Coffee Market Report May 02 2019

The respected United States Department of Agriculture Foreign Agricultural Service have forecast that with the new crop of fine washed arabica coffees in Peru having started to be harvested, that they forecast 120,000 bags or 2.74% increase in production for this new crop, which they foresee to be 4.5 million bags. 

These new crop Peru coffees are coming to the fore in competition to the significant stocks of unsold coffees in Central America, which are yet to come to the market.   A factor that must be a matter of concern to many exporters in Central America, who have recently been showing some degree of price resistance to the relatively low prices that are being dictated by the soft nature of the reference prices of the New York market. 

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 April were 68,828 bags or 48.84% lower than the same month last year, at a total of 72,105 bags.  This contributes to the islands cumulative robusta coffee exports for the first seven months of the present October 2018 to September 2019 coffee year to be 47,183 bags or 4.61% higher than the same period in the previous coffee year, at a total of 1,071,320 bags. 

The International Coffee Organisation have reported that the global coffee exports for the month of March were 3.8% lower than the same month last year, at a total of 10.98 million bags.  This they say contributes to the cumulative global coffee exports for the first six months of the present October 2018 to September 2019 coffee year to be 4.1% higher than the same period in the previous coffee year, at a total of 63.15 million bags. 

Meanwhile with the coffee terminal markets in New York and London remaining within a soft trading range and ahead of the slower summer roasting season for the main northern hemisphere consumer markets, one might expect to see producer price resistance continuing.   To result in prevailing lacklustre physical coffee market to continue, for some time to come.   

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 28.69 usc/Lb., while this equates to 31.49% 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 1,710 bags yesterday; to register these stocks at 2,440,438 bags.  There was meanwhile a larger in number 5,130 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,130 bags. 

The commodity markets and with many international players on holiday for the Labour Day holiday yesterday were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day.  The Brent Oil, Natural Gas, Wheat and Corn markets ended the day on a positive note, while the U.S. Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, 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 0.06% lower; to see this index registered at 397.04.   The day starts with the U.S. Dollar steady and trading at 1.304 to Sterling, at 1.120 to the Euro and with the US Dollar buying 3.919 Brazilian Real. 

The London market started the day yesterday on a negative note and the New York market trading close to par, but with the New York market soon losing its way and to join the London market in negative territory, into the early afternoon trade.   As the afternoon progressed, both markets started to lose more value and with sell stops being triggered, to accentuate the losses and with the markets heading south towards what one might consider to be a very soft close for the day.  

The London market ended the day on a negative note and with 73.8% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 89.1% of the earlier losses of the day intact.   This sharply negative close is unlikely to inspire confidence, but perhaps there shall be some degree of exhaustion on the part of the speculative and fund sectors of the markets, to assist towards a steady start for early trade today, against the soft prices set yesterday, as follows: 

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

MAY   1352 – 36                                            MAY     89.80 – 2.05

JUL    1376 – 31                                            JUL       91.10 – 2.05

SEP    1389 – 33                                            SEP      93.50 – 1.95

NOV   1406 – 32                                            DEC      97.15 – 1.85

JAN    1424 – 32                                            MAR   100.75 – 1.75

MAR   1443 – 32                                            MAY   103.05 – 1.65

MAY   1463 – 32                                            JUL     105.20 – 1.55

JUL    1485 – 32                                            SEP     107.25 – 1.50

SEP    1505 – 32                                            DEC    110.30 – 1.40

NOV   1523 – 32                                             MAR   113.30 – 1.35