Coffee Market Report August 02 2019

The Brazil governments export report for the month of July has reported that coffee exports for the month were 1,575,653 bags or 126.82% higher than the same month last year, at a total of 2,818,116 bags. 

The Brazil analysts Safras & Mercados who have forecast the new Brazil crop at 58.9 million bags, have estimated that so far approximately 90% of the new crop has been harvested. This related to almost all of the new conilon robusta crop having been harvested, while the tail end of the higher grown new arabica coffees are still to be harvested. 

A new cold front is entering the south of Brazil at present and is due to impact over the weekend and into early next week, but while there are expectations for low single digit temperatures over some coffee districts, few are forecasting any threat of frost. Thus, sentiment in terms of Brazil weather, remains mostly bearish. 

Reports indicate that internal market farm and internal trade coffee stocks in Vietnam are now relatively low, with farmers and internal traders continuing to show strong price resistance for their remaining stocks. Looking to take advantage of short sold exporters and exporters looking to do new short-term export contracts, so as to add some value for their remaining coffee stocks. This resulting in a hardening of asking export price differentials for new business out of Vietnam, for the present. 

The November to December contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 40.25 usc/Lb.   This equates to 39.93% 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 2,355,884 bags.  There was meanwhile a 360 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,556 bags. 

The commodity markets took a tumble yesterday, to see the overall macro commodity index taking a relatively sharp downside track for the day. The Gold market ended the day on a positive note, while the Oil markets were sharply lower for the day and the Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 2.14% lower; to see this index registered at 386.82.   The day starts with the U.S. Dollar steady and trading at 1.210 to Sterling, at 1.108 to the Euro and with the US Dollar buying 3.839 Brazilian Real. 

The London and New York markets started the day yesterday trading on a softer note and with both markets remaining under pressure and increasing their losses into the early afternoon trade. As the afternoon progressed and with the negative influences of both the soft nature of the overall macro commodity index and a weaker Brazil Real, both markets encountered increased selling pressure and with sell stops being triggered, to accentuate the losses. Both markets managing to bounce back partially from their lows but nevertheless, carrying on towards a soft close for the day. 

The London market ended the day on a negative note and with 78% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 75.8% of the earlier losses of the day intact. This close does little to inspire confidence, but one might expect to encounter a degree of caution and hesitancy and perhaps setting the markets for a near to steady start for early trade today, against the prices set yesterday, as follows: 

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

SEP    1307 – 31                                             SEP      97.25 – 2.40

NOV   1335 – 32                                             DEC    100.80 – 2.50

JAN    1363 – 31                                             MAR   104.50 – 2.55

MAR   1391 – 30                                             MAY   106.85 – 2.55

MAY   1419 – 30                                             JUL    109.00 – 2.55

JUL    1448 – 30                                             SEP    111.10 – 2.55

SEP    1476 – 28                                             DEC   114.15 – 2.55

NOV   1503 – 26                                              MAR   117.20 – 2.50

JAN    1528 – 26                                              MAY   119.15 – 2.50

MAR   1547 – 26                                              JUL    120.95 – 2.50