Coffee Market Report August 02 2018

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of July were 283,018 bags or 51.01% lower than the same month last year, at a total of 271,780 bags.   This number and following a similarly modest export performance for the previous months has contributed to the cumulative coffee exports for the first ten months of the present October 2017 to September 2018 coffee year to be 2,461,669 bags or 66.96% lower than the same period in the previous coffee year, at a total of 1,214,498 bags. 

The new Indonesian robusta coffee crop is in harvest, but with a strong domestic market demand taking in the early harvest coffees at relatively good prices in terms of the soft nature of the reference prices of the London market.   Which makes one speculate that once this market is somewhat saturated with stocks, that it shall start to impact upon internal market prices and to fuel exporters with more competitively priced coffees which shall increase the affordable volumes available for the consumer market buyers. 

The National Coffee Institute in Honduras have reported that the countries coffee exports for the month of July were 11,569 bags or 1.5% lower than the same month last year, at a total of 759,885 bags.  This the Institute report contributes to the countries cumulative coffee exports for the first ten months of the present October 2017 to September 2018 coffee year to be 1.67% lower than the same period in the previous coffee year, at a total of approximately 6.5 million bags. 

The Ministry of Trade in Brazil have reported that the countries coffee exports for the month of July were 914,901 bags or 42.41% lower than the same month last year, at a total of 1,242,462 bags.   This is a relatively modest number and one might suspect that with shortage of supply coming from a significantly larger new crop, that shall contribute towards a surge in export volumes for the present month. 

The International Coffee Organisation have reported that the global coffee exports for the months of June were 2.6% higher than the same month last year, to total 10.45 million bags.   This the report states have contributed to the cumulative global coffee exports for the first nine months of the present October 2017 to September 2018 coffee year to be 0.3% higher than the same period in the previous coffee year, to total 90.86 million bags. 

The report notes that the ratio of robusta coffee exports included within the global coffee exports for the first nine months of the present coffee year has increased, to contribute towards 37.2% of these exports.  While it would make one speculate that with a significantly larger new Brazil conilon robusta coffee crop having just completed its harvest and making available approximately 4 million bags to look for a home within the consumer markets, that this ratio for robusta coffees, might further increase.   Thinking that good volumes of these not so popular in cup profile conilon coffees, might take the relatively easy route towards the certified stocks of the London exchange. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 36.96 usc/Lb., while this equates to 33.21% 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 105 bags yesterday; to register these stocks at 2,057,691 bags.  There were meanwhile a larger in number 54,007 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 94,949 bags. 

The commodity markets encountered a U.S. dollar with increasing muscle and fears over trade wars yesterday, to see the overall macro commodity index taking a softer track for the day.  The London robusta Coffee, Orange Juice and Wheat markets did however buck the trend and end the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Corn, Soybean, 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 1.21% lower; to see this index registered at 406.52.  The day starts with the U.S. Dollar steady and trading at 1.309 to Sterling, at 1.164 to the Euro and with the dollar buying 3.749 Brazilian Real, while North Sea Oil is steady and is selling at US$ 72.25 per barrel. 

The London and New York markets started the day trading on a softer note and with both markets maintaining a negative stance, into the early afternoon trade.   As the afternoon progressed the London market attracted support and moved back up into positive territory, to be followed by a recovery for the New York market.   However, and perhaps with some influence from the negative nature of the overall macro commodity index, both markets once again came under pressure and dipped back into negative territory.   The London market die however recover and close with a degree of buoyancy, but the New York market carried on to end the day on a soft note. 

The London market ended the day on a modestly positive note but with only 12.5% of the earlier gains of the day intact, while the New York market ended the day on a very negative note and with 83.7% of the earlier losses of the day intact. This close continues to paint something of a negative picture for the charts and is unlikely to inspire confidence to possibly set the markets for little better than a cautions and hesitant near to steady start for early trade today, against the prices set yesterday, as follows: 

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

SEP    1650 + 6                                               SEP    108.05 – 1.85

NOV   1639 + 2                                               DEC    111.30 – 1.80

JAN    1640 + 1                                               MAR   114.85 – 1.75

MAR   1652 + 1                                               MAY   117.25 – 1.75

MAY   1665 + 1                                                JUL    119.60 – 1.80

JUL    1678 + 2                                                SEP    121.95 – 1.75

SEP    1691 + 3                                                DEC   125.25 – 1.75

NOV   1704 + 3                                                MAR   128.40 – 1.75

JAN    1716 + 4                                                MAY   130.40 – 1.75

MAR   1727 + 4                                                JUL    132.40 – 1.75