOV   1766 + 5                                               MAR   135.75 – 0.20

JAN    1771 + 5                                               MAY   137.50 – 0.20