Coffee Market Report June 29 2018

The General Statistical Office in Vietnam have with the export registrations for the month in hand, estimated that the countries coffee exports for the month of June were approximately 2.5 million bags.  These exports they calculate, have a value of 287 million U.S. dollars. 

The report has also calculated that based on these figures the cumulative coffee exports from Vietnam for the first six months of this year were approximately 9.6% higher than the same period last year, at a total of in excess of 17.13 million bags.   The report does however illustrate the relatively soft coffee prices for this year, as it estimates that despite the relatively sharp rise in the volume of exports, the value of these exports was 6% lower than the same period last year, at a total of 1.98 billion U.S. dollars. 

In the meantime, though and with good volumes of the past crop coffees already sold, there is evidence of price resistance within the internal market of Vietnam and with the farmers and internal traders holding back for higher value for their remaining stocks, but for the present, this is not putting much pressure upon the short-sold exporters.   Many exporters still hold sufficient stocks to cater for their commitments, while with international trade and demand somewhat lacklustre at present, there is not much pressure to chase additional supply.  

Coffee trade out of Indonesia is also quite slow and with many of the internal trade still somewhat slow post the just completed Eid Al-Fitri holiday, but one might expect that post this weekend that it shall be a return to business as usual within Indonesia.   Albeit that with good domestic coffee roasting industry demand, that the internal prices shall remain relatively firm and not be favourable for good volumes of coffee exports for at least the short term.  

Brazil continues with the seasonal cool and dry conditions over most of the main coffee districts, which is warm enough to not threaten frost and likewise, to be conducive to the progress of the new crop harvest.  In this respect the respected local analyst Safras & Mercado have estimated that so far 23 million bags or 38% of the new crop has been harvested, which they appropriate to 57% of the new conilon robusta coffee crop having been harvested and to 32% of the new arabica coffee crop having been harvested. 

These new crop coffees from Brazil are now starting to come to the market and especially so for the conilon robusta coffees that in the early days shall be mostly chasing the strong domestic roasting industry demand, while the new arabica coffees are only expected post some settling storage to come to the market in volume in August.   But in the meantime, and with the main consumer markets in the northern hemisphere heading into their slow summer holiday season, there is only limited consumer market demand for nearby supply of Brazil coffees.   The important U.S. market tending to kick off the summer holiday season with their Independence Day celebrations, on Wednesday next week. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.78 usc/Lb., while this equates to 33.5% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,112 bags yesterday; to register these stocks at 2,054,290 bags.  There were meanwhile a smaller in number 2,755 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 22,184 bags. 

The commodity markets had another mixed day yesterday and with the U.S. dollar relatively steady for the day, to see the overall macro commodity index taking something of a flat track for much of the day.  The WTI U.S. Oil, Sugar, Cocoa, Orange Juice and Soybean markets ended the day with some degree of buoyancy, while the Brent Oil, Natural Gas, Coffee, Cotton, Copper, Wheat, 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 0.22% lower; to see this index registered at 418.77.  The day starts with the U.S. Dollar showing tending a little softer and trading at 1.311 to Sterling, at 1.164 to the Euro and with the dollar buying 3.862 Brazilian Real, while North Sea Oil is a little softer in early trade and is selling at US$ 76.35 per barrel. 

The London and New York markets started the day yesterday trading marginally south of par, but with both markets soon attracting selling activity and moving deeper into negative territory.   This set the trend for the rest of the day and with both markets trading south of par for the rest of the day and through to a soft close for the day.  

The London market ended the day on a negative note and with 66.7% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 81% of the earlier losses of the day intact.   This close does not inspire much confidence, but with the U.S. dollar tending a little softer it might attract some industry price fixation buying activity out of the European market, to assist towards a steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1730 – 3                                                JUL    112.15 – 2.15 

SEP    1697 – 8                                               SEP    115.75 – 1.70

NOV   1692 – 8                                               DEC    119.20 – 1.65

JAN    1697 – 5                                               MAR   122.70 – 1.65

MAR   1708 – 5                                               MAY   125.10 – 1.65

MAY   1720 – 6                                                JUL    127.40 – 1.65

JUL    1732 – 6                                                SEP    129.50 – 1.60

SEP    1745 – 6                                                DEC   132.55 – 1.50

NOV   1759 – 6                                                MAR   135.55 – 1.45

JAN    1770 – 6                                                MAY   137.30 – 1.45