Coffee Market Report
The Brazil Governments Crop Supply Agency have reported that the foresee that the next 2019 new Brazil crop and due to negative biennial bearing factors for the arabica coffee farms shall be between only 50.4 million and 54.48 million bags. The Conab forecasts are traditionally very conservative and many would therefore see this as an indication that the new 2019 Brazil coffee crop might still be a very good crop of closer to 58 million bags, as some others have already forecast.
The report also assesses that the land under coffee in Brazil remains unchanged, but with steadily improving farm management and favourable weather, there are longer term prospects for increased yields and production. Particularly so for the conilon robusta coffee farmers, who are looking towards a bumper new crop this year.
Meanwhile the year has started with somewhat erratic rains for many of the main coffee districts in Brazil, with many districts so far having received less than average rainfall for the period. But the forecast is for more rains for the second half of the month and one must presume that with good ground water retention levels from the good rains over the past couple of months, there is presently no reason for any concern.
There are some within the market though who are already making mention of the less than perfect overall rainfall for many of the Brazil coffee districts this month, which is seemingly assisting towards some speculative stability within the volatile New York market. While this factor shall no doubt have many players keeping a closer watch upon the rainfall reports, over the coming weeks.
Monday is Martin Luther King Day in the U.S.A. and with the New York market closed for the day, which will leave the London market to trade solo for the day. Which might inspire some degree of pre long weekend price fixation activity for the New York market for trade today, but the market has been in terms of physical trade relative lacklustre of late and one would doubt, that this shall be a noticeable factor.
The March to March contracts arbitrage between the London and New York markets broadened yesterday, to register this at 32.77 usc/Lb., while this equates to 32% 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 1,732 bags yesterday; to register these stocks at 2,473,837 bags. There was meanwhile a larger in number 9,225 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 38,714 bags.
The commodity markets had a mixed day yesterday, to see the overall macro commodity index on something of a sideways track for the day. The Natural Gas, Cocoa, Cotton, Copper, Wheat, Corn and Soybean markets ended the day on a positive note and the Oil and New York arabica Coffee markets ended the day on a near to steady note, while the Sugar, Orange Juice, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.1% higher; to see this index registered at 403.18. The day starts with the U.S. Dollar steady and trading at 1.297 to Sterling, at 1.139 to the Euro and with the dollar buying 3.750 Brazilian Real.
The London market started the day yesterday on a softer note and the New York market started the day on par, but with the London market soon moving back to trade around par, while the New York market moved into modest positive territory and the markets taking this stance into the early afternoon trade. As the afternoon progressed the London market moved back into modest negative territory and the New York market traded mostly to the north of par, to see the markets remaining mostly close to par for the rest of the day’s trade.
The London market ended the day on a modestly negative note and with 44.4% of the earlier losses of the day intact, while the New York market ended the day on a steady note. This close provides no indication of direction and with the Brazil Real marginally softer, one might expect to see only a cautious and hesitant near to steady start due for the markets in early trade today against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
JAN 1510 – 9 MAR 102.40 unch
MAR 1535 – 4 MAY 105.55 unch
MAY 1556 – 4 JUL 108.25 unch
JUL 1575 – 4 SEP 111.05 – 0.05
SEP 1593 – 4 DEC 114.95 – 0.10
NOV 1612 – 4 MAR 118.75 – 0.15
JAN 1630 – 4 MAY 121.15 – 0.20
MAR 1650 – 4 JUL 123.30 – 0.15
MAY 1670 – 4 SEP 125.40 – 0.15
JUL 1686 – 4 DEC 128.40 – 0.10
