Coffee Market Report November 21 2018

The USDA have also reported that they have assessed the present April 2018 to March 2019 Indonesian coffee crop to be 1.8% lower than their earlier estimate, at a total of 10.9 million bags.  This crop that they relate 1.2 million bags of arabica coffees and to 9.7 million bags of robusta coffees, being only marginally 4.81% higher than their assessment of the previous April 2017 to March 2018 crop. 

The respected U.S Department of Agriculture Foreign Agriculture Service USDA have reported that due to the excessive monsoon rains in South West India this year, that they have reduced their new crop forecast by 5.45%, to now foresee a new coffee crop for the October 2018 to September 2019 coffee year of 5.2 million bags.  This forecast foreseeing a new crop that shall be made up by 1.5 million bags of arabica coffees and 3.7 million bags of robusta coffees. 

These figures that indicate flat coffee supply from Asia’s second and third largest coffee producers for the coming months are of no concern to the consumer markets at present, as the focus remains upon the significantly larger new Brazil crop this year, which with near perfect weather in South East Brazil at present, is indicating the potential for a follow on large new Brazil crop for next year.  

Meanwhile in terms of coffee weather, the Australian Government Bureau of Meteorology have remained with their view that there is a 70% chance that a new El Niño phenomenon shall come into play within the Pacific Ocean by the end of this year.   This possibility if for the present not causing any fear or market supportive concern, as unless it would be a severe El Niño, it would be unlikely to impact significantly upon global coffee production. 

The March 2019 to March 2019 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.65 usc/Lb., while this equates to 35.38% 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 2,315 bags yesterday; to register these stocks at 2,456,519 bags.  There were meanwhile a larger in number 9,311 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,248 bags. 

The commodity markets encountered renewed muscle for the U.S. dollar yesterday and with most markets coming under pressure for the day, to see the overall macro commodity index taking a softer track for the day.  The Wheat and Soybean markets nevertheless ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Corn, 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 1.59% lower; to see this index registered at 408.7.   The day starts with the U.S. Dollar near to steady and trading at 1.280 to Sterling, at 1.138 to the Euro and with the dollar buying 3.757 Brazilian Real. 

The London market started the day yesterday on a positive note, while the New York market started the day on a negative note and with the markets maintaining this mixed stance, into the early afternoon trade.  As the afternoon progressed the New York market made a brief recovery, but with perhaps some influence from the negative nature of the overall macro commodity index playing a part, to slip back into negative territory.   With the London market starting to come under pressure, to follow the New York market into negative territory, for late in the day’s trade.  

The London market ended the day on a negative note and with 77.8% 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 little to inspire any confidence and is most likely due to set the markets for a hesitant and cautious 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   1599 – 10                                             DEC    110.65 – 1.70

JAN    1625 – 7                                               MAR   114.90 – 1.75

MAR   1637 – 7                                               MAY   117.75 – 1.70

MAY   1651 – 6                                                JUL    120.40 – 1.70

JUL    1665 – 5                                                SEP    123.00 – 1.65

SEP    1677 – 5                                                DEC   126.55 – 1.70

NOV   1690 – 5                                                MAR   130.10 – 1.70

JAN    1704 – 4                                                MAY   132.50 – 1.70

MAR   1718 – 3                                                JUL    134.80 – 1.70

MAY   1741 + 3                                                SEP    136.85 – 1.70