Coffee Market Report
The European Coffee Federation ECF have reported that the port warehouse stocks held within reporting warehouses in the ports in Belgium, Germany, France, Italy and Spain decreased by 217,767 bags or 1.87% during the month of November 2018, to register these stocks at the end of the month at 11,422,800 bags. These stocks do not however include the unreported stocks from the industry on site inventory stocks, the transit bulk container stocks and stocks being held within non-reporting warehouses throughout Western and Eastern Europe.
The combination of West and East Europe consuming approximately 1.1 million bags of coffee a week, one might guess that the additional stocks that were not included in the report, could contribute as much as 2.5 million bags to the reported stocks. Thus, indicating that as at the end of August, the European coffee stocks might have been close to the equivalent of a relatively safe, twelve and half weeks of Western and Eastern European roasting demand.
This European coffee stock report is ahead of the pending delivery of new crop coffees from Vietnam, Mexico, Central America and India, which are now coming to the consumer markets. Thus, one might speculate, that this latest report can only add to the prevailing bearish sentiment within the coffee terminal markets.
The Australian Bureau of Meteorology have reported that for the time being, there is no immediate risk of a new El Niño phenomenon developing within the Pacific Ocean, but there remains a 50% chance for an El Niño to develop during the second or third quarter of this year. This report that would seemingly indicate normal weather conditions for the Pacific Rim coffee producing countries and for many further afield, would suggest that there are unlikely to be any frightening weather issues coming to the coffee markets for the short term.
The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.59 usc/Lb., while this equates to 33.47% 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 7,558 bags yesterday; to register these stocks at 2,484,313 bags. There was meanwhile a larger in number 12,979 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 38,562 bags.
The Certified Robusta coffee stocks held against the London exchange were seen to increase by 75,167 bags or 3.89% over the week of trade leading up to Monday 21st. January, to see these stocks registered at 2,005,667 bags.
The commodity markets were mostly on the back foot yesterday, to see the overall macro commodity index taking a softer track for the day. The Wheat and Gold markets nevertheless ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Corn, Soybean 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 1.17% lower; to see this index registered at 400.87. The day starts with the U.S. Dollar steady and trading at 1.294 to Sterling, at 1.137 to the Euro and with the dollar buying 3.814 Brazilian Real.
The London and New York markets started the day yesterday trading mostly close to par and with the markets taking something of a sideways track, into the early afternoon trade. As the afternoon progressed and with the negative influences of the softening overall macro commodity index and the weaker Brazil Real coming into play, both markets came under producer and speculative selling pressure, to set the markets for a soft close for the day.
The London market ended the day on a negative note and with 81.5% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 74.4% of the earlier losses of the day intact. This close will not do much for confidence but perhaps with producers mostly reluctant to follow the markets south and the consumer market industries rather lacklustre in terms of trade, the markets shall be due for a cautious steady start for early trade today. Against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
JAN 1497 – 22 MAR 103.35 – 1.60
MAR 1516 – 22 MAY 106.60 – 1.45
MAY 1540 – 18 JUL 109.35 – 1.40
JUL 1560 – 16 SEP 112.15 – 1.30
SEP 1579 – 14 DEC 116.00 – 1.30
NOV 1598 – 15 MAR 119.80 – 1.25
JAN 1615 – 16 MAY 122.15 – 1.20
MAR 1634 – 17 JUL 124.30 – 1.20
MAY 1653 – 18 SEP 126.40 – 1.20
JUL 1669 – 18 DEC 129.45 – 1.20
