Coffee Market Report March 02 2018

The Brazil Ministry of Trade have reported that the countries coffee exports for the month of February were 57,995 bags or 2.51% lower than the same month last year, at a total of 2,250,202 bags.  This is a relatively modest dip and when considered in terms of the exports being mostly related to arabica coffees, would seemingly indicate that the consumer markets continue to take delivery of just enough as is required of the Brazil quality coffee for their blends. 

Meanwhile in terms of weather the month of February has seen all the major coffee districts in Brazil receive good rains and with forecasts indicating good rains to continue, for the coming week.  Thus, for the present the forecasts for a significantly larger new Brazil coffee crop this year, remain weather supported and dampen many speculative spirits within the coffee terminal markets. 

With the Brazil weather issues for the present not threatening for global coffee supply, the focus shall be upon the start of the new summer rain season in Vietnam, which is due to start for the main central highlands coffee districts during the next month and shall need to come in time, to support a follow on good year end new crop for the country.    This shall be a factor closely watched and while one can expect some fear stories about dry weather threats to the new crop coming to the fore during this month, the La Niña within the Pacific Ocean is over and conditions are neutral, which would tend to indicate little threat of abnormal rains for this year.  

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 43.75 usc/Lb., while this equates to 35.3% 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 435 bags yesterday; to register these stocks at 1,895,304 bags.  There was meanwhile a similar in number 437 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,787 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a steady to buoyant track for the day.   The Natural Gas, Sugar, Cocoa, Coffee, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Cotton, Copper, Orange Juice, Gold and Silver markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher; to see this index registered at 429.82.  The day starts with the U.S. Dollar tending softer and trading at 1.378 to Sterling, at 1.227 to the Euro and with the dollar buying 3.251 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 64.40 per barrel. 

The London market started the day yesterday on a steady note and with modest buoyancy, while the New York market started the day trading marginally south of par and with the London market starting to attract support and move further into positive territory, for early afternoon trade.   Very quickly the London market attracted further support and with buy stops being triggered moved up into very positive territory which was followed by a recovery for the New York market, which took a more sedate and steady upside track for the rest of the days trade, as against the London market taking an erratic sideways track from the early afternoon surge in value. 

The London market ended the day on a very positive note and with 91.7% of the earlier substantial gains of the day intact, while the New York market ended the day on a positive note and with 91.5% of the gains of the day intact.    This close would tend to paint a more positive picture for the charts and one might think shall assist towards a steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1807 + 37                                             MAR   122.45 + 1.40

MAY   1768 + 44                                             MAY    123.95 + 1.95

JUL    1794 + 40                                              JUL    126.00 + 1.90 

SEP    1796 + 40                                              SEP    128.10 + 1.90

NOV   1798 + 39                                              DEC    131.30 + 1.80

JAN    1803 + 38                                              MAR   134.55 + 1.75

MAR   1815 + 38                                              MAY   136.50 + 1.75

MAY   1830 + 39                                               JUL    138.20 + 1.70

JUL    1846 + 36                                               SEP    139.70 + 1.55

SEP    1854 + 40                                               DEC   142.20 + 1.55