Coffee Market Report September 13 2018

Cecafé the Brazilian coffee exporters association have reported that the country exported 768,000 bags or 33.4% more coffee in August this year than the same month last year, at a total of 3,067,000 bags.  These exports Cecafé comment, are the largest monthly volume for the past two years. 

Noticeable within these exports and following a bumper crop this year, was that within these exports the conilon robusta coffees were 508,000 bags or 1,751.7% higher than the same month last year, at a total of 537,000 bags.   Making one guess that with the cup profile of conilon robusta coffees that is somewhat acceptable to the North American roasters but not so for many European roasters, that a percentage of these coffees might be destined for the certified robusta coffee stocks of the London market. 

Potentially with these conilon robusta coffees now coming to the consumer markets, they shall provide a degree of price competition for the forthcoming new Vietnam crop.  While if they start to come to the certified robusta coffee stocks of the London exchange, they might on the longer term prove to be a bit of a negative factor for sentiment within this market in the coming months.   Albeit that presently these stocks which were registered at 1,275,667 bags on the 10th. September, are still relatively modest. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 33.34 usc/Lb., while this equates to 32.65% 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 12,282 bags yesterday; to register these stocks at 2,287,316 bags.  There were meanwhile a larger in number 19,652 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 152,802 bags. 

Many of the commodity markets encountered a softening U.S. dollar yesterday which assisted many markets to show some degree of buoyancy, with the overall macro commodity index taking a positive track for the day.   The Oil, Sugar, Cocoa, Coffee, Copper and Gold markets ended the day on a positive note, while the Cotton market ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.60% higher; to see this index registered at 404.86.  The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.303 to Sterling, at 1.162 to the Euro and with the dollar buying 4.161 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 79.45 per barrel. 

The London and New York markets started the day yesterday trading around par and with both markets remaining close to par, into the early afternoon trade.   As the afternoon progressed the London market started to attract support and moved up into positive territory and soon followed by a move north for the New York market and with both markets triggering buy stops, to accentuate the gains.  The New York market did however start to attract selling at the highs and to fall back a bit for late trade, while the London market retained most of its muscle.  

The London market ended the day on a very positive note and with 88.4% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 67.3% of the earlier gains of the day intact.  This close and with the ability of the markets to bounce back from the lows and with the funds already well sold short, might assist to inspire some degree of confidence, to set the markets for a follow through steady close for early trade today against the prices set yesterday, as follows: 

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

SEP    1582 + 38                                             SEP      97.85 + 1.65

NOV   1516 + 38                                             DEC    102.10 + 1.65

JAN    1521 + 40                                             MAR   105.50 + 1.65

MAR   1538 + 42                                             MAY   107.90 + 1.60

MAY   1556 + 43                                              JUL    110.30 + 1.60

JUL    1573 + 43                                              SEP    112.65 + 1.60

SEP    1590 + 43                                              DEC   116.05 + 1.60

NOV   1603 + 42                                              MAR   119.30 + 1.55

JAN    1615 + 41                                              MAY   121.35 + 1.60

MAR   1631 + 40                                              JUL    123.15 + 1.65