Coffee Market Report March 01 2019

The majority of the main arabica coffee districts in Brazil have reported good rains for the month of February, but with there are many conilon robusta coffee districts in South East Brazil that have reported below average to no rains for the month.  This latter factor beginning to threaten the forecast for a bumper record conilon robusta coffee crop for this year, but with many farms in the north of Espirito Santo state and a leading conilon area utilising irrigation, the problem of lack of rains is so far not so much of a problem. 

Trade within the internal market in Brazil is reported to be very slow and with price resistance to the dictates of the prevailing soft New York market, tending to slow sales.  While with the country looking to the close of business for the first three days of next week for the Carnival holidays, one would imagine that there is already a good reason for many players within the local coffee trade to be taking on a holiday stance today. 

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of February were 67,144 bags or 99.67% higher than the same month last year, at a total of 134,512 bags.   This does however, follow some low volume export months and contributed to the islands cumulative robusta coffee exports for the first five months of the present October 2018 to September 2019 coffee year to be 302,426 bags or 27.19% lower than the same period in the previous coffee year, at a total of 810,010 bags. 

Internal market trade in Asian robusta coffees in the meantime remains slow and lacklustre, as within Vietnam there remains a degree of price resistance, while it is still a couple of months to the fore before the new Indonesian robusta coffee crop starts to come into play.  In the meantime, with a smaller new robusta coffee crop being harvested in India, there is also a degree of price resistance. 

The Ivory Coast and the largest producer of robusta coffee in West Africa has reported that the countries coffee exports for the month of January were 3,200 bags or 14.78% higher than the same month last year, at a total of 24,850 bags.   It is still early days in terms of the new crop and forecasts foresee that the country is more than likely to see coffee exports for 2019 to match last years performance, to get close to 1.3 million bags. 

The May to May contracts arbitrage between the London and New York markets remained unchanged yesterday, to register this at 28.73 usc/Lb., while this equates to 29.18% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged yesterday; to register these stocks at 2,477,001 bags.  There was meanwhile, a 640 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,660 bags. 

The commodity markets were mixed in trade yesterday, but with many markets tending softer and the with the overall macro commodity index taking a sideways to softer track for the day.   The U.S. Oil, Natural Gas, Cotton and Orange Juice markets ended the day on a positive note, while the Brent Oil, Sugar, Cocoa, Coffee, Wheat, Corn, Soybean, 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 0.21% lower; to see this index registered at 402.94.   The day starts with the U.S. Dollar steady and trading at 1.325 to Sterling, at 1.137 to the Euro and with the US Dollar buying 3.751 Brazilian Real. 

The London market started the day yesterday trading around par and the New York market with some modest buoyancy, to see the markets retain this stance into the early afternoon trade.   As the afternoon progressed the New York market attracted support and moved up into positive territory and with the London market remaining close to par, but with the New York market soon coming under pressure and moving back into negative territory and joined by the London market, but with the markets bouncing of the lows in later trade. 

The London market ended the day on a negative note and with 64.7% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 32.2% of the earlier losses of the day intact.  This close does little to inspire confidence, but the ability of the markets to bounce back from the lows of the day and with the prospects for trade out of Brazil slowing ahead of the Carnival holiday, one would think that there shall be some degree of caution.   To set the markets for a steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1520 – 10                                            MAR     95.20 – 0.50

MAY   1537 – 11                                            MAY     98.45 – 0.50

JUL    1544 – 8                                               JUL    101.15 – 0.55

SEP    1556 – 7                                              SEP    103.90 – 0.60

NOV   1572 – 6                                              DEC    107.70 – 0.70

JAN    1588 – 7                                              MAR   111.40 – 0.80

MAR   1605 – 9                                              MAY   113.75 – 0.85

MAY   1624 – 9                                              JUL    116.05 – 0.85

JUL    1643 – 9                                              SEP    118.25 – 0.85

SEP    1662 – 9                                              DEC   121.55 – 0.85