Coffee Market Report July 14 2018

12th. July, 2018.
The Customs authorities in Vietnam have reported that the countries coffee exports of mostly Robusta coffees for the month of June were marginally higher than had been forecast earlier in the month, to total 2,604,300 bags. These exports they say have contributed to the countries cumulative coffee exports for the first six months of this year to be 10.8% higher than the same period last year, at a total of 17,234,367 bags.

The Vietnam Customs authorities within the same report do however make note that while the volume of coffee exports for the first six months of this year were 10.8% higher than the same period last year, that the revenue from these exports was 5.1% lower than the same period last year. This data further illustrating the falling revenue for coffee producers globally, as they strive to profit from coffees that they are obliged to sell against the prevailing soft reference prices of the international coffee terminal markets.

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 36.21 usc/Lb., while this equates to 32.32% 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 4,550 bags yesterday; to register these stocks at 2,049,857 bags. There was an increase by 3,446 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,498 bags.

It was a softer day on the commodity markets, the market news shifting attention to proposed further increases in tariffs by the USA, targeted at China which contributed to uncertainty across the commodity sector yesterday. The US Dollar posted a stronger day against other major currencies as the day progressed. The Oil markets led the downward trend, to register a lower day across the board, with the exception of Orange Juice it was a softer day for Corn, Coffee, Cocoa, Copper, Cotton, Sugar, Soybean, Wheat and a lower day for precious metals, Gold, Silver, Platinum and Palladium in negative territory on the close. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets registered a lower day by 2.0741% to close at 408.90. The day starts with the U.S. Dollar steady, trading at 1.32 to Sterling, at 1.167 to the Euro and with the Dollar buying 3.877 Brazilian Real, while North Sea Oil is steady in early trade and is selling at US$ 72.89 per barrel.

The coffee markets started the day on a softer note yesterday, in comparatively good volume for the early morning session. Once established in lower territory the floor was set with limited movement for the better part of the day, both markets hovered around unchanged, the stronger Brazil Real providing support and producer selling activity for the most part, withdrawn. The firmer US Dollar and the overall developments on the macro spilled into the coffee markets as the latter day progressed, primarily speculative and fund activity leading the way lower and pushing the markets through stops along the way, in New York. The stronger selling pressure appeared to wane toward the end as both markets posted a recovery from the lows of the day, in London in the last few minutes and in New York the range settled into a negative albeit rangebound territory for the latter part of the day, to see the close in both markets in negative territory, above the lows of the day after a fair day in volume terms, as follows:

London Robusta US$/MT New York Arabica Usc/Lb.

JULY  1,752 - 38   JULY 109.20 - 2.75
SEPT 1,672 - 33   SEPT 112.05 - 2.75
NOV  1,662 - 30    DEC 115.60 - 2.70
JAN   1,662 - 28    MAR 119.25 - 2.65
MAR  1,672 - 24    MAY 121.75 - 2.60
MAY   1,684 - 24   JULY 124.15 - 2.55
JULY  1,697 - 24   SEPT 126.50 - 2.50
SEPT 1,709 - 24   DEC 129.90 - 2.40
NOV   1,721 - 24   MAR 133.15 - 2.40
JAN   1,732 - 24    MAY 135.25 - 2.35