Coffee Market Report July 05 2018

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of June was 38,000 bags or 3.62% higher than the same month last year, at a total of 1,087,000 bags.   This has contributed to the countries cumulative production for the first nine months of the present October 2017 to September 2018 coffee year to be 108,000 bags or 1.01% lower than the same period in the previous coffee year, at a total of 10,631,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of June were 58,000 bags or 6.02% lower than the same month last year, at a total of 906,000 bags.   This has contributed to the countries cumulative coffee exports for the first nine months of the present October 2017 to September 2018 coffee year to be 463,000 bags or 4.55% lower than the same period in the previous coffee year, at a total of 9,710,000 bags. 

The evidence that following a rain effected more modest Colombian main crop over the first five months of the present October 2017 to September 2018 coffee year, that the follow on Mitaca crop harvest that has started is seemingly coming to the fore in good volume, might well contribute towards the prevailing bearish sentiment within the New York market.  With the Colombian production for the present coffee year now catching up with the previous coffee year’s good performance, albeit that with the exports into the relatively well stocked consumer markets have so far been lagging. 

The Australian Government Bureau of Meteorology (BOM) have reported that the conditions within the southern Pacific Ocean remain neutral and with nothing in the way of either a La Niña or an El Niño in play, but they still foresee a 50% chance for a new El Niño to develop during the last quarter of this year.  This might if it develops and becomes a severe weather phenomenon prove to be weather threatening to the Pacific Rim coffee producing countries and even further afield, but with no certainty that this might actually be the case, the report has little influence upon the prevailing bearish market sentiment.  

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.29 usc/Lb., while this equates to 31.54% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange and with the market closed for the Independence Day holiday were unchanged yesterday; to register these stocks at 2,064,501 bags.  There was meanwhile also no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,823 bags. 

Many of the commodity markets were close yesterday, for the USA Independence Day holiday and with such markets that were trading, it was not really a day of clear direction.  The Oil, London robusta Coffee, Cotton and Gold markets ended the day on a positive note, while the Sugar, Cocoa and Copper markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets and with many markets off the field of play yesterday remains unchanged; to see this index registered at 418.14.  The day starts with the U.S. Dollar marginally softer and trading at 1.323 to Sterling, at 1.170 to the Euro and with the dollar buying 3.913 Brazilian Real, while North Sea Oil is near to steady in early trade and is selling at US$ 76.55 per barrel. 

The London market trading solo yesterday started the day yesterday on a steady note and soon starting to show some degree of buoyancy, but to drift back to par into the early afternoon trade.  As the afternoon progressed the market maintained its modest buoyancy and took a positive track, through to the close. 

The London market ended the day on a positive note and with 40% of the earlier gains of the day intact, which with the New York market not a feature, provides little indication for direction.  Thus, we would think that the markets with the New York market returning to the field of play today are due for a hesitant and near to steady start for early trade today, against the close in London yesterday and in New York on Tuesday, as follows:  

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

JUL    1739 + 4                                                JUL    108.35 + 0.55 

SEP    1689 + 4                                               SEP    111.90 + 0.25

NOV   1681 + 4                                               DEC    115.30 + 0.20

JAN    1685 + 4                                               MAR   118.85 + 0.15

MAR   1695 + 4                                               MAY   121.25 + 0.15

MAY   1709 + 2                                                JUL    123.65 + 0.15

JUL    1719 + 2                                                SEP    125.90 + 0.10

SEP    1730 unch                                             DEC   129.00 unch

NOV   1743 unch                                             MAR   132.25 – 0.10

JAN    1754 unch                                             MAY   134.15 – 0.10