24th. April, 2014.
There was a very positive and confident report from the Vietnam Coffee and Cocoa Association yesterday, who forecast that the country shall export 25 million bags of mostly robusta coffee during this year, at a value of approximately 3 billion U.S. dollars.   While the association talked in terms of the issues of the drought earlier in the year in Brazil of longer term tightness in world coffee supply, which would buoy prices and the fortunes of their coffee industry.

Meanwhile drought is no longer an issue for Brazil, with overall good April rains for most of the coffee districts and with the possibility of a mild El Nino coming into play for the second half of the year in the Pacific ocean and its resulting influence for increased rains for south and central Brazil, it would indicate a good spring and summer rain season for the main coffee districts.   This one would expect shall assist to trigger a good flowering towards the follow on 2015 crop, which one would think shall be a relatively good crop.   One that shall be further supported by the now more affordable in terms of coffee prices and farm profits, by good levels of farm inputs.

The spring and early summer rain season is starting in Central America and the flowerings towards the next October 2014 to March 2015 crop, which shall likewise be supported by profitable sales from the recently completed harvest and good levels of farm inputs.   Thus so far the forthcoming new crop is looking to much improved over the 2013/2014 crop that suffered from both the devastating effects of Roya or Leaf Rust and the lower levels of farm inputs, which came with the dismal prices and lack of profits during last year.

It is still early days in terms of Mexican and Central American coffee production to forecast the next crop, but potentially following the recently completed combined crop of approximately 16 million bags, one would think that it could once again be close to 17.5 million bags.   This added to the potential for the coming year of a Colombian crop of close to 12 million bags, should see regional fine washed arabica coffee production rise towards the 29.5 million bags level and thus, exceed the levels of coffee from the region of the past two years.

Making note that with the recent rally in prices that has been influenced by the weather problems encountered in Brazil and the inability of many main stream roasters to absorb the resulting higher fine washed arabica prices in their blends, that there has been a softening in demand for these coffees.   This would therefore suggest that on the longer term, there shall be something of an oversupply of mild coffees coming into play, which shall by the coming year have an effect upon the premiums that these coffees presently attract, relative the natural arabica coffee prices.

The struggling Cameroun coffee industry has reported that robusta coffee exports for the month of March were 12,667 bags or 43.8% lower than the same month last year, at a total of 16,250 bags.   This contributed to the cumulative robusta coffee exports for the first four months of their December 2013 to November 2014 robusta coffee year being 16,800 bags or 36.35% lower than the same period in the previous coffee year, at a total of 29,417 bags.

Meanwhile the Cameroun’s arabica coffee exports for the month of March were registered at 1,400 bags, which with the arabica coffee year related to the more conventional October 2013 to September 2014 coffee year, sees the countries arabica coffee exports for the first six months of the present coffee year being 10,367 bags or 77.46% lower than the same period in the previous coffee year, at a total of 3,017 bags.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,600 bags yesterday, to register these stocks at 2,577,285 bags.   There was meanwhile a similar in volume 1,905 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 15,203 bags.

The commodity markets are seemingly shrugging off the negative influences of slowing manufacturing activity in China, as they gain confidence from the steady growth in North America and were overall steady in trade yesterday.  The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets showed buoyancy, while the Oil, Soybeans, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.48% higher; to see this Index registered at 568.19.  The day starts with the U.S. Dollar steady at 1.678 to Sterling and 1.381 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 109.00 per barrel.

The London market started the day yesterday on a steady note, while the New York market attracted some negative pressure in early trade, but soon recovered and both markets showed good buoyancy into the afternoon’s trade.   This remained the track for the day but with markets losing some of their muscle as the day progressed and with the London market ending the day on a positive note and with only 34.1% of the gains of the day intact, while the New York market ended the day on a likewise positive note, but again with only 9.8% of the gains of the day intact.  While the arbitrage between the markets yesterday remained steady at 115.52 usc/Lb. and therefore, equates to a very attractive 53.99% price discount for the London robusta coffee market.  This positive but overall rather flat close might not be inspirational for sentiment and one might thus expect to see a steady to softer start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2152 + 6                                                 MAY     212.35 + 0.55
JUL      2170 + 14                                                JUL     213.95 + 0.55
SEP     2176 + 16                                                SEP     215.95 + 0.55
NOV    2179 + 16                                                DEC     218.15 + 0.65
JAN     2184 + 16                                                MAR    220.30 + 0.90
MAR    2190 + 16                                                MAY     220.85 + 0.80
MAY    2198 + 17                                                 JUL     220.45 + 0.70
JUL     2205 + 19                                                 SEP     219.55 + 0.65
SEP     2208 + 22                                                 DEC    218.50 + 0.70
NOV    2208 + 26                                                 MAR    217.35 + 0.60

23rd. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 26.79% in the week of trade leading up to Tuesday 15th. April;  to register a net long position of 30,461 Lots on the day.  This speculative net long position within the London market which is the equivalent of 5,076,833 bags has most likely been further buoyed, over the following days of mixed trade but finally positive trade, which has since followed.

With the buoyancy of the reference prices of the London market in play, the post Easter holiday trading activity for Vietnam coffees is expected to become relatively active.   Especially so as with still significant stocks of unsold coffees lying with farm and internal traders hands within the country, there is encouragement to look to cash in these coffees.

Meanwhile to further assist in the uptake and buying interest in Vietnam coffee stocks is the fact that the London market against which trade stocks are hedged, has turned back into a normal price structure following many months of inverted structure.  This will assist the consumer market traders to buy in and look to the longer term premium priced contracts, to assist in the finance of their carry of their stocks.

Whether this potential for increased selling volumes out of Vietnam shall have a short to medium term impact upon the now very much depleted certified robusta coffee stocks held against the London market that are now down to an insignificant 231,000 bags is however questionable, as the sharp rise in the arabica coffee prices that cannot be easily followed by price sensitive consumer brands, shall encourage an increase in robusta coffee percentages within many blends.   Thus while one can expect that the certified robusta coffee stocks shall soon start to recover, one would think that this shall be a very slow recovery for the coming months.

While with the potential for the consumer market industry players to perhaps replace overall between 2 million to 4 million bags of arabica coffees with robusta coffees over the coming year, it does reduce some of the negative effects for the potential of a deficit new Brazil arabica coffee crop this year.   A deficit that is in reality not yet seen to be one to cause any shortage in supply, as this deficit is still foreseen to be adequately covered by the substantial carry over arabica coffee stocks in Brazil.

Yesterday was all about Brazil and what one has to see to have been an overreaction to the forecast by Volcafe for the new Brazil crop to be 45.5 million bags, which is a 10% cut from their previous downgraded forecast.  This latest forecast having triggered speculative buying, which in turn triggered buy stops and a surging rally for the New York market.    One that was not followed with the same aggression, by the less volatile and more fundamental in nature London market.   This rather emotive trade forecast one has to note is even 1.5 million bags lower than the traditionally conservative Brazil Coffee Industry Association forecast from two weeks ago and in this respect, one might question such a low crop figure.

In terms of weather and with the majority of the main coffee districts in Brazil having already exceeded their five year average rainfall for the month of April, there is a new cold front entering from the south of Brazil, which is likely to bring more rain to the coffee districts during the course of this week.   This will further assist to build up the ground water retention levels ahead of the forthcoming dry and cold winter season, which shall take some of the stress away from the trees over the harvest period.

The arbitrage between the markets, but with the London market closed for the day broadened yesterday to 115.61 usc/Lb. and therefore, equates to a very attractive 54.17% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,265 bags yesterday, to register these stocks at 2,578,885 bags.   There was meanwhile a smaller in volume 2,775 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 13,298 bags.

The commodity markets were mixed in trade yesterday, but overall steady in nature.  The Cocoa, Sugar, London robusta Coffee, Cotton, Copper, Gold and Silver markets were positive and the New York arabica Coffee market showed remarkable muscle for the day, while the Oil markets were steady and the Natural Gas, Corn, Wheat, Soybean, Platinum and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.64% higher; to see this Index registered at 565.48.  The day starts with the U.S. Dollar steady at 1.682 to Sterling and 1.383 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.90 per barrel.

The London market started the day yesterday on a steady note, while the New York market showed modest buoyancy from the start.   The New York market started to attract further speculative support and to build on its gains into the afternoon trade and with the London market following suit in a more modest manner.  The New York market triggered buy stops to accelerate the gains and to hit new two year highs, but did come under a profit taking and price fixation pressure to shed a good percentage of the gains, before bouncing back by the close.   The London market came under pressure later in the day and while it ended the day on a positive note, it was only with 39.4% of the gains of the day intact, while the New York market ended the day on a very positive note and with 86.1% of the gains of the day intact.    This strong close is supportive for sentiment, but with the fundamentals behind the rally yesterday somewhat questionable, one might expect to see some degree of profit taking coming into play for early trade today in New York, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2146 + 28                                               MAY     211.80 + 15.10
JUL      2156 + 20                                                JUL     213.40 + 14.20
SEP     2160 + 23                                                SEP     215.40 + 14.15
NOV     2163 + 23                                               DEC     217.50 + 13.70
JAN     2168 + 24                                                MAR    219.40 + 13.45
MAR    2174 + 23                                                MAY     220.05 + 13.25
MAY    2181 + 22                                                 JUL     219.75 + 13.05
JUL     2186 + 23                                                 SEP     218.90 + 12.95
SEP     2186 + 23                                                 DEC    217.80 + 12.65
NOV    2182 + 19                                                 MAR    216.75 + 12.40

22nd. April, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 1.73% in the week of trade leading up to Tuesday 15th. April;  to register a net long position of 40,233 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.91%, to register a net long on the day of 45,689 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 4.44%, to register a net long position of 27,514 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,800,097 bags has most likely been marginally increased over the following days of overall positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

With most of the dominant Latin American producer bloc and so too the dominant European consumer market on holiday yesterday, there has been little in the way of coffee market news coming to the markets, which remain focused upon the issue of the probable dismal new crop from Brazil this year.   With this factor presently the only directional news for the markets, as it would appear that for the rest of the producers it is business as usual and with nothing dramatic to report, in terms of medium to longer term production and supply.

Meanwhile in terms of the Brazil new crop news, there are some arabica coffee districts reporting losses from the original crop forecasts of 15% to 20% of their late last year estimates, while others talk losses as high as 35% of original potential.    One might comment that with the Brazil arabica crop initially having been forecasted at approximately 40 million bags and therefore 71% of the overall new crop, these early reports that indicate an approximate 25% loss factor.

This 25% loss factor would extrapolate to a potential loss factor of 10 million bags, which would reduce the overall crop to around 46.5 million bags.    Thus with an overall domestic market and export market demand of approximately 54 million bags per annum, a deficit crop of 7.5 million bags which shall absorb 70% of the carryover stocks into this new crop, over the second half of this year and the first half of next year.   A factor that shall really only become a problem, should climatic conditions cause any concerns for the follow on 2015 crop, which presuming a frost free winter over the Brazil coffee districts, shall turn focus towards the spring and summer rainfall reports during the last quarter of this year.

The arbitrage between the markets, but with the London market closed for the day narrowed yesterday to 102.31 usc/Lb. and therefore, equated to a very attractive 51.36% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,130 bags yesterday, to register these stocks at 2,585,150 bags.   There was meanwhile a larger in volume 4,793 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 16,073 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 74,500 bags or 24.39% over the two weeks of trade leading up to Monday 14th. April: to see these stocks were registered at a minimal 231,000 bags.   The decline in these stocks has to be seen to be supportive for sentiment for the London market, which retains it’s well discounted to the New York market buoyancy and makes robusta coffees an attractive buy to the consumer market industries.

The commodity markets were with the impact of the holidays keeping trade thin, mixed but tending softer yesterday.   The Natural Gas and Sugar markets showed buoyancy and the Oil, Coffee, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold, Silver, Platinum and Palladium markets were softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.84% lower; to see this Index registered at 561.85.  The day starts with the U.S. Dollar steady at 1.679 to Sterling and 1.379 to the Euro, while Brent Crude is near to steady and is selling at $ 109.50 per barrel.

The London market remained on holiday yesterday to leave the day for a late start for solo trade for the New York market, which opened with follow through buoyancy from the rather dramatic rally that ended off the previous week on Thursday and adding 1.80 usc/Lb. in value.    This buoyancy was however soon under threat and the market dipped back into negative territory and despite a short bounce back into positive territory, drifted lower and set a sideways track in relatively thin trade for the rest of the day.   The New York market thus carried on to end the day on a soft note and with 83% of the losses of the day intact, but nevertheless showing good value for the producers.   It is difficult to foresee following this close the direction for the markets, which might with the news of the falling London stocks reduce the negative pressure upon sentiment for the London market that would be expected from yesterday’s softer close in New York and thus might suggest a cautiously steady start for early trade today against the prices set in London on Thursday and New York yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2118 + 54                                               MAY     196.70 – 4.50
JUL      2136 + 54                                                JUL     199.20 – 4.90
SEP      2137 + 50                                               SEP     201.25 – 4.95
NOV     2140 + 50                                               DEC     203.80 – 4.90
JAN     2144 + 53                                                MAR    205.95 – 4.90
MAR    2151 + 60                                                MAY    206.80 – 4.90
MAY    2159 + 66                                                 JUL     206.70 – 4.80
JUL     2163 + 66                                                 SEP     205.95 – 4.75
SEP     2163 + 66                                                 DEC    205.15 – 4.25
NOV    2163 + 66                                                 MAR    204.35 – 4.30

18th. April, 2014.
The cold front that has been in play over the main coffee districts in Brazil is reported to be losing its intensity, but has in the meantime brought much relief to farmers in the main arabica coffee districts of Minas Gerais and so too, to neighbouring Sao Paulo state.   With farmers mostly having already received their five year average rainfall for the month and some even reporting rainfall that has exceeded their five year averages, by 8% to 35% of these averages.

While these rains are of course too late to reverse any damage done by the hot and dry conditions during the first two months of this year and at a time when the new crop cherries were in their development stage, they shall do much to assist in the recovery of the depleted ground water retention levels.   Thus to assist to carry the coffee trees through the cold and dry winter harvest season, while providing moist conditions for the trees, which shall make them more resistant to the negative effects of any mild frosts.

Meanwhile with the hot and dry weather having accelerated growth in some districts and already some early harvesting of arabica coffees having taken place, there are reports of dismal green bean returns from these coffees.  These reports are somewhat supportive for market sentiment, but one must caution that they are related to extremely low volumes and are not guarantee of similar losses in yield potential from the immature cherries still to ripen and having had the support of reasonable rains over March and again during this month.

There is nevertheless no doubt that the potential for a much smaller than forecasted last year new Brazil arabica coffee crop for this year, that it shall continue to buoy sentiment and prices within the New York market for at least the next three months.   Following this it shall be difficult to predict, as there is no certainty as to what new crop yields shall be reported by the tail end of the harvest in August and in this respect, how accurate might these reports be, as there shall always be the temptation to forward price supportive market manipulative low yield reports.  Therefore, one must presume that the markets shall maintain a positive stance for the medium to long term.

There is in the meantime very little news coming forth from Mexico and Central America, where farmers are riding the positive nature of the reference prices of the New York market, to take good profits out of their new crop coffee stocks.    These profits to do much to assist the farmers to invest in both fertilisers and Roya or Leaf Rust fighting chemical controls, towards the development of what can be expected to be larger new crops from their next October 2014 to March 2015 harvest.

These improved crops in terms of the losses due for the new Brazil arabica crop, to assist to fill the overall world demand for arabica coffees.    Especially so as even with the predicable losses for the Brazil new arabica crop, the country has more than sufficient stocks to cover for this deficit through to their next 2015 crop.   This factor and should there be good spring and summer rains coming in later in the year for Brazil to improve the prospects for the next 2015 Brazil crop, may have a negative influence upon the fortunes for the market for the last quarter of the year, but the question is where shall the market be by the third quarter of the year and one might suggest that even with improved crop prospects, the market shall retain good value for coffee farmers for the foreseeable future.

