Coffee Market Report May 07 2019

The London market was closed for the Bank Holiday in the UK yesterday, to leave the New York market trading solo for a shortened day’s trade.   With the New York market edging towards a new thirteen year low within an environment of relatively thin trade and with the funds perhaps, reacting to the news of the reduced net short sold position of the Non-Commercial Speculative sector of the market, as at the 30th. April.  Albeit that this has most likely been increased again. 

Most producer countries are experiencing price resistance within their internal markets and with the consumer market industries tending to buy on a hand to mouth basis, as buyers remain uncertain as to where the lows might be for both the New York and London markets.  While the producer price resistance that is being experienced, is resulting in the hardening of the asking export price differentials for new business. 

The question with generally good volumes of producer stocks and with a large new Brazil crop now starting, is how long can price resistance slow global coffee export volumes.   As it would seem for the present and so long are there are no and unforeseen climatic problems coming to the fore, that eventually these coffees have to be cashed in and to come to the consumer markets. 

Meanwhile the prevailing producer price resistance is resulting in the lacklustre producer market sales being mostly above tenderable parity and thus, there are presently  very few coffees being tendered to the Certified coffee stocks, for both the New York and London markets. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 29.14 usc/Lb., while this equates to 32.32% 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 1,702 bags yesterday; to register these stocks at 2,438,992 bags.  There was meanwhile a smaller in number 1,211 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,990 bags. 

These Certified stocks of the New York market remain dominated by coffees from Honduras, which account for 64.07% of the stocks, with the producer bloc of Mexico and Central America accounting for 81.79% of the stocks.  Followed by Peru which accounts for 11.1% of the stocks and with minimal shares of the stocks, being related to Brazil, Burundi, Colombia, India, Papua New Guinea, Rwanda and Uganda. 

The commodity markets lacked participation by some of the markets in London, but with the remaining markets setting the overall macro commodity index on a softer track for the day.   The Sugar, Cocoa and arabica Coffee markets all softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.89% lower; to see this index registered at 391.75.   The day starts with the U.S. Dollar near to steady and trading at 1.312 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.968 Brazilian Real. 

The New York market started the day yesterday trading near to par, but to soon come under some pressure and to dip back into negative territory and setting the trend for the rest of the shortened five hours of trade for the day.   The market did however manage to bounce off the lows for the day, to end the day with only 37.5% of the earlier losses of the day intact. 

The London market returns to the field of play today and following a soft close for the end of last week and a softer close for the New York market yesterday, while the prices set within both markets is unlikely to inspire much in the way of confidence.   To most probably set the markets for only a hesitant near to steady start for early trade today, against the prices set in London on Friday and New York yesterday, as follows:  

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

MAY   1321 – 15                                            MAY     88.80 – 0.45

JUL    1345 – 19                                            JUL       90.15 – 0.45

SEP    1362 – 17                                            SEP      92.55 – 0.40

NOV   1381 – 16                                            DEC      96.15 – 0.40

JAN    1400 – 16                                            MAR     99.70 – 0.40

MAR   1420 – 16                                            MAY   102.10 – 0.30

MAY   1441 – 15                                            JUL     104.25 – 0.25

JUL    1462 – 15                                            SEP     106.35 – 0.20

SEP    1482 – 15                                            DEC    109.45 – 0.20

NOV   1501 – 14                                             MAR   112.55 – 0.20