Coffee Market Report July 24 2019

The Australian government bureau of meteorology have reported that conditions within the pacific ocean are neutral with no indication of either a nearby El Niño or La Niña phenomenon developing, which indicates little chance for weather related issues for the pacific rim coffee producing countries. 

The lack of reports related to frost damage to arabica coffee from Brazil and with the prospects of warmer weather continued to dampen speculative spirits within the coffee markets yesterday, which assisted to take the markets on a down side track for the day. While historically the frost threat season for Brazil was forseen to remain in place until the middle of August, one would think that market focus shall already be thinking post frost season and looking towards the pending start of the late September spring and summer rain season for Brazil. 

Presently though, longer range weather forecasts foresee no threat of drought and one might anticipate that many shall start to speculate upon the prospects of a large Brazil coffee crop due for the coming year, which would continue to depress coffee market sentiment. Albeit that one always has to keep in mind that with an approximate 3 million bags per annum increase in global coffee consumption, the markets do require a steady year by year increase in coffee supply. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.20 usc/Lb., while this equates to 39.30% price discount for the London Robusta coffee market. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday; to register these stocks at 2,362,865 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,376 bags. 

The certified Robusta coffee stocks held against the London exchange were seen to increase by 155,333 bags or 7.07% over the week of trade  leading up to Monday the 22nd of July, to see the stocks registered at 2,352,333 bags, on the day. 

The commodity markets were mixed in trade yesterday and with the US dollar showing some degree of buoyancy, to see the overall macro commodity index taking a modest positive track for the day. The Oil, Sugar, Cotton, Corn and Silver markets ended the day on a positive note and the Wheat market was steady for the day, while the Natural Gas, Cocoa, Coffee, Copper, Orange Juice, Soybean and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.24% higher; to see this index registered at 399.50.   The day starts with the U.S. Dollar steady and trading at 1.244 to Sterling, at 1.114 to the Euro and with the US Dollar buying 3.773 Brazilian Real. 

The London and New York markets started the day yesterday trading either side of par, but with both markets soon attracting selling pressure to move back into negative territory which continued, into the early afternoon trade. As the afternoon progressed selling pressure continued to dominate and with sell stops assisting to accentuate the loses, to take both markets on a downside track for the rest of the days trade. 

The London market ended the day on a negative note and with 96% of the earlier loses of the day intact, while the New York market ended the day on a very negative note and with 94.9% of the earlier loses of the day intact. This softer close is unlikely to inspire confidence and one would think that the markets are due little better than a cautious and hesitant steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1337 – 17    

SEP    1369 – 24                                              SEP    102.30 – 2.80

NOV   1400 – 23                                              DEC    106.15 – 2.80

JAN    1427 – 23                                              MAR   109.85 – 2.80

MAR   1455 – 22                                              MAY   112.15 – 2.80

MAY   1483 – 20                                              JUL    114.20 – 2.80

JUL    1509 – 18                                              SEP    116.25 – 2.75

SEP    1534 – 15                                              DEC   119.15 – 2.75

NOV   1557 – 9                                                MAR   122.05 – 2.75

JAN    1573 – 9                                                MAY   123.95 – 2.75