Coffee Market Report
| The coffee markets were devoid of fundamental news yesterday and focus remained upon the technical picture of the markets which despite an early rally for the markets became the focus for the day within the volatile New York market, which faltered as the day progressed. Thus for the present the coffee markets are lacklustre in nature and with the physical trade very much slow and lacking influence upon market direction, while consumer market industries look to fill in gaps and play something of a waiting game with the price resistant producers.
This is perhaps not a pleasing sight for the producers as they look to the main consumer markets heading towards the slow summer roasting season, but with the potential fundamental news due for the markets in the coming months more likely supportive in nature, there is perhaps some hope still in play. The coffee markets and more so the New York market which is more influenced by the fund and speculative interest in commodities in general than to the fundamentals of longer term supply as against demand, shall require some really striking fundamental news to come to the fore to make a strong move north out of the presently soft trading range. The May on May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 58.78 usc/Lb., while this equates to a 46.28% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam. The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,762 bags yesterday; to register these stocks at 1,431,211 bags. There was meanwhile a larger in volume 4,438 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,584 bags. These relatively modest New York certified stocks and the past year of decline of these stocks are seemingly having little influence upon market sentiment, as for the present they rather reflect the lack of delivery due to producer price resistance in terms of inflated export price differentials, than to any nearby tightness in the supply of coffee. With the stocks that have seen the dominance of the Mexican and Central American coffees decline to a 37.47% share of the stocks, now reflecting the good production levels of Colombia over the past year, with Colombia contributing to a 28.85% share of the stocks and followed by Peru with an 18.22% share and the African producers Burundi, Rwanda, Tanzania and Uganda contributing to 14.56% of the stocks. The balance made up by a modest quantity of Indian coffees. The commodity markets despite some support from the relative weakness of the U.S. dollar, which is related to the indication that the Federal Reserve Bank is likely to remain hesitant in terms of future interest rate hikes, were lacklustre in nature yesterday and with the overall macro commodity index remaining near to steady for the day. The Brent Oil, Natural Gas, Sugar, London robusta Coffee, Cotton and Orange Juice markets had a day of buoyancy and the Silver market was steady, while the U.S. Oil, Cocoa, New York arabica Coffee, Copper, Wheat, Corn, Soybean and Gold markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.08% lower; to see this Index registered at 387.59. The day starts with a near to steady U.S. Dollar trading at 1.433 to Sterling and 1.131 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 36.80 per barrel. The London and New York markets started the day yesterday on a positive note and with both markets making immediate gains and with both the markets taking a positive track into the afternoon trade, but as the afternoon progressed the New York market started to run out of steam and finally succumbed to negative pressure and fell back into negative territory. The London market did however while following the New York market south to a degree, show some degree of resilience and retained a positive stance for the rest of the day, while the New York market bounced off its lows but nevertheless ended the day south of par. The London market ended the day on a modestly positive note and retaining only 32% of the earlier gains of the day, while the New York market ended the day on a modestly negative note and having recovered 64% of the earlier losses of the day. This close and with the charts tending to look somewhat negative for the present does little to inspire, but with the U.S. dollar looking a little fragile for the present and with the Brazil Real presently at 3.59 to the dollar not inspiring selling aggression from Brazil, one might expect to see some degree of caution and perhaps a hesitantly steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAR 1471 + 8 |
