Coffee Market Report March 06 2020

Reuters have reported that coffee sales in Vietnam have been slowing as growers are withholding stock due to lower prices, while trading activity in Indonesia remains subdued. 

The Brazil Real tumbled yesterday to new historic lows as the rapid spread of the coronavirus grows concerns. Coffee prices dropped sharply after the Brazil Real slipped by 1.37% against the dollar and posted a new record low of 4.6655 Brazil Real/USD. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 53.57 usc/Lb.  This equates to 48.11% 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 6,923 bags yesterday; to register these stocks at 2,112,741 bags, with 89.8% of these certified stocks being held in Europe at a total of 1,896,524 bags and the remaining 10.2% being held in the USA at a total of 216,217 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags. 

The commodity markets were softer in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Cocoa, Coffee and Sugar markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.0005% lower; to see this index registered at 386.3476.   The day starts with the U.S. Dollar steady, trading at 1.295 to Sterling, at 1.123 to the Euro and with the US Dollar buying 4.607 Brazilian Real. 

The London and New York markets started the day yesterday trading on a negative note, both markets continued on this soft track into the early afternoon trade. As the afternoon progressed the New York market on the back of an all-time low Brazil Real started to attract selling pressure to move deeper into negative territory to close on a very negative note, while the London market followed suit in a more sedate manner to also close on a very negative note for the day. 

The London market ended the day on a very negative note and with 97% of the earlier losses of the day intact, while the New York market ended the day on a likewise very negative note and with 94% of the earlier losses of the day intact.  This soft and lacklustre close does little to inspire confidence and with an all-time low Brazil Real and the growing concerns over the rapid spread of the coronavirus, one might expect the markets are due for little better than a hesitant steady start for early trade today, against the prices set yesterday, as follows:   

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

MAR   1251 – 34                                                                         MAR  109.85 – 7.30

MAY   1274 – 33                                                                         MAY  111.35 – 7.05

JUL    1292 – 31                                                                         JUL    113.30 – 7.10

SEP    1309 – 31                                                                         SEP   115.25 – 7.10

NOV   1326 – 30                                                                         DEC   117.55 – 7.05

JAN    1343 – 28                                                                         MAR  119.75 – 6.95

MAR   1358 – 28                                                                         MAY  120.95 – 6.85

MAY   1377 – 28                                                                         JUL    122.00 – 6.80

JUL    1396 – 30                                                                         SEP    123.00 – 6.80