The soft nature of the reference prices of the New York market are impacting upon the coffee farmers within Mexico and Central America, who are presently harvesting and selling their new crop coffees. This having its influence upon the protests by coffee farmers in front of the offices of the Honduras Coffee Institute in Tegucigalpa yesterday, who are demanding relief from the countries withholding tax on coffee exports. This tax having for many years been something of an encouragement for many coffee farmers in Honduras to rather smuggle some of their coffees into neighbouring Guatemala for cash sales, so as to avoid the discounts that come with tax related discounted local prices.

But it is not only coffee farmers in Honduras who are suffering at present, but arabica coffee farmers globally and while within most countries there is some degree of price resistance that the resulting positive price differentials demanded for new crop coffee sales, these are mostly not sufficient to make arabica coffee farming rewarding crop in terms of farm profits. Making one question what impact this shall have upon longer term global arabica coffee production, as farmers within many producer countries struggle to afford the necessary fertilisers and protective chemicals, to maintain their yields.

However, with the demise of the value of the New York arabica coffee market related to net short sold speculative and fund focus upon the prospects for a larger new Brazil arabica coffee crop due to start to impact upon global coffee supply in four and half months’ time, it is difficult to foresee any short-term relief for the arabica coffee farmers. Unless there are some short-term problems with rainfall over South East Brazil, which is presently not being forecast.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.41 usc/Lb., while this equates to 32.92% 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 4,101 bags yesterday; to register these stocks at 1,901,180 bags. There was meanwhile larger in number 10,805 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,391 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 65,000 bags or 4.12% over the week of trade leading up to Monday 19th. February to see these stocks registered at 1,511,167 bags, on the day.

The commodity markets were mixed in trade yesterday, with the overall macro commodity index taking a sideways track for most of the day. The U.S. Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton and Soybean markets had a day of buoyancy, while the Brent Oil, New York arabica Coffee, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.13% lower; to see this index registered at 424.80. The day starts with the U.S. Dollar showing steady and trading at 1.398 to Sterling, at 1.233 to the Euro and with the dollar buying 3.255 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 64.25 per barrel.

The London and New York markets started the day yesterday trading marginally south of par, but with both markets soon moving back to par and taking a steady track, into the early afternoon trade. As the afternoon progressed the New York market started to falter and to move back into negative territory, while the London market remained close to par. The London market did however attract support and moved up into relatively strong positive territory in late trade, which was not mirrored within the New York market that headed towards a soft close for the day.

The London market ended the day on a positive note and with 67.4% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 78.9% of the earlier losses of the day intact. This mixed close does likewise paint a mixed picture for the charts, but there might be some caution over the Tet holiday ending and bringing with it the prospects for increased price fixation selling pressure coming to the fore for the London market. Making one think that the London market might come under some corrective negative pressure and the New York market some corrective modest buoyancy for early thin trade today against the prices set yesterday, as follows:

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

MAR 1812 + 35                                              MAR 118.20 + 0.25
MAY 1770 + 29                                              MAY 119.70 – 0.75
JUL 1794 + 27                                                JUL 122.00 – 0.75
SEP 1798 + 28                                                SEP 124.35 – 0.70
NOV 1802 + 27                                              DEC 127.90 – 0.70
JAN 1808 + 27                                               MAR 131.35 – 0.65
MAR 1816 + 25                                             MAY 133.50 – 0.60
MAY 1831 + 23                                              JUL 135.35 – 0.60
JUL 1853 + 18                                                SEP 137.00 – 0.60
SEP 1856 + 18                                                DEC 139.55 – 0.50