Coffee Market Report
The well-respected United States Department of Agriculture Foreign Agricultural Service have published their annual report on the Vietnam coffee crop for October 2016 to September 2017, within which they have reviewed their earlier forecast downward, from 26.7 million bags to 26 million bags. This reduction in estimate is due to unseasonal rains received during the harvest last year and the resultant loss of cherry incurred. The report foresees exports for current coffee year to reach around 24 million bags.
The forecast for the next Vietnam coffee crop to come in October 2017 to September 2018 is for a total 28.60 million bags, of which an estimated 3.85% will be arabica coffee and the balance robusta production, together with the USDA estimate of coffee stocks brought forward from the previous coffee year to be at 1.38 million bags; would imply production of al coffee forecast at 29.98 million bags, while total coffee imports to Vietnam are anticipated to be at 1.06 million bags in green bean equivalent over the same period.
The United States Department of Agriculture Foreign Agricultural Service have published their report on the Uganda crop for October 2017 to September 2018 coffee year, which they foresee to reach 4.35 million bags in the coming year. Of this, the arabica percentage of overall production stands at 17.25% of total production. The report anticipates a minimum of carryover stock and with domestic consumption growing but from a relatively low base, the cumulative total is forecast to reach around 4 million bags for exports to fuel the consumer markets with mainly robusta coffees in the coming coffee year.
The July to July contracts arbitrage between the London and New York markets widened yesterday, to register this at 43.70 usc/Lb., while this equates to 33.55% price discount for the London robusta coffee market. This relatively low arbitrage, may start to become 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 increase by 7,465 bags yesterday; to register these stocks at 1,455,350 bags. There were meanwhile 13,642 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 55,826 bags.
It was a mixed and mostly negative day in the commodity markets yesterday, the US Dollar registered a recovery during the session while positive economic indicators coming from Germany assisted to boost investor confidence within the euro zone. It was a steady to firmer day in the Oil markets, a positive close for Robusta coffee and a softer close on the day for Sugar, Cocoa, Arabica coffee, Corn, Orange Juice, Cotton, Soybean and Wheat. In the precious metals sector, Gold, Silver and Platinum finished softer while Palladium finished on a positive note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.73% lower, to see this Index registered at 411.99. The day starts with the U.S. Dollar steady and trading at 1.297 to Sterling and at 1.117 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 53.45 per barrel.
The London and New York markets started the day on a positive note and the morning session in both markets held steady above par in limited and light volume. The day progressed with both markets above par with speculative trade providing direction and a degree of industry buyer support evident although in light volume. Both markets shed some of the gains toward midsession however, with London finding additional support, to register a recovery toward the end of the day and in the last half hour, as the sellers left the floor, this market finished the day on a positive note, close to the day highs. The latter day softer trend in New York was tested with buyer support returning to floor in response and to take advantage of the lows, however the range and volume in New York remained narrow and limited throughout the session and with buyers removed, the market resumed a softer track to the end of the day. Thus, a buoyant session in both markets with an overall softer macro on the day across the commodities sector, a mildly positive close for London and a marginally softer close in New York yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1908 + 13
JUL 1936 + 11 JUL 130.25 – 0.35
SEP 1955 + 11 SEP 132.65 – 0.30
NOV 1962 + 10 DEC 136.15 – 0.30
JAN 1960 + 12 MAR 139.55 – 0.10
MAR 1954 + 13 MAY 141.80 – 0.30
MAY 1951 + 11 JUL 143.95 – 0.25
JUL 1969 + 9 SEP 145.90 – 0.25
SEP 1977 + 9 DEC 148.25 – 0.30
NOV 1984 + 9 MAR 150.65 – 0.25
