Coffee Market Report March 13 2019

Speculative sentiment within the New York market following a steady start yesterday faltered in later in the day trade, with the good February rains in Brazil assisting towards a host of new crop forecasts that foresee this year’s biennially bearing smaller coffee crop still exceeding a healthy 55 million bags.  While in the meantime, there the market is devoid of any form of supportive fundamental news.   

The less volatile London market and with internal market price resistance within Vietnam resulting in lacklustre price fixation selling activity for the present, remains relatively steady and with the arbitrage between the New York and London markets having narrowed.   This and with the differentials that washed robusta coffees attract from the consumer markets, extrapolating to a scenario that washed robusta coffees are now at premium prices to the natural arabica coffees. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 26.83 usc/Lb., while this equates to 27.95% 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 150 bags yesterday; to register these stocks at 2,491,533 bags.  There was meanwhile, a larger in number 3,300 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,485 bags. 

The Certified Robusta coffee stocks held against the London market were seen to increase by 2,500 bags or 0.13% over the week of trade leading up to Monday 11th. March, to see these stocks registered at 1,976,333 bags, on the day. 

The commodity markets were mixed in trade yesterday, but with the overall macro commodity index showing a degree of buoyancy for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.96% higher; to see this index registered at 402.31.   The day starts with the U.S. Dollar near to steady and trading at 1.310 to Sterling, at 1.129 to the Euro and with the US Dollar buying 3.813 Brazilian Real. 

The London market started the day yesterday trading within modest negative territory and the New York market trading within modest positive territory and with the markets holding this mixed stance, into the early afternoon trade.  As the afternoon progressed the New York market added to its gains of the day, but this was short lived and renewed selling pressure came into play and to fall back towards par and with the London market likewise remaining close to par.   Increased selling pressure came to the fore in New York and with sell stops being triggered, to see this market posting relatively sharp losses and with the London market likewise, moving south into negative territory before the markets bounced back from the lows to reduce the losses of the day. 

The London market ended the day on a negative note and with 50% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 47.1% of the earlier losses of the day intact.  This close does little to inspire confidence, but with the more volatile New York market looking to be over sold and having managed to bounce back from the lows in late trade, there might be some degree of caution coming into play.  This might assist the markets towards a steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1508 – 8                                              MAR     92.80 – 1.20

MAY   1525 – 7                                              MAY     96.00 – 1.20

JUL    1535 – 5                                              JUL      98.75 – 1.25

SEP    1550 – 4                                              SEP    101.55 – 1.25

NOV   1566 – 4                                              DEC    105.45 – 1.20

JAN    1582 – 4                                              MAR   109.30 – 1.20

MAR   1601 – 3                                              MAY   111.75 – 1.15

MAY   1621 – 2                                              JUL    114.05 – 1.10

JUL    1641 – 1                                              SEP    116.25 – 1.10

SEP    1660 – 1                                              DEC   119.50 – 1.10