Coffee Market Report April 18 2019

The New York market plunged to new thirteen and half year lows yesterday, as bearish sentiment over the prospects of the start of the new Brazil crop over and above the prevailing surplus coffee supply seemingly encouraged speculative short selling pressure upon the market.   This resulting in the value of the second month of the board falling by 15.3% for the year, from an already soft end to the previous year. 

The decline in the market and ahead of an Easter long weekend for the majority of the mainstream consumer markets will most likely inspire the already complacent industry buyers to step back and to hold out for new lows, while many producers continue to show price resistance within their internal markets, to result in continued lacklustre physical market trade. 

The London market shall be closed tomorrow and again on Monday, while the New York market shall be closed tomorrow and to trade solo and for a shortened trading day on Monday. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 25.60 usc/Lb., while this equates to 28.56% 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 640 bags yesterday; to register these stocks at 2,479,336 bags.  There was meanwhile no change to the number of bags ending grading for this exchange; to register these pending grading stocks at 7,897 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a near to steady track for the day.  The Cocoa, Cotton, Copper, Orange Juice, Wheat and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Coffee, Corn, 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 0.12% lower; to see this index registered at 406.60.   The day starts with the U.S. Dollar steady and trading at 1.305 to Sterling, at 1.130 to the Euro and with the US Dollar buying 3.938 Brazilian Real. 

The London and New York markets started the day yesterday trading close to par and with both markets showing some degree of modest buoyancy, but with the markets soon falling back to take a modest negative stance into the early afternoon trade.   As the afternoon progressed, the New York market and with a weaker Brazil Real in play, started to come under pressure and to trigger sell stops, which drove the market deeper into negative territory and with the London market following suit, in a more subdued and less aggressive manner.   This set the markets on track for somewhat sideways negative trade through to the close, against a relatively high volume of trade for the day.   

The London market ended the day on a negative note and with 82.6% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 83.5% of the earlier losses of the day intact.  This close paints a negative picture for the charts and does not inspire confidence, but one might suspect that following the high volume of trade yesterday, that there might be some degree of exhaustion within an oversold New York market.   To most likely set the markets for a cautious steady start for early trade today, against the soft prices set yesterday, as follows: 

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

MAY   1386 – 16                                            MAY     87.05 – 3.45

JUL    1412 – 19                                            JUL       89.65 – 3.30

SEP    1431 – 18                                            SEP      92.25 – 3.30

NOV   1452 – 16                                            DEC      96.15 – 3.30

JAN    1471 – 16                                            MAR     99.95 – 3.25

MAR   1492 – 14                                            MAY   102.40 – 3.25

MAY   1513 – 14                                            JUL     104.75 – 3.15

JUL    1533 – 14                                            SEP     107.00 – 3.05

SEP    1552 – 14                                            DEC    110.25 – 3.00

NOV   1566 – 14                                             MAR   113.45 – 2.95