Coffee Market Report June 20 2019

The rainfall reports from Brazil see most of the main coffee districts in the South East of the country and with the exception of the southern state of Parana and the north of the state of Espirito Santo have had a dry week and with the forecast for these conditions to continue for the coming week, to see the new crop harvest in full swing. 

So far, the estimate is that already approximately 18 million bags of the arabica coffees have been harvested and along with 11 million bags of the conilon robusta coffees, which with significant quantities of carry over arabica coffee stocks from last years crop, assists to support a steady supply of Brazil coffees to the consumer markets. 

Today is the Corpus Christi holiday for Brazil and with many taking tomorrow as a bridging holiday, to make for an extended long weekend, which shall take Brazil hedge selling activity away from the markets.   A factor that might assist towards a degree of market buoyancy. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.72 usc/Lb., while this equates to 36.47% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen increase by 46 bags yesterday; to register these stocks at 2,381,455 bags.  There was meanwhile a larger in number 6,140 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,737 bags. 

The commodity markets were mixed in trade yesterday, but with many markets taking a softer track for the day, to see the overall macro commodity index taking a downside track the day.   The Oil, Cocoa, New York arabica Coffee, Cotton, Gold and Silver markets ended the day on a positive note and the London robusta Coffee market was steady for the day, while the Natural Gas, Sugar, Copper, Orange Juice, 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 0.5% lower, to see this index registered at 391.66.   The day starts with the U.S. Dollar tending softer and trading at 1.269 to Sterling, at 1.127 to the Euro and with the US Dollar buying 3.838 Brazilian Real. 

The London market started the day trading on a softer note and the New York market trading around par and with the London market soon recovering and to see both markets trading around par, into the early afternoon trade.  As the afternoon progressed the New York market and with speculative short covering activity coming into play, moved up into positive territory, but with the London market remaining close to par.  

The London market ended the day on a steady note, while the New York market ended the day on a positive note and with 75% of the earlier gains of the day intact.  This close and with a firmer Brazil Real and the Brazil trade off the field of play, is most likely to inspire a steady to perhaps even buoyant start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1340 unch                                          JUL      96.25 + 1.95

SEP    1372 unch                                         SEP      97.95 + 1.35

NOV   1400 + 2                                             DEC    101.50 + 1.25

JAN    1424 + 2                                             MAR   104.95 + 1.15

MAR   1447 + 2                                             MAY   107.05 + 1.10

MAY   1470 + 2                                              JUL    108.90 + 1.05

JUL    1489 + 2                                              SEP    110.75 + 1.05

SEP    1509 + 2                                              DEC   113.70 + 1.10

NOV   1525 + 2                                              MAR   116.60 + 1.10

JAN    1542 + 2                                              MAY   118.35 + 1.15