Coffee Market Report

The European Coffee Federation have reported that the port ware house stocks held within the warehouses in the ports of Antwerp, Bremen, Hamburg, Genoa, Le Havre and Trieste increased by 16,600 bags or 0.7% during the month of December 2016, to see these stocks registered at 11,921,100 bags as at the end of the month.

These stocks did not however include the coffee stocks held within Europe in transit bulk containers, unreported warehouses throughout Europe, as well as on site roaster industry inventory stocks and with the combination of Eastern and Western European consumption at approximately 1 million bags per week, this would most likely be an additional estimated 2.5 million bags. It would therefore appear that European coffee stocks for the end of December would have been sufficient to cater for a very safe number of around 14.5 weeks of roasting activity.

Since the end of December there has been no indication that these stocks would have declined in any significant manner and might even with the advent of the good volumes of new crop coffees coming from Colombia, Central America and Vietnam, have risen a little. This factor as is similarly the case within the U.S.A. were port warehouse stocks are anticipated to be seen to be relatively high when the U.S.A. Green Coffee association forwards their latest report later today, is contributing to the physical coffee market to be somewhat in the doldrums for the present.

Lethargic consumer market roaster buying aside, the markets are devoid of any striking coffee fundamental news reports and remain somewhat directionless for the present, with fair weather reports from most of the main producer blocs and excluding only the relatively low volume East African countries, tending to supress any bulls within the markets. In this respect, one might expect to see the markets taking a sideways track and within the present trading range, for the coming weeks.

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 42.87 usc/Lb., while this equates to 30.35% price discount for the London robusta coffee market. This once again narrowing arbitrage is now becoming less of an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 333 bags yesterday; to register these stocks at 1,339,711 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,295 bags.

The commodity markets lacked some players yesterday, with the severe snow storms that hit the north east of the U.S.A. and kept many away from the office, but with the markets having a mixed day and with the overall macro commodity index taking a softer track for the day. The Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice and Corn markets had a day of buoyancy and the Gold market was steady, while the Oil, Natural Gas, Sugar, Wheat, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% lower, to see this Index registered at 416.82. The day starts with the U.S. Dollar tending softer and trading at 1.221 to Sterling and at 1.062 to the Euro, while North Sea Oil is showing some degree of buoyance and is selling at $ 50.90 per barrel.

The London and New York markets started the day with a degree of buoyancy yesterday and while the London market maintained its buoyancy into the early afternoon trade, the New York market struggled to remain on par and with frequent dips into modest negative territory. As the afternoon progressed trade became erratic and directionless within both markets and with the London and New York markets trading either side of par for the rest of the day and with the London market tending stronger to head towards a positive close, while the New York market faltered and took a softer track towards the close. The London market ended the day on a modestly positive note and with 33.3% of the gains of the day intact, while the New York market ended the day on a negative note and with 71% of the earlier losses of the day intact. This close does little to inspire and is unlikely to support little better than a steady start for early trade today against the prices set yesterday, as follows:

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

MAR 2151 + 5                                               MAR 139.60 – 0.90
MAY 2169 + 5                                               MAY 141.25 – 1.10
JUL 2186 + 5                                                   JUL 143.60 – 1.10
SEP 2196 + 5                                                   SEP 145.85 – 1.10
NOV 2199 + 5                                                 DEC 149.15 – 1.10
JAN 2199 + 5                                                 MAR 152.40 – 1.15
MAR 2200 + 5                                               MAY 154.45 – 1.20
MAY 2201 + 5                                                 JUL 156.25 – 1.15
JUL 2203 + 5                                                   SEP 157.90 – 1.15
SEP 2211 + 5                                                  DEC 160.10 – 1.15