The arbitrage between the markets broadened yesterday to 107.21 usc/Lb. and therefore, equated to a very attractive 52.53% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 6,476 bags yesterday, to register these stocks at 2,584,020 bags.   There was meanwhile a smaller in volume 1,991 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,866 bags.

The commodity markets were mixed but overall steady in pre long weekend trade yesterday with the Oil, Natural Gas, Cocoa, Copper, Wheat and Silver markets having a day of buoyancy and the Coffee markets ending the week on a very strong note, while the Sugar, Cotton, Orange Juice, Corn, Wheat, Soybeans, Gold, Platinum and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.57% higher; to see this Index registered at 566.61.  The U.S. Dollar is steady at 1.678 to Sterling and 1.382 to the Euro, while Brent Crude is offered at $ 109.30 per barrel.

The London market started the day yesterday on a softer note and with producer price fixation selling putting some pressure upon the market, while the New York market stated the day with cautious buoyancy.  The New York market started to attract support into the afternoon’s trade and with limited volumes of producer price fixation selling coming into play over the market, started to extend its gains and finally to have some influence upon a recovery for the London market.   The New York market started to trigger buy stops which triggered a strong rally and with the London market following suit, to see both markets recover from their recent dip in value.    The London market and with the prices quoted reflecting the last trades rather than the sett levels, ended the day on a strong note and with 93.1% of the gains of the day intact, while the New York market ended the day on a very strong note and with 97.4% of the gains of the day intact.    The London market shall be closed on Monday while the New York market shall have a shortened day’s trade and we would expect that this latter market trading solo and with very few players about, shall register a slow and steady day against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2119 + 55                                               MAY      201.20 + 15.25
JUL      2136 + 54                                                JUL      204.10 + 15.25
SEP      2138 + 51                                               SEP      206.20 + 15.25
NOV     2139 + 49                                               DEC      208.70 + 15.20
JAN      2146 + 55                                               MAR     210.85 + 15.25
MAR     2152 + 61                                               MAY     211.70 + 15.20
MAY     2160 + 67                                                JUL      211.50 + 15.05
JUL      2164 + 67                                                SEP      210.70 + 14.95
SEP      2164 + 67                                                DEC     209.40 + 14.50
NOV     2164 + 67                                                MAR     208.65 + 14.40

17th. April, 2014.
The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 132,307 bags or 2.74% during the month of March to register these stocks at the end of the month at 4,958,411 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per month, equate to approximately 10.3 weeks of roasting activity.

However the stocks do not include the bulk container transit coffees, the onsite roaster inventory stocks and the coffee stocks held within non reporting warehouses in both the U.S.A. and Canada and these would have been at least another 1 million bags.   Therefore in terms of North American coffee supply the end March stocks would have safely exceeded 12.5 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

Albeit that the end March stocks included 667,518 bags of mostly aged arabica coffee certified stocks that were held within the U.S.A. based approved warehouses of the New York exchange, which would mostly not participate in North American roaster off take.   Thus the reality was that the North American coffee stocks at the end of the month still were the equivalent of in excess of 11 weeks of roasting activity, which is a very safe number in terms of the flow of new crop South American and Asian coffees that are now coming to the market.

Brazil’s largest coffee cooperative Cooxupe have reported that the early harvested cherries are indicating losses from the forecasted crop that exceed 30%, but this is based on very small volumes and does not reflect any reality in terms of the main harvest.  One might comment that it is particularly so as it was the cherries related to early flowering that were most vulnerable to the hot and dry weather in January and August, which were more filled out at the time of this problem and therefore, more likely to suffer damage.

In the meantime the latest rainfall reports have confirmed that some districts within the main arabica coffee state of Minas Gerais and after only two weeks, have already received 20% in excess of their five year average rainfall for this month, while most other districts in Minas Gerais are close to matching their five year monthly averages.   These good reports are somewhat in the shade in terms of the coffee farms in South East Sao Paulo state, where rainfall levels are already 47% above the five year average for the month.

These figures are tending to dampen some speculative spirits, but the reality remains that the damage has been done and really the only positive factor about good April rains is that they shall assist to relieve stress on the trees and furthermore, make them less vulnerable to any light winter time frosts.  But it does in terms of these factors, limit the potential follow through negative effects of the hot and dry weather and the potential low ground water retention levels, in terms of the follow on 2015 Brazil crop.  

The Colombian coffee farmers and despite much improved financial returns for their coffees, are still determined to join the general farmer protests that are planned for the 28th. April.   These protests demanding more state support for the countries agricultural sector, but with the short term nature of these protests having no impact upon speculative sentiment in terms of security of Colombian coffee supply.    

The arbitrage between the markets narrowed yesterday to 94.41 usc/Lb. and therefore, equated to a still very attractive 49.99% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 483 bags yesterday, to register these stocks at 2,577,544 bags.   There was meanwhile a marginally larger in volume 899 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,857 bags.

The commodity markets were steady in trade yesterday with the Oil, Natural Gas, Sugar, Cotton, Copper, Orange Juice, Corn, Wheat, Soybean, Gold, Silver and Palladium markets showing some buoyancy and the Cocoa and Platinum markets tending easier, while the Coffee markets had another very soft day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% higher; to see this Index registered at 563.39.  The day starts with a relatively steady U.S. Dollar trading at 1.683 to Sterling and 1.384 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 109.65 per barrel.

The London market started the day yesterday with immediate losses against speculative and producer price fixation hedge selling following the previous days collapse in the New York market, but with the New York market attracting good support and posting a positive stance.   The London market continued on its negative track into the afternoon and despite the positive nature of the volatile New York market, which had posted gains of 7.45 usc/Lb. and was looking to show some muscle.    These gains in New York were however short lived and the market faltered in early afternoon trade and with speculative profit taking and producer price fixation selling coming into play to trigger a sharp reversal that was accentuated by triggering sell stops, to accelerate the losses.   The London market continued on its soft track and ended the day on a soft note and with 80.3% of the losses of the day intact, while the New York market likewise ended the day on a soft note and with 94.7% of the losses of the day intact.    This soft close and with both markets closed tomorrow and the London market closed again on Monday while the New York market shall have a shortened solo day on Monday, is hardly likely to inspire players, but one might expect to see some restraint ahead of the holidays and a relatively steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY    2064 – 57                                                MAY     185.95 – 6.20
JUL     2082 – 46                                                 JUL     188.85 – 6.20
SEP     2087 – 41                                                SEP     190.95 – 6.15
NOV    2090 – 38                                                DEC     193.50 – 6.15
JAN     2091 – 35                                                MAR    195.60 – 6.30
MAR    2091 – 34                                                MAY    196.50 – 6.25
MAY    2093 – 36                                                 JUL    196.45 – 6.20
JUL     2097 – 39                                                 SEP    195.75 – 5.95
SEP     2097 – 38                                                DEC    194.90 – 5.75
NOV    2097 – 38                                                MAR    194.25 – 5.55

16th. April, 2014.
The Vietnam Customs have reported that the countries coffee exports for the month of March was in fact far in excess of forecasts and was 51.4% higher than the same month last year, at a very impressive total of 4,638,333 bags.   This total would therefore indicate that the countries coffee exports for the first six month of the present October 2013 to September 2014 coffee now total 11,963,333 bags, which in terms of the expectations of the Vietnam Coffee and Cocoa Association for exports of 25 million bags during this coffee year, would indicate the potential for a further 13 million bags to be exported during the last six months of this coffee year.

One might however note that Vietnam was estimated to have brought in a new crop of approximately 28 million bags and added to this, was an approximate 2.5 million bags of carryover stocks and thus indicating a coffee supply of approximately 30.5 million bags of mostly robusta coffees.   Therefore if one is to go with an export figure of only 25 million bags for the present coffee year and deduct an additional 1.8 million bags for domestic consumption, one would still be left with carryover stocks into the new crop of a significant 3.7 million bags.

There is however a possibility that with the price structure moving out of its past few months of inverted profile and now assisting the international trade to finance the carry of medium term stocks, that it shall inspire increased trade house buying interest in robusta coffee stocks.  Thus one might see exports from Vietnam over the last six months of this coffee year increase and thus reduce the levels of carryover stocks into the next harvest that weather conditions permitting, is due to start in during October.

The New York market registered a sharp negative technical correction yesterday and one might expect that unless there is a very swift positive correction coming into play, that this might inspire some increase in selling activity of coffee stocks out of Mexico, Central America and Brazil, which would contribute to an increase in price fixation hedge selling pressure over this market.   This selling activity to be accompanied by new crop selling activity from Peru and from the new mid-year Mitaca crop from Colombia, which are starting to come into play.   

The issue of the Brazil weather effected new crop does however remain and no matter how much more active producer price fixation hedge selling into the New York market might be, one would expect that the underlying fund and speculative support shall come forth to absorb such activity and for the present, one has to believe that the market shall manage to maintain its 185 usc/Lb. to 205 usc/Lb. trading range.   With perhaps some dismal early crop outturn reports due to start coming from Brazil’s arabica coffee districts over May and June, to further inspire some degree of positive speculative sentiment and therefore, maintaining the prevailing volatility of this market that is more likely to see 220 usc/Lb. in the medium term, than to fall back to levels around 160 usc/Lb.

The arbitrage between the markets narrowed yesterday to 98.53 usc/Lb. and therefore, equated to a still very attractive 50.52% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 9,113 bags yesterday, to register these stocks at 2,578,027 bags.   There was meanwhile a smaller in volume 2,520 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 23,756 bags.

The commodity markets tended softer yesterday, despite the good economic figures coming through from the U.S.A. and the better than expected latest growth figures from China, as focus remains on the fact that while the GNP figures from China were better than expected, they remain well below the target.  The Orange Juice, Wheat, Corn and Soybean markets had a positive days trade and the Sugar market was steady, while the Oil, Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Gold, Silver, Platinum and Palladium markets had a softer day’s trade and the New York arabica Coffee market suffered from a sharp reversal in fortune.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.71% lower; to see this Index registered at 562.87.  The day starts with a relatively steady U.S. Dollar trading at 1.672 to Sterling and 1.382 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 109.30 per barrel.

The London and New York markets both started the day on a positive note yesterday, with both markets retaining their buoyancy into the afternoon’s trade.    The New York market and with the negative influences of the macro commodity index coming into play start to falter later in the afternoon and fell back below par, to trigger speculative profit taking and producer price fixation sell stops, which accelerated the losses and having some degree of influence upon the London market that fell back into modest negative territory.   The London market continued to end the day on a softer note and with 42.9% of the losses of the day intact, while the New York market ended the day on a very soft note and with 95.7% of the losses of the day intact.   This somewhat unexpected soft close is unlikely to inspire confidence and one might expect to see some follow through producer price fixation selling activity coming into play, to contribute to a steady to soft start for the markets today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2121 – 11                                               MAY     192.15 – 12.70
JUL      2128 – 6                                                  JUL     195.05 – 12.35
SEP      2128 – 4                                                 SEP     197.10 – 12.40
NOV     2128 – 4                                                 DEC     199.65 – 12.40
JAN      2126 – 4                                                 MAR    201.90 – 12.30
MAR     2125 – 5                                                 MAY    202.75 – 12.00
MAY     2129 – 8                                                  JUL     202.65 – 11.65
JUL      2136 – 9                                                  SEP     201.70 – 11.40
SEP      2137 – 9                                                 DEC     200.65 – 11.35
NOV     2137 – 9                                                 MAR     199.80 – 11.15

15th. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 11.75% in the week of trade leading up to Tuesday 8TH. April;  to register a net long position of 24,025 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,004,167 bags has most likely been little changed over the following days of mixed trade, which has since followed.

In terms of activity within the robusta coffee market and with the good discounts that these coffees offer against the buoyant and volatile arabica coffee market, the Vietnam Coffee and Cocoa Association have forecasted that the country shall export approximately 5.63% more coffee during the present October 2013 to September 2014 coffee year, with exports targeted at approximately 25 million bags.   This would in terms of the country’s exports of approximately 11 million bags over the first six months of the present coffee year, indicate that there is a probability for very active export selling due for the last six months of this coffee year.   

Such selling activity out of Vietnam would result in steady price fixation hedge selling for the London market, which might well once these sales are joined by new crop selling activity out of Indonesia assist to create something of a ceiling for the market.  But with the discount for robusta coffees relative to the arabica coffee market having widened and with consumer roasters fighting to maintain market share within the competitive retail markets, the increasing demand for robusta coffees shall most certainly assist to absorb the increasing robusta coffee supply and dull the negative effects of rising volumes coming to the market.

This is aside from the very volatile New York market in play and one that is influenced by the weather issues in Brazil, which is adding value the coffee market in general and is likely to retain buoyancy for the markets for the coming months.   At least until the new Brazil harvest is completed, the frost season is over and there is some perspective of the quality of the new rain season that shall dictate the prospects for the next 2015 Brazil crop, which shall have to be a large one if the coffee industry is to feel secure with the longer term supply.

The news of fair rains in Brazil for the weekend and the start of this week and with many farms within the main arabica coffee state of Minas Gerais having already been in receipt of close to their five year average rainfall for the month of April, tended to dampen some speculative spirits and impact negatively upon the New York market for early trade yesterday.   This was however short lived as the reality is that it is rather like closing the stable door after the horse has bolted, in that the damage caused by the hot and dry weather during the important cherry development period in the first two months of the year is irreversible.

The autumn rains are however positive in terms of assisting in the recovery of ground water retention levels ahead of the dry and cold winter harvest season, which shall in turn assist in the maintenance of the trees ahead of the post-harvest spring and summer rainfall season at the end of the year and the related flowering for the next crop.   Making note that the size of this next Brazil crop being a far more critical factor for the market, which anticipates the liquidation of most of the coffee stocks in Brazil over the next ten to twelve months.

The arbitrage between the markets widened yesterday to 110.60 usc/Lb. and therefore, equated to a very attractive 53.33% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,195 bags yesterday, to register these stocks at 2,587,140 bags.   There was meanwhile a smaller in volume 1,371 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 26,276 bags.

The commodity markets tended to steady in trade yesterday, with many markets showing buoyancy as the day progressed.  The Oil, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Palladium markets had a day of buoyancy and the Copper market was steady, while the Natural Gas, London robusta Coffee, Sugar, Orange Juice and Platinum markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.57% higher; to see this Index registered at 566.90.  The day starts with a marginally stronger U.S. Dollar trading at 1.671 to Sterling and 1.381 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 108.15 per barrel.

The London and New York markets both started the day tending softer yesterday, with the London market attracting producer price fixation selling pressure to maintain downside pressure upon the markets, but with both markets gaining underlying support on the dips, from roaster buying.  The markets entered the afternoon on a negative sideways track, but with the New York market gaining support from the positive nature of the macro commodity index and from speculative and fund buying as the afternoon progressed to trigger buy stops and move swiftly back into positive territory and followed briefly, but a recovery for the London market.   This latter London market however could not sustain its recovery and slid back through par at the end of the day to end on a softer note, but nevertheless having recovered 75.8% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 86.5% of the gains of the day intact.    The positive nature of the close in the more volatile New York market is perhaps supportive for sentiment and one might expect to see a steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2132 – 9                                                 MAY     204.85 + 3.65
JUL      2134 – 8                                                  JUL     207.40 + 3.85
SEP      2132 – 6                                                 SEP     209.50 + 3.90
NOV     2132 – 4                                                 DEC     212.05 + 3.95
JAN      2130 – 3                                                 MAR    214.20 + 3.95
MAR     2130 – 2                                                 MAY    214.75 + 4.00
MAY     2137 unch                                              JUL     214.30 + 4.00
JUL      2145 – 3                                                  SEP    213.10 + 4.10
SEP      2146 + 1                                                 DEC    212.00 + 4.20
NOV     2146 + 1                                                 MAR    210.95 + 4.00

14th. April, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 4.58% in the week of trade leading up to Tuesday 8th. April;  to register a net long position of 39,548 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.37%, to register a net long on the day of 46,109 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 6.24%, to register a net long position of 26,344 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,468,407 bags has most likely been marginally increased over the following days of overall positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The Uganda Coffee Development Authority has reported that the countries coffee exports for the month of March was 37,133 bags or 11.93% higher than the same month last year, to total 348,423 bags.   What was noticeable though in terms of these numbers is that despite the higher value of the market over the past four months, that the value of these exports was only 2.37% higher than the same month last year, at a total of 38.9 million U.S. dollars.  The very modest increase in the value of these exports and despite the more impressive rise in volume, does seeming indicate that a good percentage of these exports were related to price fixed forward contracts that had been concluded earlier in the previous year.

