Coffee Market Report May 24 2019

The respected U.S. Department of Agriculture Foreign Agriculture Service USDA have forecast that the next Vietnam crop that is due to start being harvested in October, shall be marginally higher than the last crop, to total 30.5 million bags.   This crop they foresee, to be made up from 29.1 million bags of robusta coffees and 1.4 million bags of arabica coffees and added to this, they foresee that carryover stocks from the present coffee year shall add 2.133 million bags of coffee, to confirm continued good supply into the next October 2019 to September 2020 coffee year. 

Meanwhile in Brazil the analysts Safras & Mercado who have forecast the new Brazil crop to be 58.9 million bags, have reported that so far 9.5 million bags or 16.1% of the new crop has already been harvested.  This well above the 11% of the crop that had been harvested at the same time last year and marginally above the 15% five-year average harvested, at the same time in the previous years.  Noting that this is related to approximately 30% of the new conilon robusta coffee crop having been harvested and along with, 10% of the new arabica coffee crop. 

The cold front that has been reported earlier this week, has started to impact upon the main coffee districts in south east Brazil and bringing with it rains and cold weather and with a follow-on cold front expected, which shall cause interruptions to the new crop harvest.   The reports of this cold front have brought with them some cautious market supportive talk of frost risk, but most this early within the winter season, to not foresee any reality to such a event occurring.  It has nevertheless, assisted towards some degree of coffee market buoyancy. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 31.4 usc/Lb., while this equates to 33.58% 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 1,005 bags yesterday; to register these stocks at 2,429,567 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 the influential Oil markets taking a tumble, to see the overall macro commodity index taking a softer track for the day.  The Natural Gas, Cocoa, Coffee, Cotton, Copper, Orange Juice, Gold and Silver markets ended the day on a positive note, while the Oil, Sugar, Wheat, Corn and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.34% lower, to see this index registered at 388.66.   The day starts with the U.S. Dollar near to steady and trading at 1.266 to Sterling, at 1.118 to the Euro and with the US Dollar buying 4.042 Brazilian Real. 

The London and New York markets started the day yesterday on a negative note and with both markets taking a negative track, into the early afternoon trade.  As the afternoon progressed the markets and against a slightly weaker Brazil Real remained within negative territory but with the talk of frost and some recovery for the Real coming to the fore, it assisted to trigger a late in the day recovery for the New York market and with the London market following suit, in a more subdued manner. 

The London market ended the day on a positive note and with 72.7% of the earlier gains of the day intact, while the New York market ended the day on likewise positive and with 77.8% of the earlier gains of the day intact.  This recovery and positive close for the day and along with some weather uncertainty for Brazil, might assist towards a cautious follow through steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1352 + 11

JUL    1369 + 8                                              JUL       93.50 + 1.75

SEP    1389 + 7                                              SEP      95.80 + 1.65

NOV   1412 + 7                                              DEC      99.30 + 1.65

JAN    1431 + 6                                              MAR   102.75 + 1.60

MAR   1450 + 6                                              MAY   104.95 + 1.55

MAY   1469 + 6                                              JUL     106.95 + 1.45

JUL    1487 + 4                                              SEP     108.90 + 1.40

SEP    1507 + 3                                              DEC    111.85 + 1.40

NOV   1523 + 3                                               MAR   114.85 + 1.45