Coffee Market Report September 04 2019

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of August was 139,000 bags or 11.05% lower than the same month last year, at a total of 1,119,000 bags.   This has contributed to the countries cumulative production for the first eleven months of the present October 2018 to September 2019 coffee year to be 17,000 bags or 0.13% higher than the same period in the previous coffee year, at a total of 12,778,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of August were 138,000 bags or 12.78% higher than the same month last year, at a total of 1,218,000 bags.   This has contributed to the country’s cumulative coffee exports for the first eleven months of the present October 2018 to September 2019 coffee year to be 915,000 bags or 7.72% higher than the same period in the previous coffee year, at a total of 12,767,000 bags. 

The International Coffee Organisation ICO have reported that the global coffee exports for the month of July were 9.5% higher than the same month last year, at a total of 11.34 million bags. This they say, has contributed to the cumulative global coffee exports for the first ten months of the present October 2018 to September 2019 coffee year to be 10.2% higher than the same period in the previous coffee year, at a total of 109.41 million bags. 

The same ICO report has estimated that global coffee consumption will have risen for this present October 2018 to September 2019 coffee year to 164.77 million bags, which is well below what they estimate to be the coffee supply for this coffee year. However, they estimate that global coffee consumption is rising by approximately 2.1% per annum and in this respect, would indicate that global coffee consumption for the coming October 2019 to September 2020 coffee year shall exceed 168 million bags. 

This increase in the estimated global coffee consumption for the coming coffee year is very much in line with many other trade and industry estimates, which following the smaller overall Brazil crop this year, indicate something in the order of a 2 million to 4 million bags deficit coffee supply for the coming coffee year. However, with the prevailing good levels of global coffee stocks in hand and speculation that Brazil is due a large new coffee crop for the coming year, this factor has yet to impact upon the prevailing speculative bearish sentiment that is keeping the markets within their soft trading range. 

The November to December contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 36.40 usc/Lb.   This equates to 38.1% price discount for the London Robusta coffee market. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,832 bags yesterday; to register these stocks at 2,329,092 bags.  There was meanwhile a smaller in number 872 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,233 bags. 

The certified Robusta coffee stocks held against the London terminal market were seen to increase by 5,333 bags or 0.21% over the week of trade leading up to Monday the 2nd. of September, to see these stocks registered at 2,556,000 bags, on the day. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Natural Gas, Sugar, Cocoa, Gold and Silver markets ended the day on a positive note, while the Oil, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.29% higher; to see this index registered at 384.61.   The day starts with the U.S. Dollar steady and trading at 1.210 to Sterling, at 1.097 to the Euro and with the US Dollar buying 4.167 Brazilian Real. 

The London and New York markets opened the day yesterday on a softer note and with both markets soon coming under pressure and increasing their losses, into the early afternoon trade. As the afternoon progressed the New York market started to attract sell stops and dipped deeper into negative territory, but to bounce back from the lows, while the London market continued on a sideways soft track for the day. 

The London market ended the day on a negative note and with 75.8% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 49.1% of the earlier losses of the day intact. This close does not inspire confidence, but with the Brazil Real marginally firmer it might assist towards some degree of caution and set the markets for a steady start for early trade today, against the prices set yesterday, as follows:  

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

SEP    1282 – 23                                                      SEP      92.35 – 1.25

NOV   1304 – 25                                                      DEC      95.55 – 1.30 

JAN    1328 – 24                                                      MAR     99.00 – 1.30 

MAR   1351 – 25                                                      MAY   101.30 – 1.25

MAY   1377 – 24                                                      JUL    103.35– 1.35

JUL    1402 – 24                                                      SEP    105.35 – 1.30

SEP    1429 – 24                                                      DEC   108.30 – 1.30

NOV   1456 – 24                                                      MAR   111.25 – 1.25

JAN    1483 – 24                                                      MAY   113.25 – 1.25

MAR   1507 – 25                                                      JUL    115.20 – 1.25