With the prevailing buoyancy of the reference prices of the New York market and the uncertainty as to the extent of the damage that has been done by the hot and dry weather over the first two months of the year, the Brazilian farmers are suggesting to their government that they should take this opportunity to liquidate the state retention coffee stocks of approximately 1.6 million bags of arabica coffees.  Such an action in terms of the potential losses to the size of the new crop would not really be seen to be a strong negative factor of the market, but would assist to stabilise internal market prices for the countries domestic roasting industry.

The Brazilian meteorologists Somar reported on Friday afternoon that they forecast fair rains for this week in the most semi drought affected and main arabica coffee state of Minas Gerais for early this week, which might with the earlier rains this month get the state up to close its five year monthly average rainfall for this month.  But making the point that these good tail end rain season rains shall not in any way reverse any damage that has been done by the hot and dry conditions in January and February, but the report did immediately seem to dampen some speculative spirits in the New York market that settled back from its near to par trading levels.

The internal market in Vietnam remained active but not aggressive in its selling activity last week and with traders still forecasting exports of mostly robusta coffees for this month to be between 2.5 million and 3 million bags.   While the relatively controlled internal market selling activity is assisting to limit the negative effects of price fixation hedge selling into the London robusta coffee market, to assist the market to maintain a degree of stability.

The arbitrage between the markets ended the on Friday at 106.39 usc/Lb. and therefore, equated to a very attractive 52.27% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,589 bags on Friday, to register these stocks at 2,589,335 bags.   There was meanwhile a smaller in volume 2,911 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,901 bags.

The commodity markets showed mixed fortunes on Friday, but with a cautious view seemingly being taken towards the markets in terms of the prospects for moves due to be taken within the Euro zone to soften the prevailing muscle of the Euro.   The Oil, Natural Gas, Cocoa and Orange Juice markets had a day of buoyancy, while the Sugar, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.32% lower; to see this Index registered at 563.71.  The day starts with a marginally stronger U.S. Dollar trading at 1.674 to Sterling and 1.385 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 107.60 per barrel.

The London and New York markets both started the day tending softer on Friday, but with both markets recovering into the afternoon’s trade and showing follow through muscle from the previous day’s strong close for the day.  There was however steady producer price fixation selling pressure to limit the gains for the London market while with the news of rain due for Brazil along with the negative influences of the macro commodity index coming into play, the New York market likewise came under some speculative profit taking and producer price fixation pressure, to see both markets fall below par and take a negative track for the rest of the day.   The London market continued to end the day marginally softer and with 66.7% of the earlier losses of the day intact, while the New York market ended the day on a relatively soft note and with 78.2% of the earlier losses of the day intact.    This softer end for the week does not however detract from the overall positive nature for the markets last week and likewise, the positive speculative sentiment that comes with the problems in Brazil, but the soft close might well result in a hesitantly steady to softer start for early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2141 – 21                                               MAY     201.20 – 4.90
JUL      2142 – 16                                                JUL     203.55 – 4.85
SEP      2138 – 15                                               SEP     205.60 – 4.80
NOV     2136 – 12                                               DEC     208.10 – 4.70
JAN      2133 – 12                                               MAR    210.25 – 4.75
MAR     2132 – 11                                               MAY    210.75 – 4.75
MAY     2137 unch                                              JUL     210.30 – 5.00
JUL      2148 + 10                                               SEP     209.00 – 5.25
SEP      2145 + 15                                              DEC     207.80 – 5.60
NOV     2145 + 15                                              MAR     206.95 – 5.55

11th. April, 2014.
The Brazilian Coffee Industry Association have countered the official new crop forecasts yesterday, with their forecast that the drought affected new crop shall most likely only fall to 47 million bags.   This latest number is on the conservative side of many other private trade and industry forecasts, which are still a couple of million bags higher.  But even while this forecast would indicate a deficit of 6 to 7 million bags, once one adds in the 10 to 11 million bags of carry over past crop stocks, it would indicate more than sufficient Brazil coffee supply for the rest of the year and into the coming year.

The big question is in this respect, is what are the prospects for the follow on 2015 crop that would need to be at least 50 million bags, so as not to tighten up Brazil coffee supply from the middle of next year onwards.   This really is a question that cannot really be addressed until the end of the year, by when there shall have been the evidence of the quality of the rainfall over the last four months of the year, and the size and setting of the flowering for the next crop.   Albeit that the government agencies prefer for the present to look to the worst scenario and are already talking of a 10 to 13 million bags deficit crop for next year.

Internal market coffee sales in Brazil have tended to slow during the past week, with forward selling activity of the new crop being retarded by the uncertainty of the levels of damage that have been caused by the first two months of dry and hot weather within the main arabica coffee districts.   Not on damage in terms of overall volume of the new crop, but also the in terms of the percentages of this new crop that shall be made up from the bolder bean coffees.   It is a factor that nevertheless is not slowing short term Brazil coffee supply to the consumer markets, as with good past crop stocks in hand the farmers are able to continue to fuel the forward sales commitments of the countries exporters.

The new crop robusta coffee harvest in the main Indonesian producer island of Sumatra is expected to be slightly delayed by the erratic cooler and wet weather that has been experienced this year, with the harvest expected to start to pick up only at the end of this month.  This delay is allowing for Vietnam to continue dominating world robusta coffee supply for the coming weeks, without competition from the new Indonesian new crop.  While with delay in the new crop and with a perspective of rising prices, is retarding new crop forward selling activity of robusta coffees out of Indonesia.

Meanwhile there are conflicting forecasts on coffee production in Indonesia for the present October 2013 to September 2014 coffee year, with figures that vary from between 10 million and 13 million bags being voiced by trade and industry players.   While the International Coffee Organisation who by nature of their official status have to likewise calculate their statistics on the basis of the individual members official figures, are forecasting that this coffee years Indonesian crop shall be 11,667,000 bags.  The countries crop made up from an approximate 85 to 15 ratio of robusta to arabica coffees.  

The arbitrage between the markets ended the day yesterday at 110.51 usc/Lb. and therefore, equated to a very attractive 53.03% price discount for the London robusta coffee market.   This is assisting to inspire keen interest in robusta coffees and with the Vietnam exporters active sellers, to contribute to steady price fixation hedge selling into the related London market and by nature, to this market not being able to completely follow the positive track that has been set within the New York arabica coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 250 bags yesterday, to register these stocks at 2,595,924 bags.   There was meanwhile a much larger in volume 7,316 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 21,990 bags.

The commodity markets showed mixed fortunes yesterday, but with the soft nature of the U.S. dollar tending to buoy many of the markets.   While with the U.S.A. reporting their unemployment rate had fallen back to the levels of May 2007 and well before the worldwide economic collapse and accompanied by a successful bond auction in Greece to buoy sprits within the Euro zone, there is an overall positive feel developing towards the world economy and towards projected commodity demand.  This is however countered by continued concerns over economic growth in China, but related to less impressive figures rather than a lack of growth.   The Sugar, Coffee, Copper, Orange Juice, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Cotton, Wheat, Corn and Soybean markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% higher; to see this Index registered at 565.50.  The day starts with a relatively steady but nevertheless soft U.S. Dollar trading at 1.678 to Sterling and 1.389 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 106.85 per barrel.

The London and New York markets both started the day with buoyancy yesterday, which added value to both the markets and set a both markets for a positive sideways track for the rest of the day and with the New York market hitting new two year highs.   There was steady producer price fixation coming into play for the markets through the day and tending to cap the buoyancy within the markets, but nevertheless not sufficient in volume to cool them down from their Brazil weather inspired bullish trend.   The London market continued to end the day on a positive note and with 61% of the gains of the day intact as did the New York market end the day on a positive note, with 79.7% of the gains of the day intact.  This overall positive close is constructive for sentiment and one might expect to see a follow through steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2162 + 21                                               MAY     206.10 + 6.25
JUL      2158 + 25                                                JUL     208.40 + 6.30
SEP      2153 + 27                                               SEP     210.40 + 6.35
NOV     2148 + 27                                               DEC     212.80 + 6.50
JAN      2145 + 28                                               MAR    215.00 + 6.60
MAR     2143 + 27                                               MAY    215.50 + 6.45
MAY     2137 + 24                                                JUL    215.30 + 6.10
JUL      2138 + 22                                                SEP    214.25 + 5.35
SEP      2130 + 22                                               DEC    213.40 + 4.55
NOV     2130 + 22                                               MAR    212.50 + 3.55

10th. April, 2014.
The well respected Brazilian meteorologists Somar came forth later in the afternoon yesterday with their latest rainfall report and with the report stressing the fact that while this month’s rainfall was mostly at normal levels, it is too late to reverse the damage already done to the main arabica coffee districts during the hot and dry months of January and February.    This very public comment and in terms of its timing, seemingly assisting to trigger a reversal of the modest downside track that the New York market had been taking so far during the earlier in the day’s trade.

The report did however while noting that it shall be mostly dry for the rest of this week, that there is another cold front and more rains due to for the main coffee districts during next week and if would seem that the tail end of the rain season in Brazil shall be normal and at least assist to build up some degree of ground water retention ahead of the cold and dry winter harvest season.  Albeit that these retention levels have to be lower than the five year average and shall add stress to the trees as the winter progresses, unless there are some additional rain showers coming forth during the winter.

Adding to the forecasts from the Meteorologists in the U.S.A. and Australia in terms of the potential for an El Nino developing during the year within the Pacific Ocean, the Japan Meteorological Agency have followed suit and have also forecasted a good chance for a new El Nino phenomenon developing for the second half of this year.   But alike all the other forecasts so far, this does not indicate the potential for a severe El Nino but rather indicates that it is likely to be modest in nature and in this respect, it might be seen to be positive rather than negative for the coffee producers who would be under is influence.

Much debated Brazil and Pacific Rim weather issues aside the industry focus has to be upon the wholesale prices for the leading coffee brands within the mainstream coffee markets in North America and Europe, where in most cases there has yet to be catch up price increases and with roasters tending to look to defend market share, rather than profit margins.   This resistance has to impact ultimately upon the blend components of these brands, as it is only by tweaking the blends and taking advantage of the relatively lower priced coffees so as to maintain some degree of profitability that the roasters can continue to take this stance, albeit that finally there has to be some significant price increases coming into play.

Yesterday’s markets well illustrate the attractiveness of the option to find ways to make more use of the lower priced coffee alternatives, with the arbitrage between the markets having widened to a very significant 105.35 usc/Lb.    This arbitrage equating to an extremely attractive 52.13% price discount for the London robusta coffee market relative to the New York arabica coffee market, which is a factor that has to attract the focus of the financial managers of the main coffee industry players.

Thus one might expect that with options to take advantage of steam treatments to soften the taste profile of robusta coffees, that despite some cost to these treatments, the significant price discounts for these coffees shall encourage increasing demand for robusta coffees that might well end the year with a close to 45% share of the overall consumer markets demand.  Fortunately in this respect, there is presently more than sufficient robusta coffee supply from the producers.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,687 bags yesterday, to register these stocks at 2,596,174 bags.   There was meanwhile a slightly smaller in volume 1,560 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,674 bags.

The commodity markets showed mixed fortunes yesterday and with some uncertainties following less than impressive Chinese trade data for the last month, having some impact within selected markets.   While with a steadier U.S. dollar in play, it took the currency factor out of influences upon market sentiment.  The Oil, Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Soybean and Palladium markets had a day of buoyancy, while the Sugar, London robusta Coffee, Cotton, Copper, Wheat, Corn, Gold, Silver and Platinum markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.17% higher; to see this Index registered at 563.66.  The day starts with a softer U.S. Dollar trading at 1.678 to Sterling and 1.384 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 107.30 per barrel.

The London market started the day yesterday on a softer note and with producer price fixation selling adding to the downside pressure, while the New York market started the day on a near to steady track in thin trade.   The London market remained on a sideways track from its early losses and with the New York market attracting speculative profit taking and producer price fixation selling pressure to start shedding some modest weight and entering the afternoon on a softer track.    There was however in mid-afternoon trade a reversal in the fortunes of the New York market and with speculative buying returning to the market to trigger buoyancy and with buy stops coming into play while producer price fixation selling slowed, the market swiftly recovered the day’s losses and moved up into positive territory.    The London market however shrugged off the positive influences of the more volatile New York market and ended the day on a soft note and with 68.7% of the earlier losses of the day intact, while the New York market held on to its late in the day recovery and ended the day on a positive note and with 90.7% of the earlier gains of the day intact.    This mixed close but with the positive nature of the New York markets close in mind, might well retard producer selling activity and one might expect to see a steady to buoyant stance being taken within the London market and a sideways stance within a thinly traded New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2141 – 33                                               MAY     199.85 + 3.35
JUL      2133 – 33                                                JUL     202.10 + 3.40
SEP      2126 – 35                                               SEP     204.05 + 3.25
NOV     2121 – 35                                               DEC     206.30 + 3.20
JAN      2117 – 35                                               MAR    208.40 + 3.15
MAR     2116 – 35                                               MAY    209.05 + 3.05
MAY     2113 – 36                                                JUL     209.20 + 2.80
JUL      2116 – 42                                                SEP     208.90 + 2.60
SEP      2108 – 42                                               DEC     208.85 + 2.55
NOV     2108 – 42                                               MAR     208.95 + 2.65

9th. April, 2014.
The final and more detailed coffee export figures from Brazil for the month of March were reported yesterday by the countries Council of Green Coffee Exporters, to confirm that the green coffee exports for the month were 200,000 bags or 8.85% higher than the same month last year, at a total of 2.46 million bags.    Added to these were the exports of value added soluble coffees calculated in terms of their green coffee equivalent, which were seen to have been 79,749 bags or 34.44% higher than the same month last year, at a total of 304,790 bags.

Thus the combined coffee exports for the month of March from Brazil were 279,749 bags or 11.26% higher than the same month last year, at a total of 2,764,790 bags.   However despite this increase and with a good percentage of these exports related to price fixed contracts from last year, the value of the Brazilian coffee exports in March were nevertheless 47 million U.S. dollars or 9.87% lower than the value of the country’s coffee exports during the same month last year, at a total of 429.3 million U.S. dollars.

There is nevertheless and despite the many forecasts for a significantly lower new crop, still relatively active selling of the substantial stocks of arabica coffees within the internal market in Brazil, with the negative effects of the firmer Brazil Real that is now trading at 2.2 to the U.S. dollar countered by the firmer nature of the reference prices of the New York market.   Thus one might think that within the next two months that the value of exports from Brazil shall soon be more weighted to these higher value sales, which shall see the value of overall coffee exports starting to surge ahead of the corresponding months last year.

The Australian Bureau of Meteorology have supported earlier forecasts from leading meteorological offices in the U.S.A., with their latest prediction that there is a 70% chance of a new El Nino phenomenon to develop within the Pacific Ocean during the second half of this year.   An El Nino is however so long as it is a mild one, overall positive for coffee, as the drier weather would assist to limit the potential for Roya or Leaf Rust within Colombia and Peru, while it would traditionally bring increased spring and early summer rainfall for the main coffee districts in central and south Brazil.   Thus for the present and with the forecasts presently indicating a mild rather than severe El Nino, the forecasts do not add to fears of tightening longer term coffee supply.

Meanwhile the spring and summer rain season is starting to come into play in Vietnam, to trigger flowerings for the countries next new crop, which shall start being harvested in October.   With the short to medium term weather forecasts so far not threatening any problems for the prospects of this new crop, but there might following the last harvest that many have assessed to have been in excess of 28 million bags of mostly robusta coffee, be some degree of biennial bearing coming into play.   Thus as an early guess, one might be safer to forecast the new crop at closer to 26 million, rather than matching the past crops levels.

