Coffee Market Report May 23 2019

The respected U.S. Department of Agriculture Foreign Agriculture Service USDA have forecast that the new Brazil coffee crop shall be only a modest 8.49% lower than last years bumper and surplus coffee crop, at a total of 59.3 million bags.   This what some might foresee to be an ambitious number, being related to a 14.94% fall in arabica coffee production for this year to total 41 million bags, but a 10.24% increase in conilon robusta coffee production, to total 18.3 million bags. 

The report does come in against a number of respected Brazil coffee crop forecasts that are not far off the number coming to the fore from the USDA, which can only contribute towards the prevailing bearish sentiment within the coffee markets.   A sentiment that has only been interrupted this week, by some cold weather fears emanating from Brazil, but most foreseeing this as an unlikely threat. 

The USDA have also reported that they forecast the new coffee crop out of India for the forthcoming October 2019 to September 2020 coffee year shall be 310,000 bags or 6% higher than the previous crop, at a total of 5.48 million bags.   This crop related to a 1.483 million bags of arabica coffees and to 3.997 million bags of robusta coffees. 

The USDA who estimate that domestic consumption in India stall total 1.27 million bags of coffee, which shall be countered by 1.307 million bags of coffee imports.  Therefore, to foresee that India shall export in the form of the combination of green coffees and value added processed coffees, a total of 5.555 million bags. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 30.02 usc/Lb., while this equates to 32.72% 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 6,800 bags yesterday; to register these stocks at 2,430,572 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,489 bags. 

The commodity markets were mixed in trade yesterday but with many markets on the back foot for the day, to see the overall macro commodity index taking a softer track for the day.  The Orange Juice, Corn, Soybean and Silver markets ended the day on a positive note and the Gold market was steady for the day, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper and Wheat markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.88% lower, to see this index registered at 389.99.   The day starts with the U.S. Dollar steady and trading at 1.264 to Sterling, at 1.114 to the Euro and with the US Dollar buying 4.040 Brazilian Real. 

The London market ended the day on a modestly negative note and having recovered 84.2% of the earlier losses of the day, while the New York market ended the day on a negative note and with 82.1% of the earlier losses of the day intact.  This softer close and along with the negative nature of the USDA Brazil coffee report, is unlikely to inspire little better than a near to steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1341 – 3

JUL    1361 – 3                                              JUL       91.75 – 1.15

SEP    1382 – 3                                              SEP      94.15 – 1.00

NOV   1405 – 3                                              DEC      97.65 – 1.00

JAN    1425 – 3                                              MAR   101.15 – 0.95

MAR   1444 – 3                                              MAY   103.40 – 1.00

MAY   1463 – 4                                              JUL     105.50 – 0.95

JUL    1483 – 4                                              SEP     107.50 – 0.95

SEP    1504 – 4                                              DEC    110.45 – 0.95

NOV   1523 – 4                                               MAR   113.40 – 1.00