Coffee Market Report April 04 2019

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of March was 123,000 bags or 11.86% lower than the same month last year, at a total of 914,000 bags.   This has contributed to the countries cumulative production for the first six months of the present October 2018 to September 2019 coffee year to be 322,000 bags or 4.41% lower than the same period in the previous coffee year, at a total of 6,985,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of March were 141,000 bags or 14.07% higher than the same month last year, at a total of 1,143,000 bags.   This has contributed to the country’s cumulative coffee exports for the first six months of the present October 2018 to September 2019 coffee year to be 343,000 bags or 4.95% higher than the same period in the previous coffee year, at a total of 7,266,000 bags. 

The dip in coffee production reported for the month of March is likely to be followed by a similar dip in April, as reports indicate that cherry ripening is somewhat slower than normal within the southern coffee districts of Colombia, which shall delay the start of the new Mitaca crop harvest.    But with significant quantities of Mexican, Central American and Peru fine washed arabica coffees available for the consumer market industries, this delay is not really a concern for the consumer market industries.   It is though a concern for the country’s short sold exporters, who are likely to have to pay up to obtain new crop coffees to fulfil their short-term export commitments. 

The International Coffee Organisation have reported that global coffee exports for the month of February were 3.14% higher than the same month last year, at a total of 10.16 million bags.   This they further report, has contributed to the global coffee exports for the first five months of the present October 2018 to September 2019 coffee year to be 6.22% higher than the same period in the previous coffee year, at a total of 52.27 million bags. 

The respected Italian coffee roaster and significant user of Brazil coffees within their blends, has forecast that they foresee a new Brazil coffee crop to be 10.71% lower than last year’s bumper crop, to total 55 million bags.  This they foresee, shall be made up by 38 million bags of arabica coffees and 17 million bags of conilon robusta coffees.  A forecast that is at the lower end of earlier forecasts, from a host of trade and industry houses.  The forecast nevertheless, indicating that the new Brazil crop while smaller, shall and with the prospects for good levels of carryover stocks into the new crop, provide more than sufficient supply for the next October 2019 to September 2020 coffee year. 

The Australian governments Bureau of Meteorology have reported that they foresee a 70% chance for a new El Niño phenomenon to soon develop within the Pacific Ocean, but the report does not indicate any degree of potential severity for this possible El Niño and for the present it is not a factor that can be expected to change the prevailing bearish market sentiment. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 31.08 usc/Lb., while this equates to 31.76% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged yesterday: to register these stocks at 2,493,453 bags.  There was likewise no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,861 bags. 

The commodity markets were mixed in trade yesterday, to see the overall commodity index taking a modestly buoyant track for the day.  The Brent Oil, Cocoa, Coffee, Copper, Wheat, Corn and Silver markets ended the day on a positive note, while the U.S. Oil, Natural Gas, Sugar, Cotton, Orange Juice, Soybean 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 0.51% higher; to see this index registered at 410.20.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.318 to Sterling, at 1.124 to the Euro and with the US Dollar buying 3.869 Brazilian Real. 

The London and New York markets started the day yesterday trading on a modestly softer note but with the markets soon recovering and moving into modestly positive territory and maintaining this stance, into the early afternoon trade.  As the afternoon progressed the New York market soon attracted some short covering support and added to its gains and with buy stops being triggered, to extend the gains. This was followed by similar activity within the London market and with both markets taking an upside track, through to the close. 

The London market ended the day on a very positive note and with 93.5% of the earlier gains of the day intact, while the New York market ended the day on a likewise very positive note and with 88% of the earlier gains of the day intact.  This close might inspire some degree of confidence and some follow through support, 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. 

MAY   1457 + 44                                            MAY     95.35 + 3.70

JUL    1472 + 43                                            JUL       97.85 + 3.65

SEP    1487 + 41                                            SEP    100.45 + 3.55

NOV   1504 + 40                                            DEC    104.25 + 3.45

JAN    1520 + 39                                            MAR   108.10 + 3.45

MAR   1537 + 38                                            MAY   110.60 + 3.45

MAY   1556 + 37                                            JUL     112.85 + 3.40

JUL    1575 + 36                                            SEP     114.95 + 3.30

SEP    1594 + 37                                            DEC    118.10 + 3.25

NOV   1612 + 37                                             MAR   121.30 + 3.20