Coffee Market Report October 31 2018

The Ivory Coast as the largest of the West African robusta coffee producers, have reported that the countries coffee exports for the month of September were 41,500 bags or 62.68% higher than the same month last year, at a total of 107,700 bags.   This has contributed to the country’s cumulative coffee exports for the first nine months of this year, to be 273,833 bags or 47.77% higher than the same period last year, to total 847,083 bags. 

The evidence of the seemingly free flow of these Ivory Coast robusta coffees that are mostly destined for the Mediterranean rim countries and North African consumer markets, indicates that despite the softer nature of the reference prices of the London market, that there has been little in the way of internal market price resistance within the country.   With the export figures indicating that the country is well on track to meet the forecast exports for the year, in excess of one million bags. 

Meanwhile in terms of fundamental news for the coffee markets, the markets remain devoid of any supportive news.   Weather reports from all the main coffee producing countries indicate presently, no reasons for concern and with these indicating that the present surplus supply of coffee is likely to carry on for the coming year and into the follow-on October 2019 to September 2020 coffee year.   A very much frightening prospect, for coffee producers in general.   But of course, weather is often unpredictable and one never knows might come to the fore in the coming months, but for the present the lack of threat to medium to longer term global coffee production fuels bearish sentiment within the coffee market. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 36.38 usc/Lb., while this equates to 32.37% 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 3,358 bags yesterday; to register these stocks at 2,448,491 bags.  There were meanwhile a smaller in number 2,450 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 35,117 bags. 

The commodity markets encountered a firming U.S. dollar yesterday, to see most markets turning south later in the day and to see the overall macro commodity index taking a softer track for the day.   The Natural Gas, Cocoa and Silver markets nevertheless ended the day on positive note, while the Oil, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean 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 0.88% lower; to see this index registered at 409.94.  The day starts with the U.S. Dollar steady and trading at 1.271 to Sterling, at 1.134 to the Euro and with the dollar buying 3.696 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 75.80 per barrel. 

The London market started the day yesterday taking a softer stance, while the New York market started the day on a modestly positive note, but with the New York market soon drifting back to trade around par and with the both markets trading hesitantly close to par, into the early afternoon trade.   As the afternoon progressed and with a firm U.S. dollar in play and with the negative influences of the softening overall macro commodity index, both markets started to come under pressure and to see the markets heading towards a softer close for the day. 

The London market ended the day on a negative note and with 61.1% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and 88.1% of the earlier losses of the day intact.   This close does not assist to paint a very good picture for the charts and with the dollar holding on to its renewed muscle, is unlikely to fuel confidence in the markets and one might think that the markets are due little better than a near to steady start for early trade today.   Against the prices set yesterday, as follows: 

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

NOV   1658 – 10                                             DEC    112.40 – 1.85

JAN    1676 – 11                                             MAR   116.25 – 1.80

MAR   1692 – 12                                             MAY   118.75 – 1.85

MAY   1706 – 12                                              JUL    121.20 – 1.80

JUL    1720 – 13                                              SEP    123.50 – 1.80

SEP    1734 – 14                                              DEC   126.90 – 1.75

NOV   1748 – 14                                              MAR   130.20 – 1.70

JAN    1763 – 12                                              MAY   132.20 – 1.70

MAR   1775 – 12                                              JUL    134.00 – 1.65

MAY   1787 – 12                                              SEP    135.65 – 1.55