Coffee Market Report October 11 2019

Reuters have reported that Vietnam’s coffee exports for the month of September fell by 19.1% from the previous month, to total 1,539,117 bags. This number proving to be well below the 1.67 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 12.5% lower than the same period in the previous year, at a total of approximately 21.16 million bags. 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. 

Internal Coffee trade in Vietnam remains slow due to low October 2018 to September 2019 stock, with the new October 2019 to September 2020 coffee year, crop season harvest not yet in full swing. 

Reuters have reported that in Brazil’s top coffee producing state - Mina Gerais, coffee trees have bloomed this week, marking the first major flowering for the new Brazil coffee crop which could indicate the size of next year’s production. 

The December to January contracts arbitrage between the New York and London markets narrowed yesterday; to register this at 35.38 usc/Lb.  This equates to 38.05% 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 10,004 bags yesterday; to register these stocks at 2,235,453 bags.  There was a smaller in number increase to the number of bags pending grade to this exchange, by 8,342 bags; to register these pending grading stocks at 68,773 bags. 

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Markets remain on edge over the U.S – China trade tensions. The Oil, Palladium, Platinum and Cocoa markets ended the day on a positive note, the Sugar markets remained unchanged for the day, while the Coffee and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.282% lower; to see this index registered at 393.544.   The day starts with the U.S. Dollar marginally firmer and trading at 1.245 to Sterling, at 1.102 to the Euro and with the US Dollar buying 4.110 Brazilian Real. 

The London and New York markets started the day yesterday trading around par, both markets showed signs of buoyancy to trade modestly firmer into early afternoon trade. As the afternoon progressed the markets continued to take a firmer and mostly sideways track, the New York market started to encounter selling pressure and dropped back from the modest highs of the day to close on a negative note, while the London market followed suit in a more sedate manner to take a softer track into the late afternoon trade. 

The London market ended the day on a modest soft note, and with 16% of the earlier losses of the day intact, while the New York market ended the day on a negative note, and with 81.25% of the earlier losses of the day intact. This close and with the Brazil Real under pressure, is unlikely to inspire confidence and one would think the markets are due little better than a cautious and hesitant start for early trade today, against the prices set yesterday, as follows:   

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

NOV   1257 – 1                                                       DEC      93.50 – 1.95

JAN    1277 – 3                                                       MAR     97.15 – 1.95

MAR   1301 – 4                                                       MAY     99.55 – 1.85

MAY   1328 – 3                                                       JUL    101.75 – 1.85

JUL    1355 – 2                                                       SEP    103.80 – 1.85

SEP    1382 – 2                                                       DEC   106.75 – 1.85

NOV   1410 – 1                                                       MAR   109.65 – 1.80

JAN    1438 – 1                                                       MAY   111.45 – 1.75

MAR   1466 – 3                                                       JUL    113.20 – 1.75