Coffee Market Report June 14 2019

With the exception of some of the conilon robusta coffee districts in the north of Espirito Santo state, the Brazil coffee districts remained dry this week, which is assisting to accelerate the new crop harvest.   In this respect the analysts Safras & Mercado have estimated that almost 40% of the new Brazil coffee crop has already been harvested. 

In this respect and based on the Safras & Mercado forecast for a new crop of 58.9 million bags, the report would indicate that so far approximately 23 million bags of the new crop have been harvested.    These coffees made up from approximately 10 million bags of conilon robusta coffees and approximately, 13 million bags of arabica coffees.  

The Brazil crop supply agency CONAB have estimated that as at the end of March this year and ahead of the new crop harvest, that private farm and trade coffee stocks in Brazil were 3,067,000 bags or 31.21% higher than the same time last year, at a total of 12,893,000 bags.   These stocks made up from 11,851,000 bags of arabica coffees and 1,043,000 bags of conilon robusta coffees, with the former arabica coffees stocks due to come to the fore to supplement the smaller arabica coffee harvest that has been forecast for this year.  Thus, to assist to maintain the prevailing relatively high volumes of monthly coffee exports, from this leading producer. 

The Agricultural Ministry in Colombia have reported that the government have allocated additional funding for the support of the country’s coffee farmers, so as to provide farmers with affordable lines of credit.   This being in addition to the funding that they are already providing, to assist farmers with their on going program to replace aged coffee trees with new disease resistant and higher yielding coffee varieties.  

The U.S. Climate Prediction Centre weather forecasting agency have reported that they foresee a 66% chance that the El Niño phenomenon within the Pacific Ocean shall continue for the next three to four months, but with only a 50% to 55% chance for it to continue for a longer period.   This is though a relatively mild El Niño that is taking place and so far, it has not brought with it any threatening weather issues for the Pacific Rim coffee producing countries and likewise, for coffee producers further afield. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.61 usc/Lb., while this equates to 35.7% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 515 bags yesterday; to register these stocks at 2,383,848 bags.  There were meanwhile a larger in number 1,908 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,700 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 16,000 bags or 0.77% over the week of trade leading up to Monday 10th. June, to see these stocks registered at 2,099,667 bags, on the day.

The commodity markets were mostly on an upside track yesterday, to see the overall macro commodity index on a positive path for the day.   The Oil, Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Natural Gas, Cocoa and Coffee markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.41% higher, to see this index registered at 393.20.   The day starts with the U.S. Dollar near to steady and trading at 1.267 to Sterling, at 1.127 to the Euro and with the US Dollar buying 3.849 Brazilian Real. 

The London and New York markets started the day on a relatively steady note and trading close to par, but with the markets tending marginally softer, into the early afternoon trade.   As the afternoon progressed, the markets returned to trade close to par, before the New York market and despite the positive influences of a buoyant macro commodity index and a firmer Brazil Real, started to attract selling pressure and triggering sell stops, to accentuate the losses.  This downside track mirrored within the London market, but in a less aggressive manner.   

The London market ended the day on a negative note and with 93.7% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 94.6% of the losses of the day intact.   This close does little to inspire and with a lack of supportive fundamental news, one might expect to see 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. 

JUL    1384 – 16                                            JUL      97.35 – 1.70

SEP    1414 – 15                                           SEP      99.75 – 1.75

NOV   1437 – 15                                           DEC    103.55 – 1.70

JAN    1459 – 15                                           MAR   107.20 – 1.60

MAR   1481 – 15                                           MAY   109.35 – 1.55

MAY   1502 – 15                                            JUL    111.25 – 1.45

JUL    1521 – 15                                            SEP    113.10 – 1.30

SEP    1541 – 15                                            DEC   115.95 – 1.15

NOV   1558 – 15                                            MAR   118.75 – 1.05

JAN    1573 – 15                                            MAY   120.50 – 1.05