Coffee Market Report November 28 2016

The General Statistical Office in Vietnam have estimated that the countries coffee exports for November shall be approximately 16.4% higher than the same month last year, at a total of 2 million bags.    This figure if it proves to be correct they say shall bring cumulative coffee exports for the first eleven months of this year to a total of 27.33 million bags and therefore a figure that would support coffee exports for this calendar year, to end up only marginally below 30 million bags.  

Brazil’s largest coffee cooperative Cooxupe and a cooperative related to arabica coffees, has forecast that by the end of the year they would have traded approximately 6.3 million bags of arabica coffee, which would prove to be approximately 18.87% higher than they traded by the end of last year.   This report further confirms the much improved new arabica coffee crop this year but the report notes that following a relatively dismal conilon robusta coffee crop this year and with domestic roasters thus chasing higher volumes of arabica coffees, that the cooperatives sales will see higher percentages of their new crop coffees being destined for the domestic roasting industry. 

Meanwhile the Brazil soluble coffee industries and with a focus on value adding the countries coffee crop have announced on Friday that they shall with the support of the Brazil Export Promotion Agency, launch a campaign to lobby up to twenty-two countries to lower import tariffs on Brazil soluble coffees.   One might question though how much chance of success might come from such a bid to assist with the competitiveness of the Brazil soluble coffees within these markets, as most would have tariffs that are universal to soluble coffees from a host of consumer market and producer market suppliers and it is often difficult to justify special tariffs for individual geographic suppliers.  

The China General Administration of Customs have been reported that the countries coffee imports for the first ten months of this year were 17,458 Metric tons or 37.12% higher than the same period during last year, with total coffee exports from January to October recorded at 64,489 Metric Tons.  Conversely though and with a steadily increasing coffee production in the South East of the country, the China General Administration of Customs have reported that the countries coffee exports for the same ten month period this year were 36,225 Metric tons or 59.32% higher than the same period during last year, at a total of 97,292 Metric tons. 

These figures pointing towards a net export volume of 32,803 Metric Tons of coffee for the first ten months of this year, which is news that is unlikely to please the many global producers who in recent years have been looking to the development of a coffee culture in China as reason to believe in the related price support from this new market demand.   One might rather suggest as is the way within the Asian countries of late, that rising demand for agricultural products shall rather where growing conditions so allow inspire corresponding rising regional production, than to provide for a lager new market for traditional exporters.  

The March to March contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 64.00 usc/Lb., while this equates to a 41.18% price discount for the London robusta coffee market.  This arbitrage remains an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,400 bags on Friday; to register these stocks at 1,257,686 bags.  There was meanwhile a larger in volume 6,405 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,110 bags. 

The commodity markets post the U.S. Thanksgiving Day holiday and with many U.S.A. based players taking an extended holiday, had a somewhat mixed and lacklustre day on Friday and with the overall macro commodity index taking a softer track for the day.  The Natural Gas, Sugar, London robusta Coffee, Copper, Orange Juice, Soybean and Silver markets had a day of buoyancy, while the Oil, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn and Gold markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.18% lower; to see this Index registered at 418.76.   The day starts with the U.S. dollar tending marginally softer and trading at 1.250 to Sterling and 1.066 to the Euro, while North Sea Oil is steady and is selling at 45.65 per barrel. 

The London and New York markets started the day on Friday and post the Thursday holiday with both markets experiencing hesitant buoyancy through into early afternoon trade, when the New York market once again started to come under pressure and take a step back into negative territory, while the London market continued to remain on the positive side of par.    The London market briefly faltered to dip twice below par, while the New York market increased its losses of the day, but with the London market recovering back into positive territory during late trade and with the New York market taking a late bounce of its six week lows.  The London market ended the day on a hesitantly positive note and with 52.6% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 65.7% of the earlier losses of the day intact.   This close does little to inspire confidence, but with the U.S. dollar a little softer there might be some degree of hesitancy and perhaps an erratically steady start for early trade today against the prices set on Friday, as follows: 

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

NOV     2058 + 8                                                 DEC   152.30 – 2.35

JAN      2032 + 10                                              MAR   155.40 – 2.30

MAR     2015 + 5                                                MAY   157.70 – 2.40

MAY     2022 + 5                                                  JUL   159.85 – 2.35

JUL      2029 + 5                                                  SEP   161.70 – 2.35

SEP      2036 + 5                                                 DEC   164.45 – 2.20

NOV     2041 + 5                                                 MAR   166.90 – 2.20

JAN      2047 + 4                                                 MAY   168.15 – 2.10

MAR     2060 + 3                                                  JUL   169.25 – 2.00

MAY     2076 + 3                                                  SEP   170.25 – 1.80