There remain substantial robusta coffee stocks within the internal market in Vietnam, following the recently completed larger new crop and this coming in over above an approximate carryover stock in excess of 2.5 million bags and thus with the assistance of the higher reference prices of the London market, there is steady step up selling activity in Vietnam and with farmers now gaining good profits from these new crop sales.  Albeit that despite the higher value of the market, the farmers are still showing some degree of restraint and are not flooding the market with aggressive selling and therefore, are assisting to maintain relatively good value for new sales.   While the value of the sales so far this year is a factor that is positive for the prospects for the new crop as now that the rains are starting, the farmers can easily afford the finance of farm inputs to assist in the development of the next October to January crop.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,975 bags yesterday, to register these stocks at 2,592,487 bags.   There was meanwhile a slightly larger in volume 5,823 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 16,234 bags.

The commodity markets gained some degree of buoyancy yesterday from the softer nature of the U.S. dollar, which provided for overall support.   The Oil, Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Corn and Soybean markets posted good gains, while the Cocoa, Copper, Wheat, Gold, Silver, Platinum and Palladium markets had a positive day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.86% higher; to see this Index registered at 562.69.  The day starts with a near to steady U.S. Dollar trading at 1.675 to Sterling and 1.379 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 106.80 per barrel.

The London and New York markets predictably started the day yesterday with follow through buoyancy, in line with the continuation of the Friday rally on Monday and the persistent talk of a much lower Brazil crop.   Both markets started to attract opportunist producer price fixation hedge selling but not in sufficient volume to buck the upside trend and with the markets showing muscle and adding to their impressive gains, into the afternoons trade.   The New York market did however hit something of a ceiling later on in the afternoon and with a reversal from its impressive highs, attracted profit taking and producer price fixation sell stops to shed most of the earlier gains and with the less volatile London market likewise faltering, but not to the same degree.   The London market continued to end the day on a positive note and with 79.4% of the earlier in the day’s gains intact, while the New York market ended the day on a positive note but with only 33.3% of the earlier in the day’s gains intact.  While the arbitrage between the markets ended the day at 100.45 usc/Lb., which is a factor that equates to a very attractive 50.55% price discount for the London robusta coffee market.   This overall positive close is supportive for market sentiment but with the late in the day reversal yesterday, it might well attract some degree of producer price fixation selling pressure in early trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2174 + 50                                               MAY      196.50 + 3.15
JUL      2166 + 54                                                JUL      198.70 + 3.15
SEP      2161 + 56                                               SEP      200.80 + 3.15
NOV     2156 + 54                                               DEC      203.10 + 3.00
JAN      2152 + 53                                               MAR     205.25 + 2.95
MAR     2151 + 53                                               MAY     206.00 + 2.65
MAY     2149 + 58                                                JUL     206.40 + 2.35
JUL      2158 + 64                                                SEP     206.30 + 2.25
SEP      2150 + 64                                               DEC     206.30 + 2.10
NOV     2150 + 64                                               MAR     206.30 + 1.85

8th. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 4.31% in the week of trade leading up to Tuesday 1ST. April; to register a net long position of 27,223 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,537,167 bags has most likely been increased over the following days of positive trade, which has since followed.

April rains over the main Brazil coffee districts are more in line with the traditional levels for the month, but with this a lower rainfall month and at the end of the main rain season, it has not dampened the bullish spirits within the coffee markets that have been fuelled by the hot and dry conditions that prevailed in January and February this year.   These prior conditions having inspired the rather dramatic lower crop forecasts from the Brazilian National Coffee Council late in the day on Friday, which were supported by the research offices in Minas Gerais of the Procafe Foundation.

These latest reports have not only indicated that as a result of the dry conditions that occurred within the main arabica coffee districts of country that the green been outturns from the cherries shall be lower, but that the dry weather has overly stressed many of the younger coffee trees and that their chances of recovery in time for the follow on crop are minimal.  Thus indicating that the problem is very much longer term in nature and shall impact negatively upon the follow on 2015 crop and perhaps, which shall not be supported by carryover stocks from this year’s crop.  While with these reports fresh within the market press, it has fuelled the speculative rally within the markets and been something of a windfall for the coffee producers in general, who have been able to add some value to their stocks, albeit that there is some degree of disbelief and price resistance from the consumer markets.

There do remain questions however in terms of these rather dramatic market manipulative forecasts from Brazil, as the continued selling activity within the internal market in Brazil does not so far indicate that the farmers truly believe that the losses are as severe as the reports indicate.   This does tend to make many consumer market buyers question the threat to longer term Brazil coffee supply and with no certainty on the matter due for at least another three to four months, the majority of the main consumer market blends have yet to completely factor in the new price levels for green coffee supply and with many looking to tweak their blend percentages, rather than risk losing market share by following the market with their traditional recipes.  

Meanwhile the surge in prices of the reference prices of the New York market has proven to be something of a windfall for the Mexicans and Central Americans whose new crop have just been completed, as they have assisted to bring relatively good prices for these coffees and just in time, so as to assist with the finance of their controls to defend their farms against Roya or Leaf Rust.   This scenario most likely to ensure improved levels of production for the regions new crops, which shall start to come into play during the last quarter of the year and to ensure along with the rising production levels from Colombia, a good longer term supply of fine washed arabica coffees.

But with premium differentials still being paid up for these coffees, it is most likely going to take a longer time before there shall be any significant recovery for the certified stocks held against the New York market, which remain relatively low.    The modest nature of these stocks is tending to assist to buoy the speculative market spirits, which are already well supported by the news from Brazil.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,715 bags on yesterday, to register these stocks at 2,588,512 bags.   There was meanwhile a very similar in volume 2,870 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,057 bags.

The commodity markets with the exception of the Coffee markets, tended to consolidate yesterday.   The Natural Gas, Copper, Orange Juice and Wheat markets showed some buoyancy and the Coffee markets continued on their rally from Friday, while the Oil, Sugar, Cocoa, Cotton, Corn, Soybean, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% lower; to see this Index registered at 557.88.  The day starts with a near to steady U.S. Dollar trading at 1.661 to Sterling and 1.374 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 105.70 per barrel.

The London and New York markets predictably started the day yesterday with follow through buoyancy, after the strong rally that was experienced at the end of last week and with both markets triggering early buy stops, to step up to a positive price level which the markets maintained during relatively high volume trade for the rest of the day.   There is however producer price fixation hedge selling over both the markets and with the improved value starting to attract some volume, despite the firmer nature of the Brazil real having taken a little of the positive effects of the gains in terms of internal market values.   The London market continued to end the day on a positive note and with 72.2% of the earlier in the day’s gains intact, while the New York market ended the day on a likewise firm note and with 70.8% of the earlier in the day’s gains intact.   While the arbitrage between the markets ended the day at 99.75 usc/Lb., which is a factor that equates to a very attractive 51.01% price discount for the London robusta coffee market.   This overall positive close is supportive for market sentiment but might attract some degree of producer price fixation selling pressure in early trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2124 + 39                                               MAY     193.35 + 8.35
JUL      2112 + 40                                                JUL     195.55 + 8.45
SEP      2105 + 38                                               SEP     197.65 + 8.55
NOV     2102 + 37                                               DEC     200.10 + 8.70
JAN      2099 + 38                                               MAR    202.30 + 8.65
MAR     2098 + 39                                               MAY    203.35 + 8.35
MAY     2091 + 41                                               JUL     204.05 + 8.05
JUL      2094 + 44                                               SEP     204.05 + 7.75
SEP      2086 + 41                                               DEC    204.20 + 7.65
NOV     2086 + 41                                               MAR    204.45 + 7.75

7th. April, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 6.84% in the week of trade leading up to Tuesday 1ST. April; to register a net long position of 41,445 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 0.05%, to register a net long on the day of 46,280 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 9.32%, to register a net long position of 28,097 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,965,375 bags has most likely been increased over the following days of positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The National Coffee Council in Brazil have announced on Friday that due to the devastating partial drought conditions that were experienced over the main arabica coffee growing districts in January and February this year, that the countries new crop that is soon to start shall only register between 40.1 million and 43.3 million bags.    This dismal deficit new crop they said shall be followed by a further dismal deficit crop that shall only be between 38.7 million and 43.6 million bags, which would be caused by the longer term damage that has been done to the coffee trees by the drought.   

These figures are all rather dramatic and would indicate that even with a carryover stock of 11.5 million bags of mostly arabica coffee stocks into the new 2014 crop, that Brazil’s coffee supply shall struggle to fuel the approximate 52 million to 54 million bags per annum combination of domestic market and export market demand for Brazil coffees.    While the further negative forecast for the follow on 2015 crop would indicate no carryover stocks and therefore a 10 million to 14 million bags shortage of Brazil coffees for the 2015 to 2016 coffee year.

The figures that emanate from the Coffee Council are traditionally overly conservative and somewhat market manipulative in nature and are well below the numbers that are foreseen by the majority of the private trade and industry players, but they shall nevertheless have a degree of impact upon market sentiment.   Albeit that serious industry players all agree that there is still no certainty as to how much damage has actually been caused to the overall crop by the dry and hot conditions, which can only truly be assessed post the actual harvest and the resulting bean outturns from the mills.

The Indonesian Coffee Exporters Association have forecasted that with the reasonable weather conditions that have prevailed during the second half of last year and so far this year, that the country can expect to bring in likewise fair crops.   In this respect they have forecasted that with the prevailing much improve price trading range for coffee that the country shall see exports rise by approximately 8% and total this year, between 9,166,667 bags and 9,583,333 bags.

This latest figure from the Indonesian Exporters Association is significantly higher than some of the earlier trade forecasts, but would if it proves to be true and with an approximate 83 to 17 ratio of robusta to arabica coffees, assist to contribute to reasonable world coffee supply for the year.   This already secured by the good unsold coffee stocks that are still lying in Vietnam and Brazil and the rising production levels in Colombia, which despite the possibility for some longer term problems with the forthcoming new Brazil crop, shall assist to maintain good overall supply for the rest of the year and into the first half of next year.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,958 bags on Friday, to register these stocks at 2,591,227 bags.   There was meanwhile a much larger 8,915 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 19,187 bags.

The commodity markets take some heart from the confirmation of steady improvement of the U.S. economy, where employment figures have not caught up with their pre-recession levels and with the economy now heading up on its positive track.   The Oil, Natural Gas, Sugar, Cocoa, Cotton, Orange Juice, Gold, Silver and Palladium markets had a day of buoyancy on Friday and the Coffee markets surged higher, while the Copper, Wheat, Corn, Soybean and Platinum markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.46% higher; to see this Index registered at 558.39.  The day starts with a near to steady U.S. Dollar trading at 1.658 to Sterling and 1.371 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.10 per barrel.

The London and New York markets started the day on Friday with hesitant buoyancy and with the London market gaining sentimental support from the news of the sharply lower certified robusta coffee stocks, while the New York market gained support from the firming Brazil real that was expected to dull internal market selling aggression in Brazil and to thus reduce the volumes of price fixation hedge selling into the New York market.    Both markets continued to attract follow through support as the day progressed and with buy stops being triggered on the way up, to add traction to the day’s rather dramatic buoyancy.   The London market continued to end the day on a firm note and with 90.8% of the gains of the day intact and likewise the New York market ended the day on a firm note and with 96.3% of the gains of the day intact. This firm close  and with speculative sentiment further supported by the dramatic lower crop forecast from Brazil, is likely to fuel follow through buoyancy for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2085 + 69                                               MAY     185.00 + 10.40
JUL      2072 + 58                                                JUL     187.10 + 10.40
SEP      2067 + 56                                               SEP     189.10 + 10.45
NOV     2065 + 53                                               DEC     191.40 + 10.45
JAN      2061 + 51                                               MAR    193.65 + 10.45
MAR     2059 + 53                                               MAY    195.00 + 10.40
MAY     2050 + 54                                                JUL     196.00 + 10.40
JUL      2050 + 54                                                SEP     196.30 + 10.40
SEP      2045 + 54                                                DEC    196.55 + 10.45
NOV     2045 + 54                                                MAR    196.70 + 10.00

4th. April, 2014.
The month of April has started with the leading coffee state of Brazil Minas Gerais being in receipt of fair rains, which is something of a further relief for this the most parched of all the coffee states over the first two months of this year.   There have also been some very light rain showers experienced in the Cerrado, but with the forecasts indicating only modest scattered showers are due in the coming couple of weeks.  This is however traditionally a drier month ahead of the dry May to September winter harvest season for the Brazilian coffee districts and so far it would appear, that Brazil has returned to overall more normal weather conditions.

It is early days but Brazil is now heading towards the June to August frost season and with the most vulnerable month being July and with relatively low ground water retention levels for the main arabica coffee districts, which would make the coffee trees more susceptible to damage from even light frosts.  It is normally the case that moist trees are better able to fight off the negative effects of frost and therefore with the potential for dry and brittle coffee trees during the coming winter, there shall be keen interest shown by the trade at times of cold fronts entering the coffee districts and the potential for above average market volatility, through to August this year.

Meanwhile with the reference prices of the New York market having softened and with the Brazil Real having firmed against the dollar over the past couple of weeks, the internal market for arabica coffees in Brazil is showing some degree of price resistance and has slowed trading activity.   But it would seem that there is nevertheless more than sufficient Brazil arabica coffees still coming to the market, which is being fuelled by the more than adequate stocks at hand.

Brazil’s Conilon robusta coffee farmers are starting to work on their new crop harvest and the Arabica coffee farmers are now starting to anticipate next month’s early start to their new crop harvest, which will bring with it further speculation on the levels of damage that have been caused by the partial drought for the first two months of this year.    This issue most likely due to bring with it some dramatic market manipulative scare stories, to add to the international coffee market volatility for the next five months.

There has been little further striking news from the main fine washed arabica producer bloc of Mexico and Central America that has just completed their new crop, which is somewhat surprising.   But with the reference prices of the New York market having been kind to this prominent producer bloc, there has been little need for further market manipulative reports on the negative effects of Roya or Leaf Rust upon regional coffee supply and to a degree this subject has been exhausted.   While with evidence of rising export volumes from the region, the speculative sector of the market would appear to be neutral towards coffee supply from the region.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,630 bags yesterday, to register these stocks at 2,589,269 bags.   There was meanwhile a modestly smaller 3,104 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 28,102 bags.

The Certified robusta coffee stocks held against the London market were seen to have decreased by 91,833 bags or 23.11% during the two weeks of trade leading up to Monday 31st. March, when these stocks were registered at a very modest 305,500 bags.   The declining size of these stock however not in any way related to any tightness in supply of robusta coffees, but to the relatively premium prices that the coffees presently attract from the industry and to the inverted price structure of this market, which does not attract trade interest in taking on tenderable robusta coffee stocks.   

The commodity markets had another generally lacklustre mixed day yesterday, with the Oil, Natural Gas, Sugar, New York arabica Coffee, Orange Juice, Wheat, Corn and Soybean markets showing buoyancy and the London robusta Coffee and Cocoa markets steady, while the Cotton, Copper, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.38% higher; to see this Index registered at 555.85.  The day starts with a steady U.S. Dollar trading at 1.658 to Sterling and 1.370 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 106.05 per barrel.

