The well-respected United States Department of Agriculture USDA report on the Mexican coffee industry has been issued, with firstly a rather dramatic 59.09% increase in their assessment of the recently completed new crop, which they now report to have been 3.5 million bags. They further more forecast an 8.57% increase in production for the forthcoming new crop, which shall start coming to the market at the end of this year, which they foresee to be approximately 3.8 million bags. This crop related to a 94.7 to 5.3 ratio of arabica to robusta coffees.

Mexico is however a complex market and with a domestic consumption that the USDA assess to be approximately 3.89 million bags, but with this demand and supplemented by imports of approximately 1.55 million bags of mostly bean coffees but with soluble coffees and roast and ground coffees, accounting for approximately 17% of the imports. This said, the USDA are forecasting that Mexico shall see an 18.2% increase in green coffee exports for the next October 2017 to September 2018 coffee year at a total of 1.95 million bags and accompanied by exports of Soluble coffees that shall be the equivalent of 924,000 bags and roast and ground coffee exports, which shall be the equivalent of 230,000 bags of coffee.

The International Coffee Organisation have reported that the global coffee exports for the month of April were 5.3% lower than the same month last year, at a total of 9.54 million bags. This dip in exports does however follow some aggressive export numbers in previous months and the report notes that the cumulative global coffee exports for the first seven months of the present October 2016 to September 2017 coffee year are still 3.1% higher than the same period in the previous coffee year, at a total of 69.51 million bags.

These relatively high volumes of exports having contributed to the relatively high consumer market arabica coffee stock levels, which are proving to be negative for market sentiment within the New York market at present. In this respect, the export volumes from Central America are expected to slow over the coming months, but to be supplemented by good volumes of arabica coffees anticipated to come from larger new Peru crop and from Colombia, now that the latter is starting to see the delayed Mitaca crop harvest starting to pick up in volume. Thus, providing for little concern over the prospects for fine washed arabica coffee supply, for the foreseeable future.

Somewhat reflecting the bearish sentiment that prevails within the arabica coffee market, is the report that the Citigroup Global markets report yesterday, has lowered its New York market price forecast by 3.95% to now foresee the average price of this year to be 146 usc/Lb. The report noting that for the longer term they have also lowered their forecast for the coming year by 4.7%, as they now forecast an average price of 162 usc/Lb. for 2018.

The Ivory Coast west Africa’s largest robusta coffee producer have reported that the countries coffee exports for the first four months of this year are 151,417 bags or 42.32% lower than the same period last year, at a total of 206,300 bags. This being a relatively modest number, in terms of the forecasts for exports of well in excess of 1 million bags for this year.

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 40.44 usc/Lb., while this equates to 30.71% price discount for the London robusta coffee market. This arbitrage may nevertheless become an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,602 bags yesterday; to register these stocks at 1,474,778 bags. There was meanwhile a larger in number 2,994 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 50,956 bags.

The commodity markets were mixed in trade yesterday and against a marginally softer U.S. dollar, but with the overall macro commodity index nevertheless taking a softer track for the day. The Cocoa, Copper, Grains and Gold markets had a day of buoyancy and the Silver market was near to steady, while the Oil, Sugar, Coffee and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.30% lower, to see this Index registered at 406.55. The day starts with the U.S. Dollar steady and trading at 1.285 to Sterling and at 1.123 to the Euro, while North Sea Oil is near to steady and is selling at $ 50.00 per barrel.

The London and New York markets started the day yesterday with early buoyancy and with both markets taking a modest positive track into the early afternoon trade, but with the New York market starting soon starting to falter and to slip back to par. As the afternoon progressed the New York market started to extend its losses and followed by the London market, which shed its gains and slipped back to join the New York market in negative territory. Both market tended to stabilise in late trade and particularly so the London market, with the markets taking a sideways track through to the close. The London market ended the day on a soft note but having recovered 52% of the earlier losses of the day, while the New York market ended the day on a very soft note and with 73% of the earlier losses of the day intact. This softer close does little to inspire confidence and one might think that there shall be little better than a near to steady start for the London market and perhaps a more steady start for the New York market for early trade today, against the prices set yesterday, as follows:

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

JUL 1995 – 15                                                JUL 129.35 – 2.75
SEP 2012 – 12                                                SEP 131.70 – 2.70
NOV 2007 – 11                                             DEC 135.25 – 2.70
JAN 1996 – 12                                             MAR 138.65 – 2.70
MAR 1983 – 17                                           MAY 140.85 – 2.75
MAY 1980 – 19                                             JUL 143.05 – 2.75
JUL 1993 – 21                                               SEP 145.05 – 2.75
SEP 2007 – 21                                              DEC 147.45 – 2.75
NOV 2014 – 21                                           MAR 149.85 – 2.75
JAN 2014 – 21                                             MAY 150.90 – 2.75