Coffee Market Report January 10 2019

There are now only sixteen trading days within the London market for the Vietnamese trade, prior to the Eve of the Tet New Year holiday on Monday 4th. February.  This starting the week of celebrations to bring in the new Year of the Pig, which shall culminate on Friday 8th. February. 

The prospects for farmers looking to sell new crop stocks to finance these festivities, is something of a negative factor for sentiment within the London market, for the short term.   Albeit that with most Vietnamese coffee farmers now multi cropping their farms as an insurance against soft coffee prices and with the Vietnamese farming community relatively sophisticated in commercial terms, one might still expect to see some degree of internal market price resistance in play and not a flood of new crop coffees coming to the market. 

Meanwhile with the Brazil Real having firmed over the past week and with the reference prices of the New York arabica coffee market still relatively soft, there is internal market price resistance within Brazil and a lack of selling aggression on the part of the Brazil arabica coffee farmers.   Particularly so as on the back of a bumper crop, most have already cashed in good volumes of new crop coffees.

 Currency and Tet holidays aside, the coffee markets remain devoid of any striking supportive news for the present, with the somewhat delayed new Mexican and Central American coffee crop now threatening to bring further price fixation selling pressure to the New York market.   A factor that makes one speculate, shall create something of a nearby price ceiling for this market. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.67 usc/Lb., while this equates to 33.87% 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 5,340 bags on yesterday; to register these stocks at 2,463,070 bags.  There was meanwhile a larger in number 5,985 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 39,924 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 17,500 bags or 0.93% over the week of trade leading up to Monday 7th. January, to see these stocks registered at 1,892,000 bags, on the day. 

The commodity markets had a mostly positive day yesterday, to see the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Cocoa and London robusta Coffee markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.89% higher; to see this index registered at 405.02.   The day starts with the U.S. Dollar near to steady and trading at 1.279 to Sterling, at 1.156 to the Euro and with the dollar buying 3.681 Brazilian Real. 

The London market and New York markets started the day on a steady note and taking a positive stance, into the early afternoon trade.   As the afternoon progressed the New York market and with a firmer Brazil Real in play to provide for positive sentiment, added more value, while the London market started to come under selling pressure.   The London market started on a steady downside track for the rest of the day’s trade, while the New York market hit something of a ceiling and took an erratic downside track towards only a modestly positive close for the day.

 The London market ended the day on a negative note and with 80.8% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with only 13.9% of the earlier gains of the day intact.  This close and with the New York market having faltered later in the day, does little to inspire confidence and one might expect 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. 

JAN    1514 – 24                                             MAR   105.30 + 0.25

MAR   1535 – 21                                             MAY   108.50 + 0.40

MAY   1554 – 20                                              JUL    111.40 + 0.45

JUL    1571 – 20                                              SEP    114.30 + 0.55

SEP    1588 – 21                                              DEC   118.20 + 0.60

NOV   1607 – 21                                              MAR   121.95 + 0.65

JAN    1626 – 19                                              MAY   124.35 + 0.65

MAR   1646 – 19                                              JUL    126.65 + 0.65

MAY   1667 – 20                                              SEP    128.85 + 0.65

JUL    1684 – 20                                              DEC    132.00 + 0.70