Coffee Market Report July 18 2018

The Brazil Real has halted its slide against the U.S. dollar and in the meantime with the New York market tending softer, it has to contribute towards price resistance and slowing selling activity of new crop coffees within the internal market in Brazil.    Thus, while the majority are seemingly very bearish towards the coffee markets, one might foresee the chance that the combination of what is evidently becoming an oversold market and slowing producer price fixation selling activity, shall soon see the markets bounce back from the lows.   But there remains no doubt that there are good volumes of both arabica and robusta coffees still due to come to the markets and without support of any threatening climatic issues, the recovery would most likely be very modest. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.23 usc/Lb., while this equates to 31.33% 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 3,348 bags yesterday; to register these stocks at 2,050,801 bags.  There were meanwhile a larger in number 4,643 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 36,026 bags. 

Noticeable within these Certified arabica coffee stocks held against the New York exchange, is that Honduras alone and with a total of 1,000,265 bags within the stocks, contributes to a dominant 48.77% of the stocks.   Followed by Mexico with a 16.23% share of the stocks and thereon by Peru, with an 11.01% share of the stocks and Nicaragua with an 8.13% share of the stocks.   The balance of nine countries presently contributing to these stocks having minimal contributions. 

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 51.000 bags or 4.83% over the week of trade leading up to Monday 16th. July, to see these stocks registered at 1,106,500 bags, on the day. 

The commodity markets were mixed in trade yesterday and with the U.S. dollar showing some muscle, to negatively affect many markets and to contribute towards a soft overall macro commodity index for much of the day.   The Oil and Cotton markets ended the day on a steady note, while the Sugar, Cocoa, Coffee, Copper and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.72% lower; to see this index registered at 405.94.  The day starts with the U.S. Dollar steady and trading at 1.308 to Sterling, at 1.163 to the Euro and with the dollar buying 3.838 Brazilian Real, while North Sea Oil is steady and is selling at US$ 70.55 per barrel. 

The London and New York markets started the day yesterday on a steady note and trading around par and with both markets showing some modest buoyancy, but with the markets slipping into modest negative territory and triggering sell stops, which took the markets further south.   The markets remained under pressure for the rest of the day, towards a soft close. 

The London market ended the day on a negative note and with 76.2% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 77.8% of the earlier losses of the day intact.   This close does very little to inspire any degree of confidence, but with perhaps the funds already well sold and many producers stepping back from the soft market prices, it might contribute towards another steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1753 – 16                                              JUL    105.70 – 1.75 

SEP    1654 – 16                                             SEP    109.25 – 1.05

NOV   1645 – 14                                             DEC    112.75 – 1.05

JAN    1646 – 13                                             MAR   116.35 – 1.05

MAR   1657 – 12                                             MAY   118.80 – 1.10

MAY   1669 – 12                                              JUL    121.20 – 1.10

JUL    1681 – 12                                              SEP    123.55 – 1.10

SEP    1690 – 12                                              DEC   126.90 – 1.15

NOV   1702 – 12                                              MAR   130.20 – 1.15

JAN    1713 – 12                                              MAY   132.25 – 1.15