The Minister of Agriculture and Livestock in Costa Rica has reported that the country has identified new outbreaks of Leaf Rust or Roya over approximately 12,000 hectares of lower grown coffee areas, which is related to weather conditions conducive to the development of Roya. The ministry is taking it seriously and is taking steps to assist farmers to control the problem and very importantly, to restrict the spread of this devastating disease.

There have been no such formal reports of relatively widespread Leaf Rust or Roya from the neighbouring coffee producing countries in Central America but with similar climatic conditions usually the case within this important fine washed arabica producer bloc, it is likely to become a thread within the region. It is of course a problem that can be chemically controlled but with farmers presently struggling to make profits from their recently completed new coffee crop at present, it would most likely require state intervention to finance the controls for many if not most of the farmers.

Meanwhile the South and Central American coffee producers which account for approximately 58% of global coffee supply are starting to wind down ahead of the important Easter holiday season for the region, which is due to dull the already relatively lacklustre physical trade out of the region, which is likely to reduce price fixation hedge selling into the New York market until post the Easter holidays. This might assist towards some degree of stability for the New York market for the rest of the week, albeit that volume within this market is more related to the already well sold speculative and fund sectors of the market, than to the physical coffee trade.

Both the New York and London coffee markets due to close for the Good Friday holiday this week and while the London market shall remain closed for Easter Monday next week, the New York market shall open late for a shorter day’s trade.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.25 usc/Lb., while this equates to 33.84% 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 2,669 bags yesterday; to register these stocks at 1,943,236 bags. There were meanwhile a smaller in number 223 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 25,446 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 27,000 bags or 1.97% in the week of trade leading up to Monday 26th. March, to see these stocks registered at 1,341,167 bags, on the day.

The commodity markets were mixed in trade yesterday and against some renewed stability for the U.S. dollar, with the overall macro commodity index marginally softer for the day. The Natural Gas, Sugar, Coffee, Cotton and Copper markets had a day of buoyancy and the Oil markets were steady for the day, while the Cocoa, Orange Juice, Wheat, Corn, Soybean, 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 0.14% lower; to see this index registered at 423.47. The day starts with the U.S. Dollar steady and trading at 1.419 to Sterling, at 1.24 to the Euro and with the dollar buying 3.326 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 68.05 per barrel.

The London market started the day yesterday lacking producer selling activity and with immediate buoyancy, while the New York market started the day trading hesitantly either side of par and to see the London market remaining in positive territory and the New York market close to par, into the early afternoon trade. As the afternoon progressed the London market started to attract more support and with buy stops being triggered to accentuate the gains, with the New York market attracting short covering buying support and moving up into positive territory. The London market managed to maintain its corrective positive stance through to the close, but the New York market did hit a ceiling and shed some weight in later trade.

The London market ended the day on a very positive note and with 95.9% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 50% of the earlier gains of the day intact. This close might be seen to be more corrective than a change in sentiment but might well bring with it some degree of confidence in the present trading range, but with the threat of some origin selling due for the firmer London market. Thus one might foresee the possibility for only a near to steady start for the London market and a 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.

MAR 1783 + 47
MAY 1735 + 47                                              MAY 118.95 + 0.80
JUL 1757 + 42                                                JUL 121.00 + 0.80
SEP 1757 + 41                                                SEP 123.20 + 0.75
NOV 1761 + 41                                               DEC 126.60 + 0.70
JAN 1765 + 40                                                MAR 130.10 + 0.70
MAR 1777 + 39                                              MAY 132.45 + 0.75
MAY 1790 + 39                                              JUL 134.55 + 0.75
JUL 1804 + 39                                                SEP 136.40 + 0.70
SEP 1817 + 39                                                DEC 139.10 + 0.60