Coffee Market Report July 12 2019

The Brazil Analysts Safras & Mercado have reported that so far approximately 68% of the new Brazil coffee crop has been harvested, which is made up from approximately 25 million bags of arabica coffees and 15 million bags of conilon robusta coffees.  Indicating that this relates to approximately 60% of the new arabica coffee crop and 84% of the new conilon robusta coffee crop, having been harvested. 

Weather reports from Brazil indicate overall warmer weather for this week, following the previous weekends cold front, with brought with it only minimal frost damage.  A further cold front is forecast to impact upon South East Brazil for the coming week, but with forecast that it shall not be frost threatening.   

Meanwhile with a softer U.S. dollar in play and the related firming of the Brazil Real, reports indicate that internal market new crop trade has slowed, with some degree of price resistance being the main hinderance to selling activity.   The exporters are also encountering slow demand from the main northern hemisphere consumer markets, as many players are presently focused upon their summer holiday season, which one might guess is contributing to less aggressive internal market demand. 

The Vietnam customs authorities have reported that the country exported 2,374,133 bags of coffee during the month of June, which was 2.6% lower than the previous month.   While they say that this contributes to the cumulative coffee exports for the first six months of this year being 11.5% lower than the same period last year, at a total of 15,317,300 bags. 

The Vietnam customs authorities have noted within the report that due to the soft reference prices of the coffee terminal markets this year, that the value of the coffee exports for the first six months of this year 21.7% lower than the same period last year, at a total of 1.57 billion US dollars.   This well illustrating the value problem that global coffee producers are presently encountering, which has been addressed over the past two days within the second World Coffee Producers Forum in Campinas, São Paulo State, Brazil.  Albeit that representatives of the Vietnam coffee industry were not actively in attendance, for this meetings.  

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 42.22 usc/Lb., while this equates to 39.48% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange were seen to decrease by 1,595 bags yesterday; to register these stocks at 2,367,916 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags. 

The commodity markets had a mixed day of trade yesterday, but with many markets tending softer, to see the overall macro commodity index taking a flat to softer track for the day.   The New York arabica Coffee, Wheat, Corn and Soybean markets ended the day on a positive note and the U.S. Oil and London robusta Coffee markets were near to steady for the day, while the Brent Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Gold and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.12% lower; to see this index registered at 401.18.   The day starts with the U.S. Dollar steady and trading at 1.255 to Sterling, at 1.127 to the Euro and with the US Dollar buying 3.756 Brazilian Real. 

The London and New York markets started the day yesterday trading with modest buoyancy and with both markets in line with positive influence of the stronger Brazil Real maintaining a positive stance, into the early afternoon trade.  As the afternoon progressed both markets started to falter and to move back to trade close to par and with the London market finally slipping back into negative territory, but gaining some support to limit the losses in late trade, while the New York market bounced back into positive territory. 

The London market ended the day on a modestly negative note and with 37.5% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 72.4% of the earlier gains of the day intact.   This mixed but steady to marginally firmer close for the day does not provide much in the way of direction, but is likely to set the markets for 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    1396 – 1                                              JUL    105.50 + 1.15

SEP    1427 – 3                                             SEP    106.95 + 1.05

NOV   1456 – 4                                             DEC    110.75 + 1.05

JAN    1484 – 3                                             MAR   114.35 + 0.95

MAR   1509 – 2                                             MAY   116.65 + 0.95

MAY   1532 – 1                                              JUL    118.65 + 0.90

JUL    1552 unch                                          SEP    120.55 + 0.85

SEP    1570 unch                                          DEC   123.35 + 0.80

NOV   1586 unch                                          MAR   126.10 + 0.70

JAN    1603 unch                                          MAY   127.85 + 0.55