The London market started the day yesterday on a softer note, while the New York market registered a hesitantly steady start, but with the London market recovering some of its early losses and moving back closer to par.   The New York market came under pressure as the day progressed but managed to fight its way back to move back into positive territory, while the London market tended to take a sideways track for the day.  The London market continued to end the day with the prompt month near to steady and with the forward months steady and with the prompt May contract having recovered 63.6% of the earlier losses of the day, while the New York market ended the day on a positive note and with 82.6% of the earlier gains of the day intact.    The arbitrage between the markets as per the close, increased to 83.16 usc/Lb.  This equates to a more attractive 47.63% price discount for the London robusta coffee market, which assist to maintain the keen buying interest for robusta coffees.   The steady to buoyant nature of the markets yesterday might well assist for a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2016 – 4                                                 MAY     174.60 + 1.90
JUL      2014 + 1                                                  JUL     176.70 + 1.90
SEP      2011 + 3                                                 SEP     178.65 + 1.85
NOV     2012 + 3                                                 DEC     180.95 + 1.65
JAN      2010 + 2                                                 MAR    183.20 + 1.55
MAR     2006 – 1                                                 MAY    184.60 + 1.45
MAY     1996 – 2                                                  JUL     185.60 + 1.50
JUL      1996 – 2                                                  SEP     185.90 + 1.60
SEP      1991 – 2                                                 DEC     186.10 + 1.60
NOV     1991 – 2                                                  MAR    186.30 + 1.70

3rd. April, 2014.
The National Coffee Organisation of Guatemala has reported that the countries coffee exports for the month of March were 27,473 bags or 7.16% higher than the same month last year, to total 410,915 bags.  This higher performance follows some lower volume months and contributes to the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year being now only 148,766 bags or 10.6% lower than the same period in the previous coffee year, at a total of 1,255,110 bags.   

The Coffee Federation in Colombia have reported that in line with the countries recovering coffee production, that the countries coffee production in March was 211,000 bags or 34.2% higher than the same month last year, at a total of 828,000 bags.     This rise in production that follows five months of positive figures has seen the cumulative coffee production for the first six months of the present October 2013 to September 2014 coffee year registered at 1,553,000 bags or 34.93% higher than the same period in the previous coffee year, at a total of 5,999,000 bags.    This much improved performance and with the new Mitaca crop from April to July starting, almost guarantees that the forecasted production for this present coffee year of approximately 11.4 million bags is very much on the cards and could well be exceeded.

Meanwhile with production in Colombia surging the country has reported coffee exports for the month of March to have been 250,000 bags or 36.87% higher than the same month last year, at a total of 928,000 bags.   This improved performance has seen the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year to be 1,665,000 bags or 39.65% higher than the same period in the previous coffee year, at a total of 5,864,000 bags.

The rising volumes of exports from Central America with Honduras, Guatemala and Costa Rica all having reported improved export performances in March and followed by the sharply higher figures that are emanating from Colombia, confirm that there is indeed still a fair supply of the top end fine washed arabica coffees coming to the consumer markets.  With the improved value this year of the reference prices of the New York market seemingly bringing more coffees out of the internal markets in Mexico and Central America where all but Honduras have been forecasting lower Roya or Leaf Rust affected new crops, while Colombia is very much filling the gap in supply from Central America.  These figures are tending for the present, to dull the bullish trend that has been set over the past few months, by the speculative and fund sectors of this market.

Comexim who are one of the leading coffee exporters in Brazil have come forth yesterday with their latest semi drought affected new crop forecast, which they now forecast at a 5 million to 7 million bags deficit crop of between 47 to 49 million bags.    The same report did however concede that they expect that Brazil shall be holding carryover coffee stocks of approximately 11.5 million bags by the end of June, which would in fact based on such a crop forecast, result in a 4.5 million to 6.5 million bags surplus Brazil coffee supply through to the next 2015 crop and is therefore a report, that does tend to dampen some speculative spirits.

These latest reports from Central America, Colombia and Brazil that tends to take the edge out to the bullish sentiment within the markets does not detract from the fact that no one really knows until the new Brazil crop is harvested and milled, just how much damage has been done to the potential of this new crop.  Thus while presently there is a degree of complacency and consolidation within the coffee markets, one can expect that once the main arabica coffee harvest starts to be milled in June that there shall be some further dramatic dismal crop reports coming to the market and thus for the medium term, the speculative sentiment within the markets is likely to retain its bullish stance.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,469 bags yesterday, to register these stocks at 2,592,899 bags.   There was meanwhile a modestly larger 4,194 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,998 bags.

The commodity markets continued to consolidate yesterday, despite the positive news of the improved economic figures from the U.S.A. and the news that the Chinese government is looking to stimulate the internal economy so as to maintain good growth.   The Oil, Natural Gas, Cocoa, Sugar, Coffee, Cotton, Corn and Wheat markets tended softer for the day, while the Copper, Orange Juice, Soybean, Gold, Silver, Platinum and Palladium markets had a day of buoyancy.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.24% lower; to see this Index registered at 553.76.  The day starts with a steady U.S. Dollar trading at 1.664 to Sterling and 1.376 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.90 per barrel.

Both the London and New York markets started the day on a hesitantly softer note yesterday and within an environment of thin and lacklustre trade, but with the New York market lacking strong producer selling over the market recovering in the afternoon and triggering high volume buy stops, to aggressively move back into positive territory.   This positive trend did seemingly have its influence within the London market that likewise moved back into positive territory and set a sideways track, but with the New York markets gains having brought price fixation hedge selling back into play and once again heading south.   The London market continued to end the day on a marginally softer note and having recovered 90.2% of the earlier losses of the day by the close, while the New York market ended the day on a soft note and with 38.9% of the losses of the day intact and with the arbitrage between the markets having narrowed to 81.07 usc/Lb., which equates to a still attractive 46.94% price discount for the London robusta coffee market.   The inability of the markets to recover yesterday and with little in the way of supportive fundamental news coming into play shall more than likely set the markets for a steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2020 – 4                                                 MAY     172.70 – 3.05
JUL      2013 – 8                                                  JUL     174.80 – 2.55
SEP      2008 – 12                                               SEP     176.80 – 2.55
NOV     2009 – 13                                               DEC     179.30 – 2.75
JAN      2008 – 11                                               MAR    181.65 – 2.85
MAR     2007 – 10                                               MAY    183.15 – 2.85
MAY     1998 – 10                                                JUL     184.10 – 2.75
JUL      1998 – 10                                                SEP     184.30 – 2.60
SEP      1993 – 10                                               DEC     184.50 – 2.50
NOV     1993 – 10                                               MAR     184.60 – 2.45

2nd. April, 2014.
The National Coffee Institute of Honduras has reported that the countries coffee exports for the month of March were 87,991 bags or 13.35% higher than the same month last year, to total 747,028 bags.  This higher performance follows some lower volume months and contributes to the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year being only 63,064 bags or 2.66% lower than the same period in the previous coffee year, at a total of 2,306,587 bags.   

The National Coffee Institute of Costa Rica has reported that the countries coffee exports for the month of March were 486 bags or 0.3% higher than the same month last year, to total 164,520 bags.  This marginally higher performance follows five low volume months and contributes to the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year being 94,775 bags or 14.96% lower than the same period in the previous coffee year, at a total of 5,38,657 bags.

The preliminary coffee export figures for the month of March from Brazil have been announced, with these exports seen to have been 300,000 bags or 13.04% higher than the same month last year, at 2.6 million bags.   This higher figure has been very much on the cards, as the buoyant reference prices of the international coffee markets since December, had influenced more aggressive selling activity within the internal market in Brazil since early this year.  This aside from the consumer market interest in higher volumes of relatively lower value natural arabica coffees from Brazil, to replace some of the now much more expensive washed arabica coffees in the main stream blends.

The International Coffee Organisation have confirmed that the world coffee exports for the month of February were 373,429 bags or 4.33% higher than the same month last year, at a total of 9,002,706 bags.   This total following some slower months nevertheless contributed to the world cumulative coffee exports for the first five months of the present October 2013 to September 2014 coffee year being 3,027,054 bags or 6.62% lower than the same period in the previous coffee year, at a total of 42,676,705 bags.

The striking differences in terms of the lower performance for the first five months of the new coffee year, was the 2,506,971 bags or 14.45% lower exports of robusta coffees, which are mostly related to the price resistance that was experienced within the internal market in Vietnam during the last quarter of last year, than to any degree of tight supply.  This has likewise contributed to the robusta coffee share of exports over these five months having been only 34.78%, when all expectations are that with the advantage of good discounted prices that robusta coffees shall finally contribute to excess of 42% of exports, for this coffee year.   Thus indicating considerable volumes of catch up robusta coffee sales are on the cards, which is already confirmed by the 3.6 million bags of exports from Vietnam in March.

A further factor that is strikingly noticeable in this report was the 1,276,092 bags or 31.13% increase in the exports of Colombian Mild washed arabica coffees over the first five months of this new coffee year, which is of course dominated by the much improved crops from Colombia.  This rise adequately countering the 1,291,125 bags or 13.65% dip in exports of Other Mild’s washed arabica coffees over the same period, which is mostly related to the negative effects of the combination of Roya and price resistance, from Mexico, Central America and Peru.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,456 bags yesterday, to register these stocks at 2,589,430 bags.   There was meanwhile a much larger 13,585 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,804 bags.

The commodity markets took a back step yesterday and overall, tended to soften.   The Copper, Corn, Soybean and Platinum markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat, Gold, Silver and Palladium markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.95% higher; to see this Index registered at 555.11.  The day starts with a softer U.S. Dollar trading at 1.663 to Sterling and 1.381 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 104.35 per barrel.

Both the London and New York markets started the day on a hesitantly near to steady note yesterday, but with both markets soon coming under some negative pressure in thin trade and into the afternoon, when there was a positive correction that came into play for the New York market, while the London market maintained its softer track.   This correction within the New York market was however short lived and with the negative nature of the macro commodity index seemingly assisting to dampen spirits and the market slipped back to join the London market in negative territory.   The London market continued to end the day on a soft note and with 93.3% of the earlier losses of the day intact, while the New York market likewise ended the day on a soft note and with 72.6% of the earlier losses of the day intact, while the arbitrage between the markets is 83.44 usc/Lb., which equates to a 47.61% price discount for the London robusta coffee market.    This soft close is unlikely to inspire any confidence, but there remains the underlying longer term speculative confidence that comes with the prospects for a smaller Brazil crop and one might therefore expect to see a near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2024 – 70                                               MAY     175.25 – 2.65
JUL      2021 – 63                                                JUL     177.35 – 2.65
SEP      2020 – 60                                               SEP     179.35 – 2.70
NOV     2022 – 58                                               DEC     182.05 – 2.65
JAN      2019 – 60                                               MAR    184.50 – 2.45
MAR     2017 – 60                                               MAY    186.00 – 2.50
MAY     2008 – 61                                                JUL     186.85 – 2.40
JUL      2008 – 69                                                SEP     186.90 – 2.45
SEP      2003 – 74                                               DEC     187.00 – 2.50
NOV     2003 – 74                                                MAR    187.05 – 2.60

1st. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of this market increase their net long position by 17.02% over the week of trade leading up to Tuesday 25th. March, to register a net long position of 26,098 Lots.  This substantial net long position which is the equivalent of 4,349,667 bags has more than likely been marginally increased over the period of steady trade that has since followed.

With the month of March passed the Government Trade data from Sumatra as the main coffee growing island of Indonesia has reported that the islands Robusta coffee exports for the month of March were 86,146 bags or 36.05% lower than the same month last year, at a total of 152,802 bags.   This more modes performance has contributed to the cumulative robusta coffee exports from Sumatra for the first six months of the present October 2013 to September 2014 coffee year being 340,561 bags or 12.48% lower than the same period in the previous coffee year, at a total of 2,388,790 bags.

Following a very active export month in Vietnam and with exports of mostly robusta coffees from the country estimated 3.67 million bags by the countries authorities, the private trade community are estimating a slower export performance shall be due for April, with exports being forecasted at between 2.5 to 3 million bags.   This forecast most likely related to a degree to the slowing selling activity within the internal market in Vietnam of new crop stocks, which is in turn being restrained by the lack of volume of medium to longer term international trade buying activity, in reaction to the persistent inverted price structure of the London market, that does not assist for the trade to hedge longer term coffee stocks and use the market to finance the carry of such stocks.  

There is a further cold front moving into the Brazilian coffee districts, which is due to bring widespread scattered showers, but with April traditionally as lower rainfall month and the tail end of the spring and summer rain season, these are not expected to be intense.   Thus indicating that while March has been a month of improved rainfall over the hot and dry months of January and February, that unless there is a bout of unusually heavy rains later on in April, that the main arabica coffee districts shall enter the cold and dry winter harvest season with relatively low ground water retention levels.

Of course it is not impossible to have a wetter than normal winter season and with light but regular showers coming in to relieve stress, but even with such rains it will not do anything to alleviate the irreversible damage that has been done to the prospects for the new arabica coffee crop, which has seen cherry development and crop potential damaged by the overly dry and hot weather.   While winter rains do also bring with them some degree of threat, in terms of triggering off early flowering that might not be able to be carried and thus, impact upon the potential for the follow on 2015 crop.

Thus in many ways in terms of longer term coffee supply security from Brazil, it would be preferred that Brazil shall have a more normal dry winter season, so long as the new spring and summer rain season shall start by late September and carry on through to the second quarter of next year.    Such a scenario is in terms of an El Nino phenomenon being forecasted to develop during the second half of this year, is so far been seen to be most likely to be the case.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,940 bags yesterday, to register these stocks at 2,585,974 bags.   There was meanwhile a smaller 4,253 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 34,389 bags.

The commodity markets are tending flat with the continued positive economic growth reports from the U.S.A. being countered by questions over the longer term growth in China and with softening figures out of Japan and threat of devaluation from some of the members of the European Union, brining for the some hesitancy.    The U.S. dollar lost a little weight yesterday but it did not help to buoy what were mostly flat markets, with the Orange Juice, Corn, Soybean and Platinum markets showing buoyancy, while the Oil, London robusta Coffee, Wheat and Silver markets were marginally softer and the Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Gold and Palladium markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.12% higher; to see this Index registered at 560.42.  The day starts with a softer U.S. Dollar trading at 1.666 to Sterling and 1.377 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 105.90 per barrel.

Both the London and New York markets started the day on a hesitantly steady note yesterday, but with both markets soon coming under some negative pressure in thin trade.   There was a positive correction for the markets but with this correction unsustainable for the New York market and while the London market managed to post a largely sideways track for the day and trading off and on either side of par, the New York market lost its way and remained within negative territory for the rest of the day.  The London market continued to end the day on a marginally softer note and having recovered 81.8% of the earlier losses of the day, while the New York market ended the day on a soft note but having bounced off its sharper losses and having recovered 58.81% of the earlier losses of the day.   This overall softer close but with at least some degree of stability coming into play for the market does not provide much in the way of direction and one might thus expect to see a cautiously near to steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2094 – 2                                                 MAY     177.90 – 2.70
JUL      2084 – 9                                                  JUL     180.00 – 2.60
SEP      2080 – 13                                               SEP     182.05 – 2.55
NOV     2080 – 15                                               DEC     184.70 – 2.30
JAN      2079 – 16                                               MAR    186.95 – 2.15
MAR     2077 – 16                                               MAY    188.50 – 2.10
MAY     2069 – 16                                                JUL     189.25 – 2.10
JUL      2077 – 16                                                SEP     189.35 – 2.20
SEP      2077 – 16                                                DEC    189.50 – 2.25
NOV     2077 – 16                                                MAR    189.65 – 2.00

31st. March, 2014.
The latest Commitment of Traders report from the New York washed arabica coffee market has seen the Non Commercial Speculative sector of this market increase their net long position by 1.72% over the week of trade leading up to Tuesday 25th. March, to register a net long position of 30,984 Lots.  This substantial net long position which is the equivalent of 8,783,827 bags has more than likely been further extended over the days of overall positive trade, which have since followed.

The hotter than normal weather conditions in Brazil that accompanied for at least the first few weeks of this first quarter of the year in Brazil, have tended to accelerate cherry development for some districts in the main coffee growing areas.   This agronomists forecast, shall see the new crop harvest starting to come in earlier than normal this year and with the northern Conilon robusta coffees due to start early next month and the new central arabica coffee districts potentially to start harvesting, early on during the month of May.

