Coffee Market Report June 28 2018

The coffee markets continue to remain devoid of striking fundamental news, to see the markets remain within the doldrums of lacklustre trade and with little in the way of reason for anyone to believe in the ability of the markets to break out of the prevailing soft trading range. 

But with the more often than not unpredictable funds very much holding the reins of the market and particularly the important and often volatile New York market, it is difficult to adjudge the future of the markets and while all indications are for little in the way of major moves due for either market, nothing is impossible.  

Meanwhile the producers are having to live with selling coffees against the soft reference prices of both markets and with only some degree of relief coming from the relatively firm U.S. dollar, which assists to take some of the bite out of the soft prices.   But nothing substantial and for the present, most coffee farmers globally will have to live with very modest profits and for many who do not have the benefit of relatively high yielding coffee farms, it may remain a struggle to break even.  

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.11 usc/Lb., while this equates to 34.15% 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 3,002 bags yesterday; to register these stocks at 2,060,402 bags.  There were meanwhile a larger in number 3,824 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 19,429 bags. 

The commodity markets had a mixed day yesterday, but with a strong U.S. dollar in play there were many markets struggling to remain close to par and to see the overall macro commodity index taking a barely steady track for most of the day.   The Oil, Natural Gas, London robusta Coffee, Cotton, Orange Juice, Wheat and Soybean markets nevertheless ended the day on a positive note, while the Sugar, Cocoa, New York arabica Coffee, Copper, Corn, Gold and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower; to see this index registered at 419.67.  The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.307 to Sterling, at 1.153 to the Euro and with the dollar buying 3.861 Brazilian Real, while North Sea Oil is a little softer in early trade and is selling at US$ 75.65 per barrel. 

The London market started the day yesterday trading on a positive note, while the New York market started day trading around par and with the markets retaining this mixed stance, into the early afternoon trade.  As the afternoon progressed the London market and with only thin volumes of producer selling coming in over the market retained its positive stance, while the New York market and with a weakening Brazil Real having an influence, remained mostly to the south of par and towards a mixed close for the markets for the day. 

The London market ended the day on a very positive note and with 79.2% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 41.7% of the earlier losses of the day intact.   This close and with the U.S. dollar retaining its muscle early in the day is unlikely to assist towards market sentiment and to set the markets for little better than a 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    1733 + 37                                              JUL    114.30 – 0.50 

SEP    1705 + 19                                             SEP    117.45 – 0.25

NOV   1700 + 16                                             DEC    120.85 – 0.25

JAN    1702 + 12                                             MAR   124.35 – 0.25

MAR   1713 + 10                                             MAY   126.75 – 0.20

MAY   1726 + 10                                              JUL    129.05 – 0.15

JUL    1738 + 10                                              SEP    131.10 – 0.15

SEP    1751 + 8                                                DEC   134.05 – 0.15

NOV   1765 + 8                                                MAR   137.00 – 0.20

JAN    1776 + 8                                                MAY   138.75 – 0.20