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Coffee Market Report
February 28 2018

The Colombian Coffee Federation and following the completion of their biannual bean count that they now estimate that the countries coffee crop for the first half of 2018 shall only be 3% lower, which is a sharp correction from their estimate in December for a 20% dip in production over the six months. The decline in production having been related to the excessive rains, that were experienced over some of the country’s coffee districts.

The report furthermore speculated that if the production for the second half of this year returned to normal levels, that the possibility was for a crop of between 13.5 million and 14 million bags, for the year. This report in terms of the earlier speculation for a larger decline in production and added to the perspective of a larger new fine washed arabica coffee crop from Mexico and Central America and to be followed by a large new Brazil arabica coffee crop later this year, tending to contribute towards the prevailing bearish sentiment within the New York market.

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 42.40 usc/Lb., while this equates to 35.01% 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 4,380 bags yesterday; to register these stocks at 1,896,639 bags. There was meanwhile larger in number 13,155 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,290 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decline by 28.500 bags of 1.89% over the week of trade leading up to Monday 26th. February, to see these stocks registered at 1,482,667 bags, on the day.

The commodity markets were mixed but with the U.S. dollar showing some renewed muscle they were mostly on the back foot yesterday, to see the overall macro commodity index taking a softer track for the day. The Natural Gas, Cocoa, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Sugar, Coffee, Cotton, Copper, Orange Juice, 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 0.55% lower; to see this index registered at 427.72. The day starts with the U.S. Dollar steady and trading at 1.390 to Sterling, at 1.222 to the Euro and with the dollar buying 3.251 Brazilian Real, while North Sea Oil is steady and is selling at US$ 66.95 per barrel.

The London market started the day yesterday on a marginally softer note and with the New York market starting the day trading around par and with the markets maintaining this stance, into the early afternoon trade. As the day progressed both markets started to come under further pressure and particularly the New York market, which was more aggressively extending its losses, while the London market was taking more of a more modest mostly sideways negative track. The New York market did however bounce off the lows and head towards a more modest negative close for the day.

The London market ended the day on a negative note and with 90% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 50% of the earlier losses of the day intact. This close and with the U.S. dollar maintaining some muscle while the weaker Brazil Real threatens increased price fixation selling, is likely to inspire little better than a near to steady start for early trade today against the prices set yesterday.