Coffee Market Report June 12 2019

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of May were 32,182 bags or 24.47% lower than the same month last year, at a total of 99,345 bags.  This contributes to the islands cumulative robusta coffee exports for the first eight months of the present October 2018 to September 2019 coffee year to be 15,001 bags or 1.3% higher than the same period in the previous coffee year, at a total of 1,170,665 bags. 

There remains for the present price resistance on the part of the farmers for their new crop robusta coffees, which are in harvest and this is likely with the resulting hardening of the asking price export differentials to the reference prices of the London market, is likely to continue to retard export volumes.   Fortunately for the farmers, the country has a vibrant and less price sensitive domestic coffee market, which one would speculate can for the short term, offer some more profitable prices for their rising new crop coffee stocks. 

The Vietnam Customs Authorities have reported that the countries coffee exports of mostly robusta coffees for the month of May were 8.31% higher than the earlier government forecast, to record coffee exports for the month at 2,437,000 bags.   This they state, has resulted in the countries cumulative coffee exports for the first five months of this year to be 11.8% lower than the same period last year, at a total of 12,962,633 bags. 

All indications are that due to internal market price resistance, that there still remain good volumes of coffee stocks being held by farmers and internal traders.   This one might expect, following the countries last crop that was estimated to well exceed 29 million bags and with no problems foreseen for prospects of another large crop to start being harvested in October this year, to result in good volumes of coffee being available for export during the third quarter of this year. 

With the coffee terminal markets once more on a downside track, there remains internal market price resistance within the producer bloc of Mexico and Central America and within the Colombia and now with the new crop in Peru being harvested, it is likewise the case within this fine washed arabica coffee producer.   But with still reasonable stock levels within the main consumer markets and good volumes of Brazil coffees coming to the markets, this factor of price resistance is really only slowing physical coffee selling activity and one might expect to see significant volumes of washed arabica coffees hanging over the market for the third quarter of the year. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.32 usc/Lb., while this equates to 35.5% 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 25 bags yesterday; to register these stocks at 2,383,333 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,908 bags. 

The commodity markets and with the U.S. dollar tending marginally softer were mostly steady to buoyant in trade yesterday, to see the overall macro commodity index taking a positive track for the day.  The Natural Gas, Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note and the Oil and Cocoa markets were steady for the day, while the Cotton and Coffee markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.49% higher, to see this index registered at 392.00.   The day starts with the U.S. Dollar near to steady and trading at 1.272 to Sterling, at 1.133 to the Euro and with the US Dollar buying 3.856 Brazilian Real. 

The London market and New York markets started the day yesterday trading in negative territory and to see the markets taking a softer track, into the early afternoon trade.  As the afternoon progressed and with the positive influences of the overall macro commodity index and a stronger Brazil Real, the New York market recovered and moved up into positive territory and with the London market moving back up to par, but this recovery was not sustained and both markets came under pressure in late trade, to drop back into negative territory and towards a soft close for the day. 

The London market ended the day on a negative note and with 89.7% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 91.7% of the losses of the day intact.   This close does little to inspire confidence and one might expect to see little better than a cautious and hesitant 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    1388 – 27                                            JUL      97.00 – 1.60

SEP    1415 – 26                                           SEP      99.50 – 1.65

NOV   1438 – 25                                           DEC    103.25 – 1.65

JAN    1461 – 23                                           MAR   106.90 – 1.60

MAR   1482 – 22                                           MAY   109.05 – 1.65

MAY   1503 – 21                                            JUL    110.85 – 1.65

JUL    1522 – 20                                            SEP    112.60 – 1.60

SEP    1542 – 20                                            DEC   115.35 – 1.60

NOV   1558 – 20                                            MAR   118.05 – 1.65

JAN    1573 – 20                                            MAY   119.80 – 1.70