Coffee Market Report March 18 2020

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 0.2% against the dollar and posted a new record low of 5.0832 Brazil Real/USD. 

Goldman Sachs has estimated that  Global Coffee demand is to drop by 10% due to the ongoing Coronavirus pandemic, citing that higher in home consumption is unlikely to compensate for a drop in out of home Coffee consumption. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 47.62 usc/Lb.  This equates to 46.41% 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 14,733 bags yesterday; to register these stocks at 2,081,173 bags, with 90.4% of these certified stocks being held in Europe at a total of 1,881,752 bags and the remaining 9.6% being held in the USA at a total of 199,421 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,200 bags. 

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 47,500 bags over the weeks of trade leading up to Monday 16th.March, to see these stocks registered at 2,429,000 bags, on the day. 

The commodity markets were softer in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Sugar, Cocoa and Coffee markets ended the day on a negative note, The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.3935% lower; to see this index registered at 331.9514.   The day starts with the U.S. Dollar steady, trading at 1.2100 to Sterling, at 1.1032 to the Euro and with the US Dollar buying 5.0110 Brazilian Real. 

The London and New York markets started the day yesterday trading on a positive close to par note, both markets continued to trade around par into the early afternoon trade. As the afternoon progressed both the London and the New York markets started to attract selling pressure to drop into negative modest negative territory and to close on a negative note for the day. 

The London market ended the day on a negative note and with 60% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 52% of the earlier losses of the day intact.  This softer close does little to inspire confidence although the markets did recover late in the day but with the Brazil Real once again hitting a record low late in the day yesterday one might not expect 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.                                               

MAY   1212 – 9                                                                          MAY  102.60 – 1.30

JUL    1233 – 9                                                                          JUL    104.00 – 1.50

SEP    1252 – 10                                                                       SEP    105.45 – 1.60

NOV   1270 – 9                                                                          DEC   107.65 – 1.65

JAN    1289 – 8                                                                          MAR  109.60 – 1.70

MAR   1304 – 7                                                                          MAY  110.70 – 1.70

MAY   1320 – 5                                                                          JUL    111.70 – 1.65

JUL    1340 – 4                                                                          SEP    112.60 – 1.55