Coffee Market Report
18th. August, 2017.
The International Coffee Organisation has come forth with their latest forecast to review the wold coffee production for the coffee year 2016 to 2017 to reach 153.9 million bags. This is an upward revision from the organisations earlier estimate at 151.6 million bags, which factors in that Indonesia has upwardly revised their mainly robusta coffee crop from 10 million bags to 11.5 million bags and similarly an upward revision of the mainly arabica washed coffee production to come from Peru to reach 4.2 million bags. The increase in year on year cumulative coffee production is within the arabica coffee production sector that is seen to be at 10.2% increase on that of the previous year, to a total 97.3 million bags, whereas robusta coffee production is expected to be 10.6% lower than that of the same period in the previous year, at 56.6 million bags. The report from the International Coffee Organisation has further projected coffee consumption over the same period to be nominally lower than the previous coffee year, at 0.3% decline, at cumulative total 155.1 million bags.
The respected Brazilian analysts Safras & Mercado who have forecasted the new Brazil crop at 51.1 million bags and made up by 40.7 million bags of arabica coffee and 11.5 million bags of conilon robusta coffees, have estimated that 91% of this new crop has already been harvested. In this respect, they estimate that so far 35.81 million bags of the new arabica coffee crop has been harvested and a total 11.5 million bags of the conilon robusta coffee crop has been harvested and now complete, while with harvest of the arabica areas is in full swing and one might soon see the new crop harvest completed.
The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.88 usc/Lb., while this equates to 29.44% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 14,124 bags yesterday; to register these stocks at 1,614,066 bags. There was meanwhile a decline in the number of bags pending grading for this exchange by 6,346 bags; to register these pending grading stocks at 87,346 bags.
The commodity markets had a mildly improved day overall yesterday, mixed economic indicators and an oscillating U.S. Dollar against a basket of currencies, contributed toward uncertainty on the day. The oil markets registered an improvement, so too a positive close for Sugar, Cocoa, Orange Juice, Soybean and in the previous metals Gold and Palladium had a positive day. The losers on the day were Cotton, Copper, Wheat, Corn, arabica Coffee softer and robusta Coffee steady. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.211% higher, to see this Index registered at 396.27. The day starts with the U.S. Dollar trading at 1.289 to Sterling and at 1.173 to the Euro, while North Sea Oil is steady and is selling at $ 50.68 per barrel.
The coffee markets started the day in muted volume and on a mildly positive note, which held momentum in London at above par for the start of the session and leading into the afternoon for this market. The positive start in New York similarly held above par in the early morning, but fairly rapidly lost ground as the America’s came to the floor to start their business day, to set a lower tone in both markets by midsession. The floor set a low and the rest of the day in New York was within a narrow range with underlying buying support capped but in an upward direction to finish the day in negative territory albeit on a buoyant note. The London market touched upon a new low later in the session which attracted renewed interest and this market gapped higher in spurts with the last couple of hours ahead, to recover all the losses and finish the day, just around unchanged.
The commercial roaster sector in the northern hemisphere are deep into the traditional lower summer coffee consumption months, while origin producer countries are at best, resistant to the prevailing market levels and for the moment, speculative and funds are the largest volume participants to determine direction in the markets. This with first notice day approaching for the prompt month in New York, on Wednesday next week. The coffee markets settled hardly changed in London and on a softer note above the days’ low in New York, after another sizable volume day in both markets, to set the close yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 2062 + 4 SEP 128.45 – 2.50
NOV 2054 Unch DEC 132.05 – 2.45
JAN 2033 – 2 MAR 135.60 – 2.50
MAR 2023 – 3 MAY 137.90 – 2.50
MAY 2029 – 5 JUL 140.10 – 2.50
JUL 2047 – 6 SEP 142.25 – 2.45
SEP 2053 – 11 DEC 145.40 – 2.35
NOV 2065 – 11 MAR 148.45 – 2.25
JAN 2071 – 11 MAY 150.20 – 2.15
MAR 2076 – 11 JUL 151.85 – 2.05
Kind regards,
Natasha
