Coffee Market Report October 11 2018

The Brazilian Coffee Exporters Association Cecafé have noted that while the country exported 27% more coffee during the month of September when compared to the same month last year, that the 2.73 million bags exported could have been much more, if there had not been the problem of more shipping space availability.   This lack of shipping space presently causing delays in shipments of forward coffee contracts, which Cecafé estimate has reduced the contracted for shipment in September coffee export volumes. 

Meanwhile the Brazilian Agricultural Ministry have forecast that the country that relies on agricultural exports for approximately 50% of its export income, that the agricultural exports for this year shall be worth approximately 100 billion U.S. Dollars.   Noting that that agriculture contributes to approximately 25% of the countries total economy and is presently a strong sector, which shall contribute towards an approximate 1.4% gross national product growth for this year. 

The Indian Coffee Exporters Association have voiced concerns over their ability to maintain market share for Indian coffees for this present October 2018 to September 2019 coffee year, following the devastating rains that hit some of the main coffee growing districts in South West India this year.    Suggesting that the countries exporters might suffer from in excess of a 30% shortage in internal market coffee supply, to fuel their traditional export demand.  But also noting that in terms of the significant global coffee surplus supply that is due for this year, that this is a factor that shall not cause concerns on the part of most of the consumer market industries. 

The physical coffee market is due for something of a long weekend with the annual Swiss Coffee Trade Association taking place over today and tomorrow and with the related Thursday Cocktail Party and the Friday Gala Dinner attracting leading representatives of just about every major consumer market coffee industry player and along with, representatives of every major coffee trade company.   This event that has returned to Geneva this year is now seem to be more of a global coffee event, than a Swiss coffee event. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.88 usc/Lb., while this equates to 31.17% 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 845 bags yesterday; to register these stocks at 2,414,121 bags.  There were meanwhile a larger in number 3,567 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 61,088 bags. 

The commodity markets along with the equity markets, were under pressure yesterday, to see the overall macro commodity index on the back foot for the day.   The Orange Juice and Gold markets nevertheless ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Soybean 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 0.64% lower; to see this index registered at 414.50.   The day starts with the U.S. Dollar steady and trading at 1.321 to Sterling, at 1.155 to the Euro and with the dollar buying 3.755 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 82.15 per barrel. 

The London and New York markets started the day yesterday with some degree of buoyancy, but with the London market soon coming under pressure and slipping back to trade below par and to see the markets taking a mixed stance, into the early afternoon trade.   As the afternoon progressed and with the negative influences of the soft overall macro commodity index playing its part upon sentiment and along with a weaker Brazil Real coming into play, the New York market came under pressure and slipped back into negative territory.   This triggered sell stops with accelerated the losses for the New York market and followed by similar selling and softness for the London market, but with both markets experiencing a degree of exhaustion and bouncing back from the lows and towards a more modest soft close for the day. 

The London market ended the day on a negative note but having recovered 78.6% of the earlier losses of the day by the close, while the New York market ended the day on a negative note and with 59.5% of the earlier losses of the day intact.   This close and the reversal of the fortunes for the markets and likewise commodity markets in general is likely to inspire some degree of caution and one would think that the coffee markets are due a hesitant and only close to steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1682 – 11                                             DEC    111.90 – 1.25

JAN    1698 – 6                                               MAR   115.50 – 1.20

MAR   1713 – 5                                               MAY   117.95 – 1.20

MAY   1726 – 6                                                JUL    120.25 – 1.25

JUL    1738 – 7                                                SEP    122.55 – 1.25

SEP    1752 – 7                                                DEC   125.90 – 1.25

NOV   1766 – 7                                                MAR   129.15 – 1.25

JAN    1780 – 7                                                MAY   131.20 – 1.25

MAR   1796 – 7                                                JUL    132.95 + 1.25

MAY   1808 – 7                                                SEP    134.70 + 1.25