Coffee Market Report

The world’s largest coffee cooperative Cooxupé have forecast that with the new arabica coffee crop cherries developing on the trees that they foresee that their farmer members and associated farmers shall deliver to the cooperative 1.7 million bags or 25.37% more coffee this year than they delivered last year, to see the deliveries total approximately 8.4 million bags. The cooperative does however concede that the much larger new overall coffee crop in Brazil this year is having and shall have a negative effect upon prices and making note that presently, their prices to the farmers for quality arabica coffee are 11.46% lower than at the same time last year.

This report from Cooxupé Cooperative tends to underpin the many earlier forecasts that foresee that the new Brazil coffee crop might be close to 60 million bags this year and thus by nature, one would see this to be report that is rather bearish for market sentiment. Particularly so within the volatile New York arabica coffee market, as while the Cooxupé report is related to rising Brazil arabica coffee supply, the new conilon robusta coffee crop is generally forecast for an even more dramatic recovery than the arabica coffee crop.

The rise in the new conilon robusta coffee crop shall not only bring with it relief for the past two years of tight internal market supply of conilon robusta coffees and the resulting supplementing with lower quality arabica coffees by many of the countries domestic roasters, but with the potential for surplus conilon robusta coffee supply it shall free up a higher percentage of the already much larger new arabica coffee crop for the export markets. This aside from the potential for a return to the export markets and mostly in North America, of 2 to 4 million bags of conilon robusta coffees, which will in terms of overall global robusta coffee supply, fill in for the forecasted possibility of a smaller robusta coffee crop from Sumatra this year.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.80 usc/Lb., while this equates to 32.63% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,844 bags yesterday; to register these stocks at 1,898,336 bags. There was meanwhile larger in number 6,986 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,405 bags.

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a steady to marginally positive track for the day. The Natural Gas, Cotton, Copper, Corn, Soybean and Silver markets had a day of buoyancy and the Gold market was steady for the day, while the Oil, Sugar, Cocoa, Coffee, Orange Juice and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.05% higher; to see this index registered at 425.01. The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.391 to Sterling, at 1.228 to the Euro and with the dollar buying 3.268 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 64.35 per barrel.

The London market started the day yesterday on a softer note, while the New York market started the day mostly to the positive side of par and with the markets maintaining this mixed stance, into the early afternoon trade. As the afternoon progressed the London market bounced back from the lows and moved back to par and with some brief pips into modest positive territory, while the New York market started on a somewhat steady slide south into negative territory.

The London market ended the day on a modestly negative note but having recovered 78.9% of the earlier losses of the day by the close, while the New York market ended the day on a negative note and with 84.2% of the earlier losses of the day intact. This close does little to inspire confidence and especially so with a firmer dollar tending to bring to the fore producer selling pressure, but with the recent movements of the market indicating rising levels of the net short sold position within the New York market, it should bring to the fore some degree of caution and the chance for a steady start for early trade today, against the prices set yesterday, as follows:

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

MAR 1807 – 5                                                MAR 116.95 – 1.25
MAY 1766 – 4                                                MAY 118.90 – 0.80
JUL 1793 – 1                                                  JUL 121.15 – 0.85
SEP 1797 – 1                                                  SEP 123.50 – 0.85
NOV 1801 – 1                                                 DEC 126.95 – 0.95
JAN 1807 – 1                                                  MAR 130.40 – 0.95
MAR 1815 – 1                                                MAY 132.50 – 1.00
MAY 1830 – 1                                                JUL 134.40 – 0.95
JUL 1852 – 1                                                  SEP 136.15 – 0.85
SEP 1855 – 1                                                  DEC 138.85 – 0.70