Coffee Market Report September 12 2019

Reuters have reported that Vietnam’s coffee exports for the month of August fell by 18.7% from the previous month, to total 1,902,700 bags. This number proving to be well below the 2.17 million bags that had been initially forecast for the month’s coffee exports. 

These exports contributing to the country’s cumulative exports for the first nine months of this year to be 11.5% lower than the same period in the previous year, at a total of approximately 19.5 million tons. While the report well illustrates the negative effects of the prevailing soft coffee terminal markets, in that the value of Vietnam coffee exports for the first nine months of this year is 21% lower than the same period last year, at a total of approximately two billion US dollars. 

Weather forecasts coming out of the main coffee growing districts in south east Brazil, indicate dry conditions for the next six to ten days, which is contributing towards some degree of speculative support for the coffee markets at present. Albeit that the start of the spring and summer rain season only starts to become something of a critical issue, if there are no significant rains forthcoming by the first half of October. 

The November to December contracts arbitrage between the London and New York markets broadened yesterday; to register this at 41.70 usc/Lb.   This equates to 41.30% 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 1,976 bags yesterday; to register these stocks at 2,324,567 bags.  There was meanwhile a larger in number 2,470 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,390 bags.

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index near to steady for much of the day. The Cocoa, Coffee, Cotton, Orange Juice, Gold and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, 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 0.24% lower; to see this index registered at 388.92.   The day starts with the U.S. Dollar steady and trading at 1.233 to Sterling, at 1.101 to the Euro and with the US Dollar buying 4.067 Brazilian Real. 

The London and New York markets started the day yesterday trading around par and to see the markets taking a steady track into the early afternoon trade. As the afternoon progressed the New York market started to attract support and with buy stops being triggered to accentuate the gains, while the London market moved into positive territory, in a less aggressive manner. The London market continued and holding onto much of its gains, while the New York market attracted selling pressure at the highs, to limit its gains for the day. 

The London market ended the day on a positive note and with 68.7% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 58.1% of the earlier gains of the day intact. This close, albeit that the New York market did hit a ceiling and came off its highs of the day, might nevertheless inspire some degree of confidence. To possibly set the markets for another hesitant steady start for early trade today, against the prices set yesterday, as follows:   

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

SEP    1321 + 16                                                           SEP    100.15 + 1.80

NOV   1338 + 11                                                           DEC    103.40 + 1.80  

JAN    1362 + 13                                                           MAR   106.90 + 1.90  

MAR   1387 + 14                                                           MAY   109.20 + 1.90

MAY   1413 + 14                                                           JUL    111.35 + 1.95

JUL    1439 + 14                                                           SEP    113.35 + 2.00

SEP    1465 + 14                                                           DEC   116.35 + 2.00

NOV   1492 + 15                                                           MAR   119.40 + 2.10

JAN    1519 + 15                                                           MAY   121.35 + 2.05

MAR   1543 + 15                                                           JUL    123.20 + 2.00