Coffee Market Report May 15 2019

The Tanzania Coffee Board and with the harvest of the North Western districts robusta coffees soon to start and the new arabica coffee crop cherries developing, have forecast that the overall new crop shall be approximately 23% lower than the past crop, at a total of approximately 833,340 bags.   This dip they relate to the combination of biennial bearing and spells of dry weather, that were experienced within some of the coffee districts of the country. 

The Australian Government Bureau of Meteorology have reported that the El Niño signals within the Pacific Ocean are weakening and have reduced to only 50% the chances for a stronger El Niño to develop, over the coming months.   This report for the present, removes any speculation of short-term weather-related threat to the Pacific Rim coffee producers and likewise, for coffee producers further afield. 

The coffee markets bounced back yesterday, in line with both a perception that by the end of the year the return to a modest deficit global coffee supply for the coming October 2019 to September 2020 coffee year and a firming of the overall macro commodity index, which supported sentiment.  But one might see this as little more than a correction, than a change in the prevailing over supplied bearish sentiment.  

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 27.81 usc/Lb., while this equates to 30.58% 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 275 bags yesterday; to register these stocks at 2,435,682 bags.  There was meanwhile also no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,700 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to register 39,833 bags or 2.03% increase over the week of trade leading up to Monday 13th. May, to register these stocks at 2,004,833 bags, on the day. 

The commodity markets were mostly taking a positive track in trade yesterday, to see the overall macro commodity index taking an upside track for the day.  The Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets ended the day on a positive note, while the Gold market ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 1.44% higher, to see this index registered at 390.95.   The day starts with the U.S. Dollar steady and trading at 1.291 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.976 Brazilian Real. 

The London and New York markets started the day yesterday on a firmer note and to see the markets take this positive track, into the early afternoon trade.   As the afternoon progressed both markets and along with the positive nature of the overall macro commodity index, started to add value and particularly so, the London market and with buy stops being triggered, to accentuate the gains for the London market.   The New York market likewise started to trigger buy stops and added to its gains, but soon hitting a ceiling and selling pressure coming to the fore, to limit the gains to little more than a correction from the previous day, while the London market managed to hold on to a better percentage of the impressive gains of the day. 

The London market ended the day on a positive note and with 71.9% of the earlier gains of the day intact, while the New York market likewise ended the day on a positive note and with 45.8% of the earlier losses of the day intact.  This close but with both markets seemingly hitting a selling ceiling might generate some degree of caution and to set the markets for only a hesitant steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1367 + 47                                            MAY     89.55 + 1.30

JUL    1392 + 46                                            JUL       90.95 + 1.35

SEP    1408 + 48                                            SEP      93.30 + 1.30

NOV   1427 + 48                                            DEC      96.85 + 1.35

JAN    1446 + 48                                            MAR   100.40 + 1.30

MAR   1465 + 48                                            MAY   102.60 + 1.20

MAY   1486 + 48                                            JUL     104.65 + 1.25

JUL    1505 + 48                                            SEP     106.55 + 1.20

SEP    1526 + 48                                            DEC    109.40 + 1.15

NOV   1545 + 48                                             MAR   112.30 + 1.10