On can speculate that the early harvest arabica coffee that are due to start being harvested in May shall most likely as these cherries that would have been related to the first flowerings in late September and early October last year, be the most effected cherries from the dry and hot period over January and February this year.   While one can further speculate that the later in October and November flowerings would not have been as vulnerable to the early in their cherry development stage, stress from the hot and dry weather.   Thus with the potential for relatively high damaged bean percentages due from the early harvested arabica coffees, one might expect to see a bout of dismal bean outturn reports due during the latter half of May, which might well buoy speculative spirits within the New York market.

The Brazil Real is presently retaining its new found muscle that saw it pip back through the 2.3 line against the U.S. dollar last week and is trading today, at 2.263 to the dollar.   This firming of the Real has contributed to slower selling activity for Brazil arabica coffees on Friday and the resulting price fixation hedge selling into the New York market, which assisted for a strong close for the market for last week.   Albeit that the buoyancy within this market was also related to the speculative support, which came with the news of below average rainfall for most of the Brazil arabica coffee districts for the month of March.

The arbitrage between the London robusta and New York arabica coffee markets widened on Friday to 85.53 usc/Lb., which would equated to an attractive 47.36% price discount for the London market.    This has to within the price competitive consumer markets where the majority of the global brands have yet to react significantly to the past four months of rising coffee prices, to be supportive for increasing demand for the more affordable robusta coffees.   Especially so as with little chance that the markets shall have defining perspective upon the actual size of the new Brazil crop for another five to six months, that there would be little chance for the markets to slip back from their new trading range.    

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,556 bags on Friday, to register these stocks at 2,591,914 bags.   There was meanwhile a similar 4,896 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 38,642 bags.

These New York certified stocks remain dominated by the producer bloc of Mexico, El Salvador, Guatemala, Honduras, Costa Rica and Nicaragua, who account for 1,572,250 bags or 60.66% of the stocks and followed by Peru with 559,628 bags or 21.59% of the stocks, with the African bloc of Burundi, Rwanda, Tanzania and Uganda contributing 330,527 bags or 12.76% of the stocks and with India and Colombia with contributions of 69,574 bags and 59,935 bags respectively, making up the balance.   While the European warehouses of the exchange in Antwerp, Barcelona, Bremen and Hamburg presently account for a dominant 1,924,386 bags or 74.25% share of the stocks, as against the relatively modest share held within the U.S.A. based warehouses of the exchange, in Houston, Miami, New York and New Orleans.

The commodity markets with support from a weaker U.S. dollar maintained their overall steady track during trade on Friday, with the Oil, Natural Gas, Sugar, Cocoa, Coffee Cotton, Copper, Orange Juice, Silver and Platinum markets showing buoyancy, while the Wheat, Corn, Soybean, Gold and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.30% higher; to see this Index registered at 561.11.  The day starts with a steady U.S. Dollar trading at 1.663 to Sterling and 1.375 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.65 per barrel.

The London coffee market predictably started the day with a degree of buoyancy on Friday and followed by buoyancy for the New York market, within and environment of thin and lacklustre trade and with both markets tending to consolidate within their trading range.   This positive stance did however dull the negative effects of producer selling within both markets and despite a short afternoon dip to take some of the added value of both markets, the markets recovered and maintained their positive track through the day.  The London market continued to end the day on a positive note and with 52% of the earlier gains of the day intact and followed by a strong close for the New York market, with 90.4% of the earlier in the days gain intact.   This overall positive close is most likely going to inspire some degree of confidence, to set the markets for a slow and steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2154 + 11                                                         
MAY     2096 + 13                                               MAY     180.60 + 4.25
JUL      2093 + 13                                                JUL     182.60 + 4.30
SEP      2093 + 14                                               SEP     184.60 + 4.35
NOV     2095 + 15                                               DEC     187.00 + 4.45
JAN      2095 + 16                                               MAR    189.10 + 4.55
MAR     2093 + 18                                               MAY    190.60 + 4.45
MAY     2085 + 18                                                JUL     191.35 + 4.35
JUL      2093 + 18                                                SEP     191.55 + 4.30
SEP      2093 + 18                                                DEC    191.75 + 4.40

28th. March, 2014.
The General Statistical Office in Vietnam and with the March export registrations in hand, has predicted that the countries coffee exports for the month shall be 39.3% higher than the same month last year, to total 3.67 million bags.  This figure if it proves to be correct would assist to fuel catch up robusta coffee supply following relatively modest export figures over the first four months of the present October 2013 to September 2014 coffee year, with exports for the first six months of this coffee year now only a relatively 5.6% lower than the same period in the previous coffee year, at a total of 13,683,333 bags.

This latest official March coffee estimate is however significantly higher than the 2.5 million bags to 3 million bags that had earlier been forecasted by the private traders in the country, but it does perhaps have credibility in terms of the much more aggressive selling activity that prevailed during the first half of the month.   While with the new crop in Vietnam having been estimated to have been between 27.5 million bags to 28 million bags and over and above carryover stocks into the new crop of approximately 2.5 million bags, there are prospects for good volumes of coffee exports from the country over the last six months of the present coffee year.

Despite the many very emotive new crop forecasts that have emanated from Brazil and have been indicating sharp losses, there are still many forecasts that foresee that while there has been damage caused by the overly dry and hot weather for the first two months of this year, that this new crop might still be as large as 50 million bags.   This is of course with the combination of domestic consumption and export demand of approximately 54 million bags a deficit crop figure, but is one that with carryover stocks of approximately 8 million to 9 million bags, not yet a disastrous figure and for the present, this view is somewhat confirmed by the steady selling activity that prevails within the internal market in Brazil.

Such selling activity in Brazil is tending to confirm that the farmers do not believe that the damage done has been as severe as some market manipulative reports have indicated, with less aggressive but nevertheless steady selling activity continuing through this week.   The Brazil Real has however since firmed against the U.S. Dollar and with the exchange rate that had been around 2.34 to the U.S. dollar now trading at 2.258 and one might expect that this might dampen some selling spirits ahead of the weekend, which would likewise thin the volumes of price fixation hedge selling activity within the New York market.   

Meanwhile there are further light scattered showers forecasted for the main Brazil coffee districts for the last few days of this month, but not foreseen to be sufficient in volume so as to dramatically increase the generally below average rainfall that has been experienced over most districts for the month so far.    However with at least some rains and with the temperatures lower as Brazil heads into its autumn season, it has been sufficient to relieve the stress on the trees, but it does still indicate that these districts shall enter the relatively dry winter harvest season with lower than normal ground water retention levels.

There has been no news of late emanating from Mexico and Central America, where the new crop harvests are coming to a close.   There is no doubt that some of the countries have suffered significantly from the Roya or Leaf Rust problem and shall have experienced sharply lower levels of production and particularly so El Salvador, but how it has actually impacted upon this producer bloc in general, might only become evident from the export figures reported in the third quarter of the year.   While already the relatively active selling activity out of Honduras does seem to confirm that this now leading regional producer has experienced an improved new crop, as had anyhow been forecasted.     

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 8,416 bags yesterday, to register these stocks at 2,587,358 bags.   There was meanwhile a smaller 6,311 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 43,538 bags.

The commodity markets maintained and overall steady track during trade yesterday, with the Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat and Corn markets showing buoyancy, while the Cocoa, Soybean, Gold, Silver, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.87% higher; to see this Index registered at 559.42.  The day starts with a steady U.S. Dollar trading at 1.662 to Sterling and 1.375 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.00 per barrel.

The London coffee market started the day on a hesitantly steady note yesterday, while the New York market started the day on a marginally softer track.    The New York market did however soon recover and started to set a positive stance in thin trade, while the London market continued on its sideways track.   The New York market once again came under pressure during the afternoon’s trade and dipped back into negative territory, but with volumes thin and underlying support sufficient to halt the slide and set the market back onto a modest recovery track.   The London market continued to end the overall lacklustre day of trade for both markets on a steady note and with only 25% of the gains of the day intact, while the New York market likewise ended the day on a steady note and with 43.7% of the gains of the day intact.     One might expect that following the steady close and with producer selling pressure slow that this shall inspire a cautiously steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2143 – 2                                                           
MAY     2083 + 3                                                 MAY     176.35 + 0.35
JUL      2080 + 7                                                  JUL      178.30 + 0.30
SEP      2079 + 3                                                 SEP      180.25 + 0.35
NOV     2080 + 2                                                 DEC      182.55 + 0.40
JAN      2079 + 1                                                 MAR     184.55 + 0.40
MAR     2075 + 1                                                 MAY     186.15 + 0.50
MAY     2067 – 8                                                  JUL      187.00 + 0.65
JUL      2075 – 8                                                  SEP      187.25 + 0.55
SEP      2075 – 8                                                  DEC     187.35 + 0.50

27th. March, 2014.
The fine washed arabica coffee producer bloc of Central America, Dominican Republic, Colombia and Peru but excluding the volumes still to be reported from Mexico, have announced that their combined coffee exports for the month of February were 10.2% higher than the same month last year, at a total of 2.35 million bags.    Thus if one were to take a guess at the Mexican contribution, one might guess that the fine washed arabica coffee exports from Central and South America for the month of February, would have been close to 2.7 million bags.

This is a number that with the circumstances of the market and with many roasters reacting to the sharp rise in the coffee prices over the past couple of months by decreasing the washed arabica shares within many blends, would indicate that there is for the present a more than adequate supply of these top end coffees to the consumer markets.   Albeit that with the February figures in hand that the cumulative exports for this producer bloc and excluding Mexico for the first five months of the present October 2013 to September 2014 coffee year are a negligible 0.14% lower than the same period in the previous coffee year, at a total of 9.66 million bags.  

Of course this more than adequate performance in terms of fine washed arabica coffee exports from the region is heavily influenced by the surging production in Colombia that is on the road to full recovery following the past few years of climatic problems, with the country having filled in the gap that has come with the Roya or Leaf Rust problems in Central America.   This countries production forecasted to increase further this year and with increasing areas of replanted coffee farms coming into production, to continue to post improved crop figures for the coming two to three years and with unforeseen climatic issues aside, to target annual crop that might well exceed 14 million bags by 2016.

These good volumes of production from Colombia and with the increased yields contributing to lowering the unit costs of production, which has over the recent months been accompanied by the much improved prices that have been dictated by the reference prices of the New York market, does not detract from still some dissatisfaction on the part of the farmers.   Thus despite these bonuses that had also been accompanied by government price subsidies, the Colombian coffee farmers still plan to participate in a general Dignity of Coffee Workers national strike that is scheduled for the 28th. April.   This is however only a short protest and cannot be expected to be as disruptive as the two week strike in February 2013 and thus, the news of this proposed strike is not expected to have any effect upon market sentiment, as it shall be business as normal for the Colombian coffee sector for the foreseeable future.   

The question remains and with increasing production due from Colombia, what shall be the prospects for the next October 2014 to March 2015 new Mexican and Central American fine washed arabica coffee crop.    This crop is with the improved prices that now afford improved farm inputs and control measures to counter Roya or Leaf Rust, likely to be an overall larger crop and thus on the longer term and for the follow on October 2014 to September 2015 coffee year, one can expect to see good quality coffee supply to the consumer markets.    Such a scenario could potentially provide a modestly negative influence upon the longer term speculative sentiment within the New York market but is still likely to be countered by the negative deficit natural arabica coffee reports that shall follow the new Brazil 2014 crop harvest, which shall potentially continue to buoy the market into the first quarter of 2015.

Meanwhile the arbitrage between the markets ended the day yesterday at 81.65 usc/Lb., which equates to a still attractive to the roasters 46.39% price discount for the London robusta coffee market, against the New York arabica coffee market.   Thus while the New York market that is still finding its way to set a stable trading range following the past couple of weeks of volatility, one might presume that with such encouragement for higher percentages of robusta coffees within the consumer market blends, that there is the potential for longer term buoyancy for London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,389 bags yesterday, to register these stocks at 2,578,942 bags.   There was meanwhile a similar 1,695 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 49,849 bags.

The commodity markets were mixed in trade yesterday, with the Oil, Sugar, Cocoa, Coffee, Orange Juice and Soybean markets having a day of buoyancy, while the Natural Gas, Cotton, Copper, Wheat, Corn, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.14% lower; to see this Index registered at 554.59.  The day starts with a steady U.S. Dollar trading at 1.657 to Sterling and 1.379 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.30 per barrel.

The London coffee market started the day yesterday taking a near to steady stance and followed by the New York market taking a softer track, which was likewise soon followed by the London market.    There was however a recovery during the afternoon’s trade and with both markets moving back into positive territory and with buy stops coming into play, to extend the gains.   The London market continued to maintain its steady track through to its positive close but with only 26.9% of the earlier gains of the day intact, while the New York market ended the day on a positive, but with a less confident 17.1% of the earlier gains of the day intact.   This overall hesitantly positive close provides little in the way of direction, which is likely to set the markets for a steady to perhaps mildly softer start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2145 + 6                                                           
MAY     2080 + 7                                                 MAY      176.00 + 0.70
JUL      2073 + 6                                                  JUL      178.00 + 0.75
SEP      2076 + 5                                                 SEP      179.90 + 0.95
NOV     2078 + 3                                                 DEC      182.15 + 1.10
JAN      2078 + 4                                                 MAR     184.15 + 1.15
MAR     2074 + 2                                                 MAY     185.65 + 1.10
MAY     2075 unch                                              JUL      186.35 + 0.90
JUL      2083 unch                                              SEP      186.70 + 0.75
SEP      2083 unch                                              DEC     186.85 + 0.65

26th. March, 2014.
The potential for a mild El Nino phenomenon developing within the Pacific Ocean during the second half of this year is starting to impact upon coffee market news and with the Colombian Coffee Federation having already seen this as a positive factor that could assist to provide drier conditions, which would limit the threat of Roya and support a 2014 crop of 11.4 million bags of fine washed arabica coffees.   This has however been followed by speculation from Brazil that has experienced a historic hot and dry summer for its main south central coffee districts, that the El Nino might bring with it increased rainfall for the countries southern districts.   

This speculation from Brazil albeit that it might increase the threat of frost for the very southern coffee districts, is that it would seemingly support a good start to the late September 2014 to April 2015 rain season, which would indicate the potential for a good flowering and follow on 2015 coffee crop.   In this respect the stress of the relatively low ground water retention levels within many of the main south central arabica coffee districts in Brazil that shall be further followed by the stress of the May to August harvest, is by nature likely to trigger a good flowering should the spring rains come on time and in relatively good volume.

The question still remains however, what damage has been done to the potential of this forthcoming 2014 arabica coffee harvest, from the relatively low rainfall over the past three months.  In this respect and albeit that it has never been a full on drought, the main arabica coffee state of Minas Gerais has reported rainfall for January to have been 10% to 33% of the five year average and for February, to have been between 8% to 28% of the five year average, which has been followed during March so far, by rainfall that has been between 45% to 83% of the five year average.  It has however not been quite so bad for the lower production state of Sao Paulo, which has reported rainfall for January to have been 40% to 72% of the five year average and for February, to have been between 50% to 52% of the five year average, which has been followed during March so far, by rainfall that has been between 39% to 65% of the five year average.

The damage to the overall crop from these stressful dry conditions that have been accompanied by the increased levels of evaporation that came with the accompanying hot temperatures can really only be truly assessed post-harvest in September and when the weight of the new crop harvest is clarified.   As it is only then that one shall know what percentages of beans have been completely damaged and are blacked and shall be unusable and likewise, what percentages of the beans shall be small and in the grinder category, rather than being bold bean coffees.   Thus with the potential for both factors to impact upon the overall weight of the new crop, one must presume that the fundamentals of tighter Brazil supply shall continue to buoy speculative spirits within the coffee markets and inspire the funds to remain long rather than short within the market.  Albeit that with the considerable carryover arabica coffee stocks that Brazil shall enter this new crop with, that there really is not short to medium term threat to Brazil arabica coffee supply.

The Ivory Coast with its new robusta coffee crop harvest near to completion, has reported that the countries robusta coffee exports for the first five months of the present October 2013 to September 2014 coffee year is 129,300 bags or 47.4% higher than the same period in the previous coffee year, at a total of 402,100 bags.   This is however a number that is well below the forecasted exports of in excess of 1.5 million bags of robusta coffee for the present coffee year and one might presume that with the much improved value of the reference prices of the London market, that the coming seven months and including March, shall see steady export volumes emanating from the Ivory Coast.  With these coffees mostly destined for their traditional markets in North Africa and the Southern European markets, where these coffees attract good support.

