Coffee Market Report

The General Statistics Office in Vietnam and with the month of December coming to a close and the export registrations for the month in hand, have estimated that the country’s coffee exports for the month of December shall be approximately 2,666,667 bags. This they estimate shall contribute to the country’s coffee exports for the 2018 year to be 20.1% higher than the previous year, at a total of approximately 31,481,467 bags.

However, with the softer reference prices of the coffee terminal markets for most of this year and while the volume of exports is expected to be 20.1% higher, they estimate that income from these 2018 coffee exports shall be only 1.2% higher than the previous year, at approximately 3.54 Billion U.S. Dollars. Well illustrating the prevailing problems being experienced by most coffee producers, in terms of making reasonable profits out of coffee production and exports.

Reports indicate that there is some degree of internal market price resistance developing in Vietnam, against the relatively low prices being dictated by the soft nature of the coffee terminal markets. But with the expensive for families to finance Tet New Year holidays now only five weeks to the fore, one might imagine that there shall soon be some pressure on farming families to cash in more of their new crop coffee stocks, so as to celebrate the week-long holiday to bring in the new Year of the Pig. But with most coffee farmers multi cropping, this bid for cash might not result in overly aggressive selling for the coming month.

The March 2019 to March 2019 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 33.35 usc/Lb., while this equates to 32.78% 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 1,220 bags yesterday; to register these stocks at 2,461,889 bags. There was meanwhile a larger in number 8,845 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,496 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 80,500 bags or 4.58% over the week of trade leading up to Monday 24th. December, to see these stocks registered at 1,836,333 bags.

The commodity markets and despite some degree of softening of the U.S. Dollar were mostly on the back foot yesterday, to see the overall macro commodity index taking a softer track for the day. The Natural Gas, Wheat, Corn, Gold and Silver markets ended the day on a positive note, while the Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice and Soybean markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.79% lower; to see this index registered at 393.14. The day starts with the U.S. Dollar tending a little softer and trading at 1.266 to Sterling, at 1.145 to the Euro and with the dollar buying 3.873 Brazilian Real.

The London market started the day on a positive note, while the New York market started the day on a negative note and with the markets maintaining this mixed stance, into the early afternoon trade. As the afternoon progressed the New York market started to extend its losses and with the London market drifting back to trade around par, before slipping to trade around par. The New York market started to trigger sell stops and accentuated its losses, with the London market likewise moving further south, but with both markets managing to bounce back from the lows of the day by the close.

The London market ended the day on a negative note but having recovered 72% of the earlier losses of the day, while the New York market ended the day on a negative note and with 71.7% of the earlier losses of the day intact. This close might not inspire much in the way of confidence, but with a firmer Brazil Real in play and many players still on holiday, one might expect to see a hesitant and cautious steady start for early trade today. Against the prices set yesterday, as follows:

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

JAN 1487 + 2                                                  MAR 101.75 – 2.15
MAR 1508 – 7                                                MAY 104.90 – 2.10
MAY 1526 – 8                                                 JUL 107.75 – 2.05
JUL 1541 – 10                                                 SEP 110.55 – 2.00
SEP 1560 – 10                                                 DEC 114.30 – 2.00
NOV 1580 – 10                                               MAR 118.10 – 1.95
JAN 1598 – 10                                                MAY 120.55 – 2.00
MAR 1620 – 10                                               JUL 122.90 – 2.00
MAY 1643 – 10                                               SEP 125.15 – 2.00
JUL 1660 – 10                                                 DEC 128.25 – 2.00