Coffee Market Report June 05 2019

The National Coffee Institute in Honduras have reported that the countries coffee exports for the month of May were 308,925 bags or 41.32% higher than the same month last year, at a total of 1,056,516 bags.   This they say has contributed to the country’s cumulative coffee exports for the first eight months of the present October 2018 to September 2019 coffee year to be 1.9% lower than the same period in the previous coffee year, at a total of 4,804,263 bags. 

The United States Department of Agriculture’s Foreign Agricultural Service USDA have forecast that Tanzania is due to see its coffee production for the forthcoming July 2019 to June 2020 coffee year to be 50,000 bags or 3.85% lower than the previous crop, at a total of 1,250,000 bags.  This they say, shall be related to the production of 650,000 bags of arabica coffee and 600,000 bags of robusta coffee. 

This report in terms of both the official new crop forecast and many trade and industry forecasts, would appear to be quite ambitious.  As most forecast a relatively sharp dip in coffee production for the new coffee crop in Tanzania, with indications that it might struggle to exceed 800,000 bags.   With indications that arabica coffee production might only be approximately 500,000 bags and robusta coffee production to be sharply lower, at around 300,000 bags. 

The International Coffee Organisation ICO have reported that global coffee exports for the month of April were 4.6% higher than the same month last year, at a total of 10.73 million bags.   This they say has contributed to global coffee exports for the first seven months of the present October 2018 to September 2019 coffee year to be 4.4% higher than the same period in the previous coffee year, at a total of 74.01 million bags. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 39.98 usc/Lb., while this equates to 36.95% 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 1,893 bags yesterday; to register these stocks at 2,390,727 bags.  There was meanwhile a smaller in number 320 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,593 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 5,000 bags or 0.24% over the week of trade leading up to Monday 3rd. June, to see these stocks registered at 2,083,667 bags, on the day. 

The commodity markets were mixed in trade yesterday, but with many markets taking a positive track, to see the overall macro commodity index showing some degree of buoyancy for the day.  The Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Cotton, Orange Juice and Wheat markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.25% higher, to see this index registered at 394.88.   The day starts with the U.S. Dollar near to steady and trading at 1.271 to Sterling, at 1.126 to the Euro and with the US Dollar buying 3.855 Brazilian Real. 

The London and New York markets started the day yesterday in negative territory and to see both markets taking a negative track, into the early afternoon trade.   As the afternoon progressed the London market came under pressure and fell deeper into negative territory, but the recovery of the New York market into positive territory appeared to have its influence and to see the London market move back to trade around par.  The New York market continued to react to the firmer nature of the Brazil Real and some degree of caution towards the Brazil frost season and with buy stops being triggered, to increase its gains and to see the markets taking a positive track through to the close, in what was a relatively high volume day of trade. 

The London market ended the day on a modestly positive note and with 80% of the modest gains of the day intact, while the New York market ended the day on a very positive note and with 82.6% of the earlier gains of the day intact.   This close and in terms of the volume traded over the past few days, might indicate that the markets are somewhat over bought and is likely to inspire some degree of caution and threatens to attract some increase in producer price fixation selling activity.  Which is likely to set the markets for only 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. 

JUL    1484 + 4                                             JUL     105.65 + 1.90

SEP    1504 + 4                                             SEP    108.20 + 1.90

NOV   1524 + 4                                              DEC   111.75 + 1.80

JAN    1545 + 5                                             MAR   115.20 + 1.75

MAR   1465 + 5                                              MAY   117.10 + 1.65

MAY   1584 + 4                                              JUL    118.75 + 1.55

JUL    1603 + 4                                              SEP    120.40 + 1.60

SEP    1623 + 4                                              DEC   122.95 + 1.60

NOV   1640 + 4                                              MAR   124.45 + 1.55

JAN    1657 + 4                                              MAY   126.95 + 1.50