The internal markets in Vietnam are seen to be taking something of a breather this week, as farmers and internal traders while still having substantial stocks of new crop robusta coffees at hand, are again showing some degree of price resistance to the prices dictated by the reference prices of the London market.   One would think however that this is something of a short term hiccup in what has been a few weeks of active selling, as with the pending competition from the start of the new Indonesian robust coffee crop coming into play, farmers shall need to continue to liquidate and cash in a good percentage of their new crop stocks.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,150 bags yesterday, to register these stocks at 2,580,331 bags.   There was meanwhile a similar 1,520 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 48,154 bags.

The commodity markets are in receipt of supportive improved jobs data from the U.S.A., but remain cautious over the duller growth figures from China.   The Brent Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Soybean and Gold markets had a day of buoyancy, while the U.S. Oil, Coffee, Orange Juice, Wheat, Corn, Silver, Platinum and Palladium markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.17% higher; to see this Index registered at 555.37.  The day starts with a near to steady U.S. Dollar trading at 1.652 to Sterling and 1.381 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.70 per barrel.

The London coffee market started the day yesterday with follow through early buoyancy and followed by a similar stance being taken within the New York market, with producer selling pressure thin and allowing for both markets to show some muscle.   However as the afternoon progressed the New York market started to come under pressure and headed back into negative territory, while the London market maintained a more positive track.   The London market did however late in the day falter and follow New York back into negative territory and while both markets did attract a very short term positive pip, the London market ended the day on a softer note and with 66.7% of the losses of the day intact, while the New York market ended the day on a soft note and with 40% of the losses of the day intact.   This soft end to the day’s trade is unlikely to inspire little better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2139 – 9                                                           
MAY     2073 – 10                                               MAY      175.30 – 1.10
JUL      2067 – 8                                                  JUL      177.25 – 1.05
SEP      2071 – 8                                                 SEP      178.95 – 1.05
NOV     2075 – 7                                                 DEC      181.05 – 0.90
JAN      2074 – 9                                                 MAR     183.00 – 0.65
MAR     2072 – 7                                                 MAY     184.55 – 0.45
MAY     2075 – 2                                                  JUL     185.45 – 0.30
JUL      2083 + 6                                                  SEP     185.95 – 0.25
SEP      2083 + 6                                                 DEC     186.20 – 0.25

25th. March, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the speculative sector of this market `increase their net long position within this market by 11.12% in the week of trade leading up to Tuesday 18th. March; to register a net long position of 22,302 Lots on the day.  This net long position within the London market which is the equivalent of 3,717,000 bags has most likely been little changed over the period of modestly softer trade, which has since followed.

The London market does however come under some pressure from the increased selling activity within the internal market in Vietnam, where farmers and internal traders have been taking advantage of the buoyancy of the reference prices of the London market, to liquidate some of their substantial new crop stocks.   There still remains however something of a problem with the inverted price structure of the London coffee market, where the premium prices of the front months, makes it something of a risk factor for the international coffee traders to take on large volumes of medium terms stocks, where the carry of such stocks cannot be financed by the market.

The question is when might the volumes of new crop robusta coffees that are still due to come to the international markets, finally force the London market to return to a normal structure of rising value for the forward contracts, which would allow for the consumer market trade to take on, hedge and carry longer terms stocks.    Perhaps it shall require the competition of the new Indonesian robusta coffee crop that shall come into play later on in the coming month and in competition to Vietnam, to finally impact upon the structure of the London market.   Albeit that there is already some degree of competition for Vietnams dominant robusta coffee supply, from the Indian robusta coffee crop that is already coming to the market.

Meanwhile in terms of the next October 2014 to January 2015 new Vietnam crop, the country is still within its late October to April dry season, but with forecasts for rains to come for the main coffee regions during this week and into next week.  These rains are however expected to be relatively modest in nature, but would indicate relatively normal climatic conditions for the country and conditions that do not indicate any short term threat for the prospects of the countries next crop.  This following an 8.5% larger new crop that was completed early in January and one that has been assessed to have been well in excess of 27 million bags and including in excess of 26 million bags of robusta coffees.

The Yunnan Coffee Industry Association in China which is the dominant force in terms of Chinese coffee production that is related to washed arabica coffees, have voiced fears that the new crop harvest shall prove to be 40% lower than the previous year, at a total of less than 1 million bags.   These coffees which come from plantations that cover 46,000 hectares they say have suffered from some dry spells and cold spells during the past eight months and along with the negative effects of the low prices in 2013 that had an impact upon farm inputs, are mostly exported to the consumer markets.

China is an active importer of robusta coffees from their neighbouring Asian countries, for most of their domestic coffee requirements and has therefore become a useful fill in exporter of affordable arabica coffees to many of the traditional consumer markets.   But one might expect that with climatic issues aside and with the much improved values now being dictated by the international arabica coffee market, that it shall once again inspire the Chinese coffee farming community and indicate a potential for a much improved new crop to start to come into play for the last quarter of this year, which might recover to as much as 1.35 million bags.   These coffees added to the potential for a price inspired and improved inputs larger new crop from the leading washed arabica coffees producer bloc of Mexico and Central America, who are fighting their way back from the dip in production that has been caused by the problems of Roya or Leaf Rust.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,707 bags yesterday, to register these stocks at 2,581,481 bags.   There was meanwhile a very sharp 44,734 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 46,634 bags.

The commodity markets showed some concern over the lower than expected PMI index figures from the U.S.A. and the continued speculation over slowing growth within China, albeit that Chinese growth is still relatively impressive.   The Coffee, Wheat, Corn and Soybean markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% higher; to see this Index registered at 554.45.  The day starts with a near to steady U.S. Dollar trading at 1.649 to Sterling and 1.383 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.50 per barrel.

The London coffee market started the day on Friday on a softer track and followed by similar stance being taken towards the New York market, but with the New York market seemingly being inspired by reports of lower than expected rains in Brazil over the weekend to take the lead in a recovery for the afternoon’s trade.   This recovery in New York and with technical buy stops being triggered to accelerate its gains had its influence upon confidence within the London market, which joined New York on its upside track and with both markets extending their gains through the afternoon.   The London market continued to end the day on a positive note and with 95.7% of the earlier in the day’s gains intact, as did the New York market end the day on a positive note and with 82% of the earlier in the day’s gains intact, while the arbitrage is presently at 81.92 usc/Lb., which equates to a still attractive 46.44% price discount for the London robusta coffee market relative to the New York arabica coffee market.  This positive close one would think shall restrain producer selling activity as they look towards the potential for a further recovery and one might therefore expect to see as steady to buoyant start for early trade today against the firmer prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2148 + 49                                                         
MAY     2083 + 45                                               MAY      176.40 + 5.25
JUL      2075 + 39                                                JUL      178.30 + 5.25
SEP      2079 + 38                                               SEP      180.00 + 5.35
NOV     2082 + 37                                               DEC      181.95 + 5.90
JAN      2083 + 38                                               MAR     183.65 + 6.65
MAR     2079 + 37                                               MAY     185.00 + 7.00
MAY     2077 + 37                                                JUL     185.75 + 7.25
JUL      2077 + 37                                                SEP     186.20 + 7.35
SEP      2077 + 37                                               DEC     186.45 + 7.35

24th. March, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 14.87% in the week of trade leading up to Tuesday 18th. March; to register a net long position of 41,404 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 3.55%, to register a net long on the day of 47,376 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 26.86%, to register a net long position of 30,461 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 8,635,559 bags has most likely been sharply reduced over the following days of negative trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The Coffee Federation of Colombia have foreseen the possibility of a moderate El Nino phenomenon in the Pacific Ocean for later in this year to be a positive factor for their coffee crop, as they see the marginally drier weather that this shall bring, to be conducive to good growing conditions.  Thus they have increased their forecast for coffee production for this calendar year to be 4.59% higher than last year, to total an impressive 11.4 million bags.    

This impressive recovery in the Colombian production over the past couple of years and since dipping to below 8 million bags, does much to counter the negative effects upon fine washed arabica coffee supply from the Roya or Leaf Rust affected Mexican and Central American producer bloc.  While with the recent weeks of relatively good value new crop sales from this region in hand, they can be expected to improve their levels of Roya controls and one might well foresee improved crop levels from these producers for their next October 2014 to March 2015 harvest.   Thus contributing to an overall recovery in world coffee supply for the next October 2014 to September 2015 coffee year, which shall be under some pressure from the smaller than expected 2014 new Brazil crop.

Stepping in to add to the negative forecasts in terms of world coffee supply for the coming coffee year is the forecast from the prominent commodity bankers BNP Paribas on Saturday, who foresee that with the low rainfall problems being experienced by Brazil for the first quarter of this year, that world coffee supply shall decline to 150.1 million bags, which the foresee to be a deficit supply of 612,000 bags. This forecast does however still foresee a new Brazil coffee crop of 51.5 million bags which many might dispute, but nevertheless it does make the point that the forecasted deficit supply follows two years of surplus supply and with more than sufficient stocks to guarantee sufficient supply for the coming coffee year.   Leaving the big question as to what are the prospects for the follow on 2015 Brazil crop, which shall be critical for safe coffee supply for the follow on October 2015 to September 2016 coffee year.  

Meanwhile in terms of Brazil rainfall for the month, there have been widespread rain showers over all of the coffee districts, albeit that in term of average monthly rainfall levels, the rains are still well below the traditional levels.   One might however presume that while the rainfall for the month so far has been relatively modest, that they would be sufficient to sustain the coffee trees, but there still has to be some concern over the much lower than is normal for this time of the year, ground water retention levels that are important for the support of the trees through the cold and dry winter harvest season.   However with a new front coming in over this last weekend, one might well see some catch up rainfall coming into play for this week, to assist towards a recovery of these pre winter ground water retention levels and with the prospects of such rains to continue to dampen some of the bullish sprits that still prevail within the coffee markets.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged on Friday, to register these stocks at 2,587,188 bags.   There was meanwhile a modest 884 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 1,900 bags.

The Certified Robusta coffee stocks held against the London market were seen to have decreased marginally by 2,000 bags or 0.50% during the two weeks of trade leading up to Monday 17th. March, to see these stocks were registered at a modest 397,333 bags.   These stocks now that there is an increasing flow of new crop robusta coffee stocks coming forth from Vietnam have lost some of their attraction for the consumer market roasters and one might expect that in the coming months that they might be expected to register new coffees, which shall see them steadily start to increase.

The commodity markets were again mixed in trade on Friday, but with the overall macro commodity index tending softer for the day.  The Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Gold and Palladium markets had a day of buoyancy, while the Sugar, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.41% lower; to see this Index registered at 554.43.  The day starts with a near to steady U.S. Dollar trading at 1.648 to Sterling and 1.380 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.80 per barrel.

The London coffee market started the day on Friday on a softer track and followed by similar stance being taken towards the New York market, but with both markets recovering into the afternoons trade and moving back into positive territory.   The markets did however again come under pressure and slip back into negative territory, but with the London market posting a recovery while the New York market remained under pressure.  The London market continued to end the day on a steady note but with only 3.6% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 53.1% of the earlier losses of the day intact.  This close does little to inspire confidence and one might thus expect to see little better than a steady to soft start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2099 + 2                                               
MAY     2038 + 1                                                 MAY     171.15 – 3.00
JUL      2036 unch                                              JUL      173.05 – 2.90
SEP     2041 – 2                                                  SEP      174.65 – 2.95
NOV     2045 – 3                                                 DEC      176.05 – 3.15
JAN      2045 – 4                                                 MAR     177.00 – 3.35
MAR     2042 – 5                                                 MAY     178.00 – 3.55
MAY     2040 – 7                                                  JUL      178.50 – 3.80
JUL      2040 – 7                                                  SEP      178.85 – 4.15
SEP      2040 – 7                                                 DEC      179.10 – 4.25

21st. March, 2014.

The Certified robusta coffee stocks held against the London exchange were seen to have decreased by 120 Lots during the two weeks of trade leading up to Monday 17th. March, with these stocks registered at 23,840 Lots on the day. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 1,075 bags yesterday, to register these stocks at 2,587,188 bags. The number of bags pending grading for the exchange was unchanged on the day at 2,784 bags pending grading for the exchange.

The commodity markets experienced a reversal yesterday, with the influential Oil markets on a softer note and a firmer US Dollar applying some pressure during the course of the day.  The energy markets were mostly softer as was agriculture with Sugar, Coffee, Cocoa, Wheat and Corn all lower on the day, with Soybean and Orange Juice finishing in positive territory.  It was likewise a lower close on the day for Copper, Cotton, Gold, Silver and Platinum, although a mildly positive finish for Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.30% lower; to see this Index registered at 556.71. The day starts with a steady U.S. Dollar trading at 1.649 to Sterling and 1.378 to the Euro, while Brent Crude is steady in early trade and is selling at US$ 106.86 per barrel.

It was another soft day for the coffee markets yesterday, with both London and New York starting the day on a lower note and any attempts to the upside, lacking follow through support. The overall negativity across the board of commodities along with the strengthening in the US Dollar leant an influence to the downward day.  However sentiment would point to the weather premium that is rapidly chiselled away, with weather forecasters consensus that widespread rains will return to the coffee growing areas in Brazil, over the coming weekend and to the end of March, news which is seen to be dampening speculative spirits. The session continued into the afternoon with speculative long liquidation and producer price fixation selling pressure, and limited underlying buyer support which finally saw the markets close after triggering stops along with way, on a softer note, with some recover seen toward the very end of the day in both markets and a negative close set yesterday, with a 2.53% lower market in London and a 6.18% decline in the New York May position, in a relatively heavy volume day, set the close yesterday, as follows: 

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


MAR     2097 – 53 MAY 174.15 – 11.35
MAY     2037 – 53 JUL 175.95 – 11.40
JUL      2036 – 53 SEP 177.60 – 11.40
SEP      2043 – 51 DEC 179.20 – 11.80
NOV     2048 – 49 MAR 180.35 – 12.20
JAN      2048 – 47 MAY 181.55 – 12.35
MAR     2047 – 46 JUL 182.30 – 12.45
MAY     2047 – 46 SEP 183.00 – 12.40
JUL      2093 - 29                             DEC  195.40 -  6.15
SEP      2047 – 46 MAR 183.10 – 12.30

20th. March, 2014.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by 894 bags yesterday, to register these stocks at 2,588,263 bags. The number of bags pending grading for the exchange registered a decline of 1,925 bags to a total 2,784 bags pending grading for the exchange.

It was a steady day on the commodity markets yesterday, the Oil markets showing some stability and a return to market investor confidence surrounding the latest round of U.S. Federal Reserve policy discussions. It was a positive day for Oil, Sugar, Copper, Wheat, Corn, Coffee, Soybean and a softer day for Orange Juice, Gold, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% higher; to see this Index registered at 564.05. The day starts with a steady U.S. Dollar trading at 1.6539 to Sterling and 1.383 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.20 per barrel.

The coffee markets started the day on a buoyant note, but with both markets registering thin and lacklustre trade.  There was limited upward support and both markets struggled to maintain positive momentum, which brought speculative profit taking back to the floor, triggering stops along the way.  The lack of follow through buoyancy continued to come under negative pressure with price fixation selling pressure entering the market and toward the afternoon higher volumes of trade coming into play.  Both markets maintained the session in negative territory although a late in the day recovery in both markets was noted, the close was on a softer note and near to the day’s lows in both markets, to set the close yesterday as follows: 

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

MAR     2150 - 51                                             MAR    185.10 – 5.85
MAY     2090 - 45                                              MAY    185.50 – 6.05
JUL      2089 - 42                                              JUL     187.35 – 6.05 
SEP      2094 - 44                                             SEP     189.00 – 6.10
NOV     2097 - 42                                              DEC    191.00 – 6.05
JAN      2096 - 41                                             MAR    192.55 – 6.10
MAR     2093 - 39                                             MAY    193.90 – 6.10
MAY     2093 - 39                                              JUL    194.75 – 6.15
JUL      2093 - 39                                              SEP    195.40 – 6.15
SEP      2093 - 39                                             DEC    195.65 – 6.10 

19th. March, 2014.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 3,988 bags yesterday, to register these stocks at 2,587,369 bags. The number of bags pending grading for the exchange steady at 4,709 bags pending grading for the exchange.  

