Coffee Market Report

The July on July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 53.02 Usc/Lb., while this equates to a 42.73% price discount for the London robusta coffee market. This arbitrage remains 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 decrease by 1,930 bags yesterday; to register these stocks at 1,401,270 bags. The number of bags pending grading to the exchange remained unchanged, to see these pending grading stocks at 5,121 bags on the day.

It was a mixed day on the commodity markets yesterday which started in a continuation of the positive sentiment that had been seen over the past few sessions, spurred on by renewed confidence in the oil sector and positively received Chinese economic data. The day progressed with an unchanged interest rate outcome from the European Central Bank meetings and a hint from OPEC producer countries that they would consider an increase in oil output, seemed to take the wind out of the sails of the speculative resurgence across the board of commodities in the latter half of the day, assisted by a firming US Dollar as the session progressed. It was a lower result on the day, for Oil, Sugar, Coffee, Orange Juice, Wheat and Corn markets, the Cocoa, Copper and Soybean markets held steady, a positive day for Platinum and Palladium, but a softer finish for Gold and Silver. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.622% lower to see this Index registered at 401.479. The day starts with a steady U.S. Dollar at 1.435 to Sterling and 1.1298 to the Euro, while North Sea Oil is softer in early trade and is selling at 43.55 per barrel.

The markets started the day in modest buoyancy yesterday, boosted by the overall positive sentiment across the commodities board, it was a busy morning in volume terms as the New York Market surged ahead, with London following on the coattails but with a more evident cap at the top of the day in this market. The early speculative buying support built on the gains in New York which was devoid of producer seller activity ahead of the long weekend holiday in Brazil and the speculative sector pushed this market through technical levels, to trigger stops along the way. As the overall sentiment across the commodities board took an about turn and the US Dollar demonstrated a degree of muscle, the speculatively guided session within the coffee markets ran out of steam and sellers turned to the floor, to rapidly push both markets lower and into negative territory where the more volatile session in New York, settled into a narrow range toward midsession and first notice day on the prompt month in New York, this market was subjected to another bout of selling activity toward the end of the day, to see this market finish at the lows on the day, although a steadier end to the session in London, both markets finished the day on a softer note, to set the close yesterday as follows:

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

MAY        1534 – 13                   MAY 123.55 – 3.60
JUL          1567 – 11                   JUL   124.10 – 4.60
SEP          1587 – 11                   SEP  125.85 – 4.60
NOV        1605 – 11                   DEC 128.15 – 4.50
JAN         1623 – 11                   MAR 130.35 – 4.40
MAR       1637 – 10                   MAY 131.85 – 4.40
MAY       1654 – 10                   JUL  133.25 – 4.30
JUL         1672 – 10                   SEP  134.45 – 4.25
SEP         1690 – 10                   DEC 136.25 – 4.15
NOV       1710 – 10                   MAR 137.80 – 4.05