Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Coffee Market Report
April 05 2018
The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of March was 17,000 bags or 1.64% higher than the same month last year, at a total of 1,037,000 bags. This has contributed to the countries cumulative production for the first six months of the present October 2017 to September 2018 coffee year to be 473,000 bags or 5.95% lower than the same period in the previous coffee year, at a total of 7,482,000 bags.
The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of March were 148,000 bags or 12.87% lower than the same month last year, at a total of 1,002,000 bags. This has contributed to the countries cumulative coffee exports for the first six months of the present October 2017 to September 2018 coffee year to be 510,000 bags or 6.86% lower than the same period in the previous coffee year, at a total of 6,923,000 bags.
This dip in both production and exports over the past six months in Colombia and as the third largest coffee producer would most usually have had a been supportive for sentiment within the New York arabica coffee market, but with many foreseeing the prospects for rising Central American and Brazil arabica coffee supply for the year, this has not been the case so far. While in the meantime one would speculate that the exports are not really lower for the past month because of a lack of available coffee but are more related to some degree of internal market price resistance and complacent consumer market industries, because of the prevailing soft reference prices of the New York market and good levels of overall consumer market arabica coffee stocks.
Meanwhile in reaction to the soft internal prices the Colombian Coffee Federation failed to gain government support yesterday, in their request for aid for the Colombian coffee farmers to assist them to live with often loss-making farm gate coffee prices. This is somewhat of a surprise as historically the Colombian government has been quite supportive at times of low coffee prices and one might start to speculate that the lack of aid might impact upon the levels of farm inputs, which could result in flat to perhaps even lower production yields for the coming October 2018 to September 2019 coffee year.
A Reuters report indicates that traders within Vietnam are quite far apart from each other in terms of their estimates for exports of mostly robusta coffees for the month of April, with some who foresee that they might be as low as 1.7 million bags, while some foresee a potential for exports of as much as 2.3 million bags. The lower estimates one might presume to be related to lacklustre consumer market demand and to some degree of internal market price resistance, as following the larger new crop there is certainly not shortage of coffee within the internal market.
The International Coffee Organisation have increased by 0.46% their forecast for global coffee supply for the present October 2017 to September 2018 coffee year, which they now peg at 159.66 million bags. This and with their estimated global consumption for the present coffee year, indicates a modest surplus supply of 778,000 bags. This report further contributes to the prevailing bearish sentiment within the speculative sector of the coffee markets, which is looking at the prospects for a significantly larger new Brazil crop and with the various forecasts averaging approximately 10 million bags higher for this year, as it would indicate a significant longer term surplus supply for the forthcoming October 2018 to September 2019 coffee year.
The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.61 usc/Lb., while this equates to 32.47% 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 1,453 bags yesterday; to register these stocks at 1,945,462 bags. There were meanwhile a smaller in number 499 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,257 bags.
The commodity markets were mostly on the back foot yesterday, to see the overall macro commodity index taking a softer track for the day. The Natural Gas, Coffee, Orange Juice and Gold markets nevertheless had a day of buoyancy, while the Oil, Sugar, Cocoa, Cotton, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.49% lower; to see this index registered at 418.61. The day starts with the U.S. Dollar steady and trading at 1.406 to Sterling, at 1.227 to the Euro and with the dollar buying 3.329 Brazilian Real, while North Sea Oil is steady and is selling at US$ 66.70 per barrel.
The London market started the day yesterday of a steady note and trading either side of par, while the New York market started the day on a marginally softer note and with the markets maintaining this stance, into the early afternoon trade. As the afternoon progressed the London market started to attract support and to move higher into positive territory and with the New York market moving up into modest positive territory, to see both markets heading towards a positive close for the day.
The London market ended the day on a positive note and with 61.1% of the earlier gains of the day intact, while the New York market ended the day on a modestly positive note and with only 35.7% of the earlier gains of the day intact. This positive close might bring with it some degree of confidence and assist towards a steady start for early trade today, against the prices set yesterday.