World Market F.O.

Licht's International Coffee Report

World Market

Oct. 20 - Nov. 3, 2017

Robusta futures in London suffered became publicly available in 2006. were offering coffee beans at
sizeable losses pressured by the At the same time they increased their VND39,200-40,000 ($1.73-1.76) per
approaching harvest in top grower bearish bets for robusta coffee kg, the lowest level since September
Vietnam and disappearing concern futures and options to a net short 6 last year, as prices track a fall in
about harvest delays. The benchmark position of 6,735 lots from 5,469 lots London robusta coffee futures.
contract for January delivery shed in the previous week. Export contracts were unmatched as
$109 to settle at $1,856 per tonne, The ICO composite indicator price sellers offered the 5% black and
after falling as low as $1,830 a tonne fell from 119.79 cents/lb to 117.59 broken grade 2 robusta variety at a
on the first of November. That had cents in the period under review. discount of $40-50 to the January
been the lowest level since Colombian Milds gained 0.26 cent to contract while importers asked for a
September 2016. 143.41 cents/lb while Other Milds discount of $60-70.
Front-month November even shed rose 0.14 cent to 140.01 cents/lb. In Indonesia, the grade 4 defect 80
$120 to $1,900 a tonne. There was Brazilian Naturals dropped 0.60 cent robusta beans were traded at a $20-
renewed strength in the front-month's to 123.15 cents/lb and robustas were 30 premium to the January contract,
premium to January which down 5.47 cents at 93.76 cents/lb. tightening from a $40 premium a
temporarily climbed to around $70 a A storm heading to Vietnam’s week earlier. Most traders are only
tonne. The November contract had its Central Highlands coffee belt over fulfilling their delivery commitments
first notice day on November 1. A the past weekend caused rains in from previously signed contracts and
sharp decline in open interest in the several growing areas, preventing are not active, traders said, as harvest
prior session should ensure that there farmers from harvesting and drying will not start until April 2018.
are adequate supplies available to coffee beans. The harvest is still in its Brazil's think tank Cepea reported
tender. early stages as many cherries are not that rains have returned to the
Arabica futures in New York ended yet ripe, local sources said. arabica-producing regions, favouring
only slightly weaker due to a Traders said farmers in Daklak crops many of which were hit by dry
corrective bounce after heavy fund
selling in the first session of
November had pressured the market
down to its weakest level since late
June. All in all, the most-active
December contract dropped 1.30 cent
to 123.95 cents/lb, after falling as
low as 121.20 on November 1.
Second-month March gave up 1.50
cent to 127.50 cents/lb.
The arabica premium continued its
recent recovery as it rose for seven
out of the past eight sessions to reach
39.76 cents/lb. This reflects a gain of
nearly 7 cents during this time.
Speculators slightly reduced their
arabica coffee net short position by
499 contracts to 46,469 contracts in
the week to October 31, CFTC data
showed. However, the net short
position remained near the previous
week's highs, the largest since data

144 2017 F.O.Licht GmbH Vol.32, No.11 / 06.11.2017

F.O.Licht's International Coffee Report World Market
weather and intense heat. Rains were
highly expected, mainly in Cerrado ICO Group Indicator Prices
Mineiro and Mogiana, where drops Monthly Averages: Jan 1992 – Oct 2017
of developing fruit were reported. In
350
the remaining regions, weather
Colombian Mild Arabicas
conditions favoured crops after the 300
last flowering event. Other Mild Arabicas

Regarding robusta, light rains were 250 Brazilian Natural Arabicas

observed in Espírito Santo. The Robustas

US cents/lb
warm weather and the low rainfall 200

affected crop conditions. Growers

150
were concerned as water levels at
reservoirs in the state have been 100
decreasing day by day. Thus, crop
development may be hampered if it 50
does not rain significantly in
0
November. Somar Meteorologia
forecast that it should rain throughout
Brazil in November, with larger
volumes forecast for the second Source: ICO
fortnight of the month.
Green coffee exports in October
Colombia produced only 1.073 mln August, the Karnataka Planters'
2017 amounted to 2.644 mln 60-kg
60-kg bags of washed arabica coffee Association (KPA) had already said
bags, up from 2.177 mln in
in October, the first month of the new that coffee output in 2017/18 will
September but below 2.975 mln in
2017/18 season, down 23% from likely fall to its lowest level in eight
the same month last year. This
1.395 mln in the same month a year years, with low rainfall hitting the
brought total green coffee exports in
earlier, the National Coffee Growers' development of crops and
the first seven months of 2017/18
Federation said. Exports totaled encouraging the spread of plant-
(Apr/Mar) to 14.927 mln bags, down
1.156 mln bags, down only 6% from damaging pests. KPA sources also
9.8% from 16.557 mln in the
October 2016. pointed to the impact of climate
corresponding year-ago period.
Uganda’s coffee exports in change which prompted an increase
Reuters reported that supplies of
September 2017 rose by 63.6% on in pests and diseases.
coffee from Brazil for prompt
the year to 341,839 60-kg bags from All in all robusta coffee futures fell
delivery have tightened in the United
208,956, boosted by yields from to a 14-month low in the period
States and Europe as importers say
maturing new trees, state-run under review as concern about
some shipping companies are cutting
regulator Ugandan Coffee supply tightness waned. Largely
container availability. Low Brazilian
Development Authority (UCDA) positive weather reports from Brazil
exports in recent months, especially
said. This brought total exports in the also kept arabica values under
in September, have resulted in stock
now-completed 2016/17 (Oct/Sep) pressure. The ongoing flowering
draw-downs and a surge in demand
season to 4.605 mln bags, up 38.9% period in Brazil for the 2018/19 crop
for Brazilian natural arabica coffee
from 3.316 mln bags a year ago. will remain a key element on the
on the spot market, a US coffee
Last but not least, Indian planters radar of market participants in
importer said. As a result, the
from the state of Karnataka said the coming weeks. The weather has
differentials on the spot market are
recently issued projection by the obviously caused some strikes
narrowing and the price of some fine
Coffee Board of India (CBI) for against that crop, but a more reliable
cup Brazilian beans moved from a
2017/18 output of 5.840 mln 60-kg estimate over the size of the next
discount under the benchmark "C"
bags is too high. Their estimate is a crop will only be possible with the
contract to nearly par.
much-smaller 5.2 mln bags. In start of calendar 2018.

Vol.32, No.11 / 06.11.2017 2017 F.O.Licht GmbH 145