Coffee Market Report January 24 2019

The Coffee Board of India have reduced their earlier new coffee crop harvest by 1,008,333 bags or 15.92%, to now forecast a new crop for the present October 2018 to September 2019 coffee year of 5,325,000 bags.  This reduction in their new crop expectations being related to the excessive and often damaging rains experienced in the country’s coffee states of Karnataka and Kerala, over July and August last year. 

In this respect the Coffee Board foresee that the new robusta coffee crop shall be 17% below their earlier forecast, at a total of 3,741,667 bags.  While they likewise foresee that the new arabica coffee crop shall be 13.6% below their earlier forecast, at a total of 1,583,333 bags.   This the further speculate shall result in the countries coffee exports for this present coffee year to be 8% below their earlier forecast, at a total of 3,833,333 bags. 

This forecast a dip in potential production and exports of Indian coffees for the present October 2018 to September 2019 coffee year had already been long since factored in to market sentiment and in terms of numbers, it does not change the global perception of significant surplus coffee supply for the present coffee year.   But in terms of some grades of Indian coffee such as their well supported parchment robusta coffees, it shall have the effect of firming up the asking export differentials, relative to the London market. 

The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.32 usc/Lb., while this equates to 33.19% 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 4,540 bags yesterday; to register these stocks at 2,488,853 bags.  There was meanwhile a smaller in number 1,815 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 36,747 bags. 

The commodity markets had a mixed day yesterday and with the majority of the markets remaining relatively close to par for the day, to see the overall macro commodity index on something of a sideways track for most of the day.  The Sugar, London robusta Coffee, Cotton, Wheat, Soybean and Silver markets ended the day on a positive note and the New York arabica Coffee market was steady for the day, while the Oil, Natural Gas, Cocoa, Copper, Orange Juice, Corn 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 0.01% lower; to see this index registered at 400.84.   The day starts with the U.S. Dollar steady and trading at 1.307 to Sterling, at 1.138 to the Euro and with the dollar buying 3.765 Brazilian Real. 

The London and New York markets started the day yesterday trading on a softer note and with both markets taking a marginally softer stance, into the early afternoon trade.   As the afternoon progressed and with the Brazil Real showing a little bit of muscle, both markets recovered to trade around par and to show some short spells of positive buoyancy.  But both markets soon encountered a nearby ceiling of selling pressure, to limit the gains for the day. 

The London market ended the day on a positive note and with 87.5% of the earlier gains of the day intact, while the New York market ended the day on a steady note and with 8.3% of the earlier gains of the day intact.    This close provides no indication of direction for the day and with the ongoing U.S.A. Federal Government closure of the U.S. Commodity Futures Trading Commission resulting in no indication of the Commitment of Traders for the leading and volatile New York market, there is further uncertainty.  Thus, one might expect to see only a hesitant steady start for early trade today, against the prices set yesterday, as follows: 

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

JAN    1504 + 7                                               MAR   103.40 + 0.05

MAR   1523 + 7                                               MAY   106.65 + 0.05

MAY   1547 + 7                                               JUL    109.40 + 0.05

JUL    1565 + 5                                               SEP    112.20 + 0.05

SEP    1583 + 4                                               DEC   116.00 unch

NOV   1602 + 4                                               MAR   119.70 – 0.10

JAN    1620 + 5                                               MAY   121.95 – 0.20

MAR   1639 + 5                                               JUL    124.10 – 0.20

MAY   1658 + 5                                               SEP    126.20 – 0.20

JUL    1674 + 5                                               DEC    129.20 – 0.25