Coffee Market Report June 13 2019

The world’s largest coffee cooperative Cooxupé in Brazil have reported that their members have so far harvested 26.65% of their new crop coffees, which is well ahead of the 11.47% that was harvested at the same time last year.  

The acceleration of the Brazil new crop coffee harvest is coming in on top of significant volumes of carryover stocks of past crop arabica coffees, which are due to fuel relatively high volumes of export sales over the coming months.   But there are concerns on the part of the farmers that despite some assistance from the softening of the Brazil Real to the US dollar over the past months, that the farm gate income from coffee sales is sharply lower, which is impacting negatively upon profit margins. 

This is of course a problem for coffee producers in general and has inspired the value-add Juan Valdez coffee shop chain that has 131 coffee shops within their domestic Colombian market and a further 13 coffee shops in Ecuador, Chile, USA, Spain and Panama, to target increasing their international market presence.  With the intent to increase their presence within their existing markets, to return to the Mexican market and to open shops in the Argentine and on the longer term, to open up stores within many of the European and Asian markets. 

The coffee markets remain devoid of striking fundamental news and for the present, remain mostly in the hands of the speculative sector of the market, in terms of price direction.  Leading to something of a day by day roller coaster picture for the charts, while the physical coffee market and with the slow northern hemisphere summer season to the fore, remains lacklustre in nature. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 36.68 usc/Lb., while this equates to 36.14% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange remained unchanged yesterday; to register these stocks at 2,383,333 bags.  There were meanwhile 5,700 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,608 bags. 

The commodity markets encountered some degree of renewed muscle for the U.S. dollar and were mixed in trade yesterday, but with the relatively sharp softening of the influential oil markets, the overall macro commodity index took something of a sideways track for the day.   The Sugar, Cocoa, Coffee, Cotton, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Copper and Orange Juice markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.11% lower, to see this index registered at 391.58.   The day starts with the U.S. Dollar near to steady and trading at 1.269 to Sterling, at 1.130 to the Euro and with the US Dollar buying 3.867 Brazilian Real. 

The London market and New York markets started the day yesterday trading around par and the New York market trading in modest positive territory but to settle back and to see both markets trading close to par, into the early afternoon trade.   As the afternoon progressed the New York market started to attract support and to move back into positive territory and with buy stops assisting to add value, while the London market followed suit in a more sedate manner and to set the markets on track for a positive end for the day. 

The London market ended the day on a positive note and with 93.3% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 93% of the gains of the day intact.   This close does somehow indicate the ability of the markets to resist falling into a lower trading range and one might think that it might inspire a follow through steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1400 + 12                                            JUL      99.05 + 2.05

SEP    1429 + 14                                           SEP    101.50 + 2.00

NOV   1452 + 14                                           DEC    105.25 + 2.00

JAN    1474 + 13                                           MAR   108.80 + 1.90

MAR   1496 + 14                                           MAY   110.90 + 1.85

MAY   1517 + 14                                            JUL    112.70 + 1.85

JUL    1536 + 14                                            SEP    114.40 + 1.80

SEP    1556 + 14                                            DEC   117.10 + 1.75

NOV   1573 + 15                                            MAR   119.80 + 1.75

JAN    1588 + 15                                            MAY   121.55 + 1.75