Coffee Market Report July 25 2019

The markets remained devoid of fundamental supportive news and with the frost risk for Brazil factor now on the wane, speculative focus is turning back to the ample global coffee stocks as against the slow northern hemisphere summer holiday demand. This impacting negatively upon sentiment and resulting in the prevailing soft nature of the coffee terminal markets. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.40 usc/Lb., while this equates to 38.02% 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 3,129 bags yesterday; to register these stocks at 2,365,994 bags.  There was meanwhile a larger in number 9,228 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,148 bags. 

The commodity markets were mixed in trade yesterday and with the overall macro commodity index taking something of a sideways track for the day. The Sugar, Cotton, Copper, Orange Juice, Wheat, Soybean, Gold and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Cocoa, Coffee and Corn markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.12% higher; to see this index registered at 399.99.   The day starts with the U.S. Dollar steady and trading at 1.248 to Sterling, at 1.113 to the Euro and with the US Dollar buying 3.773 Brazilian Real. 

The London market started the day trading around par and with the New York market trading with modest buoyancy and with the London market soon moving up to trade with likewise modest buoyancy, while the New York market started to add more value. The markets retained this stance into the early afternoon trade but with the London market soon drifting back to trade around par. As the afternoon progressed the London market started to attract selling pressure and moved down into negative territory, which was followed by renewed pressure coming upon the New York market and with sell stops coming into play to take the New York market relatively deep into negative territory. Both markets retained their soft stance for the rest of the day, but with the ability to bounce back from the lows of the day. 

The London market ended the day on a negative note and with 64.3% of the earlier loses of the day intact, while the New York market ended the day on a likewise negative note and with 70.3% 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    1326 – 11    

SEP    1360 – 9                                                SEP    101.00 – 1.30

NOV   1389 – 11                                              DEC    104.70 – 1.45

JAN    1416 – 11                                              MAR   108.40 – 1.45

MAR   1444 – 11                                              MAY   110.70 – 1.45

MAY   1472 – 11                                              JUL    112.80 – 1.40

JUL    1498 – 11                                              SEP    114.80 – 1.45

SEP    1523 – 11                                              DEC   117.70 – 1.45

NOV   1547 – 10                                              MAR   120.60 – 1.45

JAN    1566 – 7                                                MAY   122.50 – 1.45