Coffee Market Report

The Uganda Coffee Development Authority UCDA has reported that the countries coffee exports for the month of July were 158,714 bags or 59.11% higher than the same month last year, at a total of 427,204 bags.

This improved performance and following a much-improved performance in many of the previous months, has contributed to the countries cumulative coffee exports for the first ten months of the present October 2016 to September 2017 coffee year to being 1,029,753 bags or 36.57% higher than the same period in the previous coffee year, at a total of 3,845,645 bags.

The surge in coffee exports from Uganda during this present coffee year so far and with still two more months of exports to come, would seemingly indicate that Uganda with an approximate 74 to 26 ratio of robusta to arabica coffees, is on track to see coffee exports to perhaps exceed 4.3 million bags during this present coffee year.

The Chairman of the Karnataka Planters Association or KPA in India and the leading coffee producing district in the country, is reported to have forecast that the countries coffee production for the coming October 2017 to September 2018 coffee year shall be 5.3% lower than the present coffee year. This forecast for a lower crop being related to many districts having been in receipt of erratic and lower than normal rainfall, over this years monsoon season.

In this respect, the report foresees that there shall be a 6.7% dip in the countries arabica coffee production, which shall total only approximately 1.5 million bags and a 4.76% dip in the countries robusta coffee production, which shall total approximately 3.5 million bags. It is however early days still ahead of the new crop year for India and only time shall tell, if the coffee supply from India for the forthcoming new coffee year shall indeed be as low as 5 million bags.

With the high-volume winter roasting shipments to the fore and the new crop from Brazil poised to flow into the consumer markets, there are growing concerns over delays in shipments out of the port of the country’s leading coffee export port of Santos. These delays apparently being related to the falling behind of the dredging of the port, which is forcing many of the larger vessels and with their deep draft’s when fully loaded, to partially cancel bookings so as to sail with lighter loads out of the port. One would however expect that with the importance of the port of Santos for a host of Brazil’s high volume export commodities, that the authorities shall take quick steps to solve the problems of this port, which shall allow for a catch up in export commitments during the coming month.

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 32.26 usc/Lb., while this equates to 24.99% 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 5,853 bags yesterday; to register these stocks at 1,639,977 bags. There was meanwhile a smaller in number 3,467 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 88,837 bags.

The commodity markets had another mixed day yesterday, but with U.S. dollar recovering some degree of muscle through the day and impacting within many markets, the overall macro commodity index took a marginally softer track for the day. The Oil, London robusta Coffee, Cotton, Copper and Soybean markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Gold and Silver markets experienced a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% lower, to see this Index registered at 394.12. The day starts with the U.S. Dollar steady and trading at 1.282 to Sterling and at 1.176 to the Euro, while North Sea Oil is steady and is selling at $ 52.05 per barrel.

The London market started the day yesterday with immediate buoyancy, while the New York market traded in a hesitant manner either side of par, with the markets maintaining this stance through to the early afternoon trade. As the afternoon progressed though the New York market slipped back into negative territory, while he London market continued to remain within modest positive territory and with the markets maintaining this mixed stance through to the close.

The London market ended the day on a positive note and with 80% of the earlier gains of the day intact, while the New York market ended the day on a negative note and at a five-week low with 95.5% of the earlier losses of the day intact. This mixed close and with the charts remaining somewhat supportive for sentiment within the London market, while remaining negative for the New York market, provides for mixed signals and is once again likely to provide for a degree of caution on the part of the speculative players within the markets. Thus, one might expect to see a hesitant close to par start for the London market and perhaps some modest corrective buoyancy for the New York for early trade today, against the prices set yesterday, as follows:

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

SEP 2158 + 17                                                SEP 125.85 – 0.55
NOV 2135 + 16                                             DEC 129.10 – 1.05
JAN 2091 + 11                                             MAR 132.70 – 1.00
MAR 2076 + 9                                             MAY 135.05 – 0.95
MAY 2080 + 11                                              JUL 137.30 – 0.95
JUL 2096 + 10                                                SEP 139.50 – 0.95
SEP 2099 + 6                                                 DEC 142.70 – 0.95
NOV 2109 + 4                                              MAR 145.80 – 0.95
JAN 2115 + 4                                                MAY 147.75 – 0.90
MAR 2120 + 4                                                JUL 149.60 – 0.80