The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of December were 39,024 bags or 9.18% lower than the same month last year, at a total of 386,217 bags. This following a good performance in the previous two months, results in the cumulative coffee exports for the first three months of the present October 2017 to September 2018 coffee year to still be 168,875 bags or 16.21% higher than the same period in the previous coffee year, at a total of 1,210,953 bags.

Thus, Uganda who reported exports coffee exports for the previous October 2016 to September 2017 coffee year of 4,605,158 bags, have started the new October 2017 to September 2018 coffee year on a good upside track. But it is early day’s in the new coffee year and many have forecast for a dip due for the present coffee year, which might reduce exports for the present coffee year of closer to more modest 4 million bags.

These potentially more modest Ugandan coffee exports during the present coffee year to be made up by an approximate 77% share to be related to robusta coffee and thus maintaining Uganda as Africa’s leading robusta coffees supplier, while remaining second in the continent in terms of arabica coffees supply to the consumer markets. Where Ethiopia still dominates overall arabica coffee production and likewise, arabica coffee supply to the consumer markets.

The Colombian Coffee Growers Federation have voiced their fears that due to the negative effects of wet and cloudy weather for the last quarter of 2017, that there is a potential for a 20% decline in coffee production for the first half of this year. While with the Colombian exports influenced by significant volumes of oil exports and the Colombian Peso steadily firming against the U.S. dollar while coffee export prices are influenced by the reference prices of the soft New York market, the internal market prices are threatening to fall below farm production costs.

Fortunately for the Colombian coffee farmers there is state and Federation assistance programs in place to counter loss making production costs, but while this is for the Colombian farmers presently a matter of concern, the soft nature of the international coffee prices and accompanied by a weaker U.S. dollar, is becoming a problem for many other coffee producer communities. A factor that so long as the coffee markets remain soft, must eventually impact upon global coffee production volumes.

But this takes time to impact and presently the funds and speculative sectors of the volatile New York market remain focused upon the prevailing more than adequate short term overall coffee supply and the pending larger new Brazil crop, which shall ensure good supply of Brazil coffees for the second half of the year. Thus, for the present, remaining with their significant net short sold positions within the New York market, which has accentuated the decline in the value of this market.

This leaves the market is open to a very sharp short covering price rally, as soon as any striking supportive fundamental news is forthcoming to change market sentiment. Albeit that it that the prospects of such news and a market recovery is now looking to be too far away to quickly assist the Mexican and Central American coffee farmers, who are presently in full harvest and have already been obliged to sell good volumes of new crop coffees against the reference prices of the prevailing market. But one would think that there shall be a close watch upon the February and March rainfall reports from Brazil as any extended dry spells, would very quickly change the perspective of a large new crop for this year and the prevailing bearish sentiment that prevails within the New York market.

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.62 usc/Lb., while this equates to 34.41% 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 11,012 bags yesterday; to register these stocks at 2,003,899 bags. There was meanwhile a smaller in number 3,705 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 43,057 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 95,833 bags or 4.95% over the week of trade leading up to Monday 22nd. January, to register these stocks at 1,839,000 bags, on the day.

The commodity markets had another mixed day yesterday and with many markets tending softer, but with the support of the influential Oil markets, the overall macro commodity continued to show a degree of modest buoyancy for the day. The Oil, Natural Gas, Sugar and Gold markets had a day of buoyancy and the Soybean market was steady for the day, while the Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.035% higher; to register this index at 427.12. The day starts with the U.S. Dollar sharply softer and trading at 1.404 to Sterling, at 1.232 to the Euro and 3.237 to the Brazilian Real, while North Sea Oil is steady and is selling at US$ 69.90 per barrel.

The London market started the day on a steady note and trading around par, while the New York market started the day on a softer note and with the London market tending softer to join the New York market within negative territory, for the early afternoon trade. As the afternoon progressed the New York market attracted further selling pressure and triggering sell stops to move into deeper negative territory, before taking a soft sideways track, while the London market took a less aggressive downside track for the day.

The London market ended the day on a negative note and with 69.2% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 78% of the earlier losses of the day intact. This close tends to paint a negative picture for the charts and with the weaker dollar assisting to bring to the fore increased producer selling, is not supportive for the market. But one might think that the combination of concerns over Colombian supply and the evidence of an extensive short sold situation in New York shall bring forth some degree of caution and rather set the markets for a steady start for early trade today, against the prices set yesterday, as follows:

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

JAN 1769 – 14
MAR 1749 – 18                                             MAR 120.95 – 1.60
MAY 1734 – 17                                             MAY 123.40 – 1.60
JUL 1761 – 18                                               JUL 125.75 – 1.60
SEP 1765 – 18                                               SEP 128.15 – 1.55
NOV 1773 – 17                                             DEC 131.60 – 1.55
JAN 1780 – 17                                               MAR 134.85 – 1.60
MAR 1794 – 16                                             MAY 136.80 – 1.60
MAY 1808 – 16                                              JUL 138.55 – 1.60
JUL 1838 – 16                                                SEP 140.30 – 1.60