Coffee Market Report July 05 2019

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of June was 124,000 bags or 11.41% higher than the same month last year, at a total of 1,211,000 bags.   This has contributed to the countries cumulative production for the first nine months of the present October 2018 to September 2019 coffee year to be 110,000 bags or 1.05% lower than the same period in the previous coffee year, at a total of 10,342,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of June were 229,000 bags or 25.28% higher than the same month last year, at a total of 1,135,000 bags.   This has contributed to the country’s cumulative coffee exports for the first nine months of the present October 2018 to September 2019 coffee year to be 681,000 bags or 7.01% higher than the same period in the previous coffee year, at a total of 10,391,000 bags. 

If one is to presume that Colombia shall mirror production last year for the last three months of the present coffee year of 3,355,000 bags, one might expect to see coffee production for the present coffee year to come close to 14 million bags, which many have already forecast.   But the problem remains with the soft reference prices of the New York market, against which the Colombian farmers are having to delivery coffee and the Colombian Coffee Federation continues to meet fellow producers to find a solution for this problem.  A difficult and perhaps impossible factor to solve, within the environment of global free market trade. 

This weekend shall see the global coffee market players keeping a close eye upon the cold front that shall impact the main arabica coffee districts of South East Brazil to prospects of which, have inspired the recent days of speculative short covering buying activity.   Albeit that most forecasters while acknowledging the advancing cold front, speculate that it is unlikely to bring freezing temperatures to most of the coffee farms.  While one might comment that the well above average rains experienced for the early winter months for the coffee farmers would result in relatively high ground water retention levels, which makes the moist coffee trees less vulnerable to damage from a light frost. 

Meanwhile the respected analysts Safras & Mercado in Brazil have estimated that so far approximately 62% of the new Brazil crop has been harvested, which would be related to 78% of the new conilon robusta crop and to 55% of the new arabica coffee crop.   Indicating that so far, 22 million bags of arabica coffees have been harvested and 14 million bags of conilon robusta coffees have been harvested. 

There has been a relatively modest start to the new monsoon season over the main coffee districts in South West India this year, which has brought to the fore speculation that it might have some impact upon the prospects for the developing new crop.   One might though speculate that there have after all been rains and that so long as the monsoon season continues to bring good rains to the fore, that there might not actually be a problem for this new crop.   

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 46.79 usc/Lb., while this equates to 41.17% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange closed for the Independence Day holiday remained unchanged yesterday; to register these stocks at 2,373,661 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,344 bags. 

The commodity markets lacked the participation of many of the U.S.A based markets, which were affected by the Independence Day holiday yesterday, to provide no direction for the overall macro commodity index for the day.  The London Cocoa, Sugar and Coffee markets ended the day on a positive note, while Brent Oil ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets could not be calculated for the day, to see index registered at 399.69.   The day starts with the U.S. Dollar steady and trading at 1.258 to Sterling, at 1.128 to the Euro and with the US Dollar buying 3.801 Brazilian Real. 

The London market started the day yesterday with some degree of follow through buoyancy, to take a positive track into the early afternoon trade.   As the afternoon progressed the market started to attract further support and to add some more value and setting the market trading solo for the day, towards a positive close for the day. 

The London market ended the day on a positive note and with 79.2% of the earlier gains of the day intact, to perhaps with the pending cold weekend for Brazil to the fore and the firmer nature of the Brazil Real, to set both markets for a steady start for early trade today, against the prices set in New York on Wednesday and in London yesterday, as follows: 

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

JUL    1443 + 19                                            JUL    112.25 + 4.00

SEP    1474 + 19                                           SEP    113.65 + 4.00

NOV   1502 + 17                                           DEC    117.35 + 4.00

JAN    1525 + 16                                           MAR   120.85 + 3.95

MAR   1550 + 16                                           MAY   123.00 + 3.95

MAY   1574 + 16                                            JUL    124.80 + 3.95

JUL    1593 + 16                                            SEP    126.50 + 3.95

SEP    1611 + 16                                            DEC   129.20 + 3.90

NOV   1626 + 16                                            MAR   132.00 + 3.90

JAN    1643 + 16                                            MAY   133.90 + 3.90