It was a buoyant day on the commodity markets yesterday, the advent of the U.S. Federal Reserve two day policy meetings seemed to provide some confidence in the continuity of current policies and the widely expected trimming back of bond-buying stimulus, the meetings continue today.  In a mild reversal of fortunes, it was a more positive day for Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Platinum and Palladium. The Oil markets were steady to softer and a softer day for Gold, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% higher; to see this Index registered at 563.53. The day starts with a steady U.S. Dollar trading at 1.6594 to Sterling and 1.392 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.40 per barrel. 

The day started lower in the coffee markets, with London weighed down through an influx of origin sellers at the outset.  New York opened on a similarly softer note but in thin trade and a recovery back to unchanged in the early session and fairly steady in a narrow range ahead of the American opening. London similarly registered a recovery toward midsession although the presence of additional selling was noted above the market, came in to cap the gains as the afternoon progressed. The spurt of buyer participation within New York was met with steady speculative profit taking, leaving this market vulnerable to further pressure as the day wore on although to remain within a positive range, by the end of the day. London did not fare quite as well and remained in negative territory throughout the session, with a push to the lows on the close of the day.  It was an overall quieter day in the markets yesterday, the volume of trade was muted and relatively slow through the session, the total volumes for the day posted at close to half of that of the previous session.  Lacking any other directional news and with the weather reports from Brazil predicting wide spread rains for the coffee producing areas to the end of March, a consolidation in the markets, to set the close on a softer note in London and a mildly positive note in New York yesterday, as follows:  

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

MAR     2201 - 24 MAR    190.95 + 1.05
MAY     2135 - 24 MAY    191.55 + 0.15
JUL      2131 - 24 JUL     193.40 + 0.15 
SEP      2138 - 21 SEP     195.10 + 0.15
NOV     2139 - 21 DEC    197.05 – 0.10
JAN      2137 - 22 MAR    198.65 – 0.40
MAR     2132 - 20 MAY    200.00 – 0.55
MAY     2132 -  9 JUL     200.85 – 0.55
JUL      2132 - 11 SEP     201.55 – 0.40
SEP      2132 - 11 DEC    201.75 – 0.40 

18th. March, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 114 Lots in the week of trade leading up to Tuesday 11th March; to register a net long position of 20,070 Lots, or the equivalent of 3,345,000 bags net long on the day.  

Following the news of a catch up surge in exports out of Vietnam as was reported for the month of February, robusta deliveries continue to flow from the interior to the main export port in Ho Chi Minh City.  According to a recent poll compiled by Bloomberg trade however, producer sales from this current October 2013 to September 2014 crop is estimated by a median of private trade participants as 50% sold thus far, compared with an average at 60% sold at the same time over the past five years. This underscores the prevailing sentiment that producers are generally well financed within Vietnam and have the ability to selectively wait out the market in anticipation of better value to come. The surge reported in deliveries over these past few weeks should assist to bolster exports from Vietnam to consumer markets over the next few months, which for the first five months of the present coffee year registered 10,070,000 bags or 15% below that of the same period in the previous year.   

There are meanwhile some whispers of concern surrounding a continuation of dry weather, emanating from Vietnam.  This would seem to be slightly market manipulative in nature as it is not quite yet the rain season.  There are by some accounts, evidence that the dry weather has been extended by a fortnight over the seasonal average.  This in the age of global warming and with a prevailing weather market already in existence in Brazil, may serve to pique speculative interest with regard to the prospective development of the next coffee crop to come.  There is however some time ahead for the October 2014 to September 2015 Vietnam new robusta crop to develop and the evidence of considerable stocks being held within the interior meanwhile, will dispel any fundamental concerns of supply to consumer markets at this point in time.  The National Exports Association in Nicaragua have reported that the countries coffee exports for the month of February were 29,249 bags or 24.80% higher than the same month last year, at a total of 147,312 bags. This improved performance follows the modest volumes of exports recorded thus far in the coffee year. The countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year is nevertheless 47.30% below that of the same period in the previous coffee year, at a total of 336,422 bags. 

The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks declined by a sizeable 203,234 bags or 4.04% during the month of February to register these stocks at the end of the month at 4,826,104 bags.  The largest drawdown was noted in San Francisco, New Orleans and New York. These stocks however, do not include the bulk container transit coffees, the onsite roaster inventory stocks and the coffee stocks held within non reporting warehouses in both the U.S.A. and Canada. In addition, these stocks included 669,605 bags of mostly aged arabica certified coffee stocks held within the U.S.A., certified were houses at the end of February.

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged yesterday, to register these stocks at 2,591,357 bags. The number of bags pending grading for the exchange remained at a 4,709 bags pending grading for the exchange.

 It was a mixed day on the commodity markets yesterday, the leading in influence Oil markets posted softer overall results as the tenuous political situation in Ukraine remains in focus following the referendum held on Sunday.  It was a softer day for agricultural commodities generally, with Wheat, Corn, Coffee, and Sugar lower on the day, with Cocoa and Orange Juice bucking the trend to end on a positive note.  Cotton and Copper finished lower on the day, as did Gold, Silver, Platinum and Palladium, ahead of the U.S. Federal Reserves’s two day policy review starting later today.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.28% lower; to see this Index registered at 561.63. The day starts with a steady U.S. Dollar trading at 1.6639 to Sterling and 1.393 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.59 per barrel.

It was a softer start to the day for both markets yesterday, with London dipping lower from the opening bell.  New York opened in a similar fashion and lower, although in light volume the losses were maintained and this market settled into a narrow range initially but met with speculative profit taking as the weather in Brazil remains very much an influence in the prevailing weather market. According to local forecasters, more widespread rains are expected to reach the coffee producing areas by the end of this week. The markets settled into a lower range by midsession but toward the latter half of the trading day both markets had registered a recovery, which in New York saw the market regain all of the losses incurred as the afternoon progressed. The upward momentum was however quickly met with a fresh bout of selling activity at the top of the market in New York, leading to a softer close on the day closer to the day’s lows, and a finish in negative territory for both markets, to set the close yesterday as follows: 


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

MAR     2225 – 16 MAR    189.90 – 7.95
MAY     2159 – 16 MAY    191.40 – 7.00
JUL      2155 – 16 JUL     193.25 – 6.95 
SEP      2159 – 16 SEP     194.95 – 7.00
NOV     2160 – 14 DEC    197.15 – 6.90
JAN      2159 – 11 MAR    199.05 – 6.80
MAR     2152 – 14 MAY    200.55 – 6.55
MAY     2155 – 14 JUL     201.40 – 6.40
JUL      2157 – 14 SEP     201.95 – 6.35
SEP      2157 – 14 DEC    202.15 – 6.35 

17th March, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 1.22% in the week of trade leading up to Tuesday 11th. March and register a net long position of 36,045 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 1,815 Lots, to register a net long on the day of 49,118 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 1.14%, to register a net long position of 23,823 Lots on the day. This speculative net long position within the New York market which is the equivalent of 6,753,715 bags has most likely been buoyed over the following days of positive trade, albeit that this net long position may have been trimmed after the softer result on Friday.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 364 bags yesterday, to register these stocks at 2,591,357 bags.   There was meanwhile a modest 1,432 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,709 bags.

The commodity markets were generally positive on Friday, with the Oil markets following a positive track.  It was similarly a positive day for Cotton, Copper, Wheat, Gold, Silver and Platinum.  It was a softer day however for Sugar, Cocoa, Corn, Soybean, Coffee, Orange Juice and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% lower; to see this Index registered at 563.24. The day starts with a steady U.S. Dollar trading at 1.6632 to Sterling and 1.389 to the Euro, while Brent Crude is steady in early trade and is selling at $ 107.56 per barrel.

It was a softer day in the coffee markets on Friday, London started the day on a negative note but after the initial dip registered a recovery by mid-morning, before being met with heavy selling pressure waiting just above the market.  The New York market opened the day with a degree of buoyancy in relatively thin volume.  Both markets continued to come under pressure in the afternoon and with producer fixation hedge selling in combination with speculative profit taking coming into play.  There was evidence of underlying support coming in at the lows to reduce the losses; however both markets struggled to regain lost ground toward the latter half of the day.  Although London managed to close within the middle of the trading range on the day and with some late in the session recovery as sellers left the floor, it was a softer close on the New York market which registered another bout of selling toward the end of the day, and a close near to the day lows, in moderate volume of trade for the day in this market.  To register a softer close for the coffee markets on Friday, as follows; 


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

MAR   2241 –  4                                MAR    197.85 – 7.20
MAY   2175 – 14                                MAY    198.40 – 7.55
JUL   2171 – 14                                JUL    200.20 – 7.60 
SEP   2175 – 13                                SEP    201.95 – 7.60
NOV   2174 – 12                                DEC    204.05 – 7.55
JAN   2170 – 12                                MAR    207.10 – 7.50
MAR   2166 – 16                                MAY    207.80 – 7.45 
MAY   2155 – 27                                JUL    208.30 – 7.25
JUL   2157 – 27                                SEP    208.30 – 7.15
SEP   2157 – 27                                DEC    208.50 – 7.15

14th. March, 2014.
The Coffee Development Authority of Uganda have reported that the countries coffee exports for the month of February were 10,077 bags or 2.92% higher than the same month last year, to total 354,837 bags.   This figure assisting to confirm that the countries expectations for exports for the present coffee year shall once again 3 million bags.  

The Vietnam Customs Authorities have increased their figure for coffee exports during the month of February, which they now report to have been 83.4% higher than the same month last year, at a total of 3,068,333 bags and thus well above the earlier private trade forecasts for exports of between 1.67 million and 2 million bags.  This surge in exports for the month is very much catch up in nature as despite this higher figure, the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year are 15% lower than the same period in the previous coffee year, at a total of 10,070,000 bags.

The International Coffee Organisation and with the new Mexican and Central American crops coming to completion, have reported that the damage to these new crops caused by Roya or Leaf Rust might not be as severe as had earlier been forecasted, but that the damage was nevertheless still quite severe.  This ICO report that was based on input from the regional coffee body Promecafe has indicated that coffee production for this important producer bloc has declined by 24.1% for the new crop, from the levels of the 2011/2012 harvest.  

One might however question the accuracy of the new crop reports from Mexico and Central America as while there is no doubt that the overall production from the region is lower, there has been very active price resistance on the part of many farmers within these countries, in their bid to hold back stocks for higher value in anticipation of further drought fuelled rallies for the reference prices of the New York market.   These price resistant activities that has tightened supply and by nature buoyed the asking differentials by the exporters for new business might as soon as the New York market is seen to steady or perhaps even lose a little weight, start bringing larger volumes of unsold coffees out of the interior to the mills and exporters.

Thus one would suggest that it shall only be by well into the second quarter of the year and perhaps only early in the third quarter, that one shall be in a position to truly asses what has been the size of the overall crops from Mexico and Central America.   Perhaps in the end and it is still quite probable, that they shall be only 16% lower than the 19.7 million bags of the 2011/2012 harvest, rather than the more dramatic percentages that are being reported by Promecafe and the International Coffee Organisation.   In the meantime however and albeit partially manipulated by internal market price resistance, the overall supply from Central America remains tight and the differentials for new business firming, which has likewise assisted to firm up the asking differentials for new business from neighbouring Colombia.

With Brazil having been an active seller over the past months the respected domestic analysts Safras e Mercado have estimated that by the end of February approximately 77% of the 2013 crop of 52.9 million bags had been sold.   This figure they say is well ahead of the 71% factor at the same time last year, of sales of the previous 2012 crop coffees.  There are many questions however in terms of these figures as the evidence of internal market coffee supply in Brazil is that both the last 2013 and the prior 2012 and 2011 crops might have been much larger than many have assessed and that the sales within Brazil are including good volumes of past crop stocks, which might be clouding the assessment of how much of the 2013 crop coffees have actually been sold.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a 2,455 bags yesterday, to register these stocks at 2,590,993 bags.   There was meanwhile a modest 2,200 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 6,141 bags.

The commodity markets were again mixed in trade yesterday, but with the overall macro commodity index tending to stake a softer track for the day.  The U.S. Oil, Sugar, Cocoa, New York arabica Coffee, Corn, Soybean and Gold markets showed buoyancy, while the Brent Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.12% lower; to see this Index registered at 563.37.  The day starts with a steady U.S. Dollar trading at 1.662 to Sterling and 1.386 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.15 per barrel.

The London coffee market started the day yesterday taking a softer track and followed by a similar start for the New York market, but with both markets recovering and moving back into positive territory for the afternoon’s trade.  The markets were however experiencing thin and often lacklustre trade, comparative to the exciting days over the past couple of months, which would seemingly indicate that many players are taking a bit of a breather while they await further fundamental weather and crop news out of Brazil.  The London market continued on its positive track for most of the afternoon, but lost its way on the close and dipped back into negative territory and ended the day on a softer note and with 64.7% of the earlier losses of the day intact, while the New York market also started to lose its way in the closing stages of trade, but nevertheless ended the day on a positive setting and with 30.2% of the earlier gains of the day intact.   This mixed close and with both markets taking a late in the day dip does not however provide much in the way of confidence and one might expect to see a steady to soft start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2245 – 6                                                MAR    205.05 + 0.25
MAY     2189 – 11                                              MAY     205.95 + 0.65
JUL      2185 – 14                                               JUL     207.80 + 0.65
SEP      2188 – 13                                              SEP     209.55 + 0.70
NOV     2186 – 18                                              DEC     211.60 + 1.05
JAN      2182 – 20                                              MAR    213.35 + 1.20
MAR     2182 – 17                                              MAY    214.55 + 1.20
MAY     2182 – 16                                               JUL     215.05 + 1.00
JUL      2184 – 16                                               SEP     215.45 + 1.00
SEP      2184 – 16                                              DEC     215.65 + 1.10

13th. March, 2014.
The coffee markets with much improved value on the table for farmers for their coffee stocks, are presently devoid of striking news, which is presumably related to there no longer a need for bouts of market manipulative scare stories designed to assist to buoy speculative confidence.   There is of course no doubt that the issues of Roya or Leaf Rust in Mexico and Central America remain a factor, as has the partial drought in the main central coffee districts of Brazil done damage to the new crop potential, but with the reporting of this problems having already been factored into the market, there is a degree of exhaustion on the matter.

The London is finally starting to move back towards a traditional price structure, with the inverted nature of the market now moving back towards a structure that can assist the trade to finance the carry of stocks with the use of the forward month premiums.  It is not quite there yet, but there is no doubt that anticipating the return to normal that the trade is already buying into the substantial robusta coffee stocks that are on offer from Vietnam.   This should on the medium term, start to see some volume of robusta coffees starting to come to the certified stocks of the London market, which are presently very low.

The mixed results for the markets yesterday has seen the arbitrage set at 105.51 usc/Lb., which equates to a slightly narrower but still very attractive to the consumer roasters 51.39% price discount for the London robusta coffee market, relative to the New York arabica coffee market.   This discount in terms of the fine washed arabica coffees that are selling at premium differentials to the New York market is in terms of actual physical sales, providing an even more impressive percentage discount for the robusta coffees.   Albeit that the trend is not so much directly related to replacement of washed arabica coffees within the blends, but more so the step down from washed to the less expensive natural arabica coffees and from thereon, the step down from natural arabica coffees to robusta coffees.  

With the markets seemingly taking a bit of a breather this week and tending to move more sideways after the weeks of a steady upside track, it should be encouraging for the consumer market industries who have recently taken on catch up cover, to address further new business.  Few expect that the markets shall suffer a strong reversal in fortunes, as with the Brