Coffee Market Report

The Brazil Real currency has shown a degree of muscle against the US Dollar over the last week, reaching its highest level in over five months against the US Dollar. A stronger Brazil Real traditionally discourages export selling from Brazil’s coffee producers, which could bring a continued degree of buoyancy to the coffee futures markets in the coming weeks, should this trend continue.

Social unrest and protests against a proposed tax reform in Colombia, which started at the beginning of May continue to disrupt the flow of coffee from the interior, as road blockades around the country are inhibiting exporters from delivering coffee to the ports. Negotiations between Government Authorities and a group of protestors known as the National Strike Committee have stalled however discussion are due to resume later this week as the protests lead into their second month.

The July-to-July contract arbitrage between the London and New York markets widened yesterday; to register this at 85.31 usc/Lb. This equates to 54.10% price discount for the London Robusta coffee market. This wide arbitrage will likely be viewed by price sensitive roasters as an attractive alternative discount for robusta against the comparatively higher value arabica coffee.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,277 bags yesterday, to register these stocks at 2,109,297 bags, with 93.28% of these certified stocks being held in Europe at a total of 1,967,738 bags and the remaining 6.72% being held in the USA at a total 141,559 bags. Of this, a total 1,143,402 bags, or 54.21% of the coffees registered and stored in consumer country certified warehouses of the exchange, Brazil washed arabica, and a further 37.51% of these certified coffees, originating from Honduras. There was meanwhile a larger in number 10,487 bags decrease to the number of bags pending grading to the exchange; to register these pending grading stocks at 97,538 bags.

The Certified Robusta coffee stocks held against the London exchange have been reported to decrease by 40,333 bags over the weeks of trade leading up to Monday 7th. June, to see these stocks registered at 2,586,333 bags, on the day.

It was a mixed day on the commodity markets yesterday as the U.S Dollar strengthened awaiting fresh economic data to be released from the world’s largest economy later this week. The Sugar, Cocoa, Corn, Wheat and Soybean markets ended the day on a positive note, while the Coffee, Gold, Silver, Platinum and Palladium markets ended the day on a softer note. The day starts with the U.S. Dollar trading at 1.416 Sterling, at 1.218 the Euro and with the US Dollar buying 5.036 Brazil Real.

The New York and London markets started the day yesterday trading on a modest firmer note, both markets continued to gain momentum throughout the early morning session, this saw the New York and London markets hit a ceiling late in the morning session limiting the gains for the day. As the afternoon progressed the markets would drop back from these highs to be set on a softer path, this attributed to a degree of selling pressure within the New York market which was reflected in London. Both markets continued to drop back throughout the afternoon session before hitting a floor late in the day. Both the New York and London markets settled near to the lows of the day at the close.

The London market ended the day on a negative note and with 80.55% of the losses of the day intact, while the New York market ended the day on a likewise negative note and with 83.05% of the losses of the day intact. This softer close with both markets settling near to the lows of the day does little to inspire confidence and one might think that the markets are due for little better than a hesitant steady start to early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                             NEW YORK USC/LB.

JUL 1596 – 29                                                         JUL 157.70 – 2.45
SEP 1621 – 30                                                         SEP 159.85 – 2.35
NOV 1640 – 31                                                       DEC 162.80 – 2.20
JAN 1655 – 31                                                        MAR 165.40 – 2.10
MAR 1667 – 31                                                      MAY 166.70 – 1.85
MAY 1681 – 31                                                      JUL 167.55 – 1.75
JUL 1698 – 30                                                        SEP 168.10 – 1.60
SEP 1714 – 29                                                        DEC 168.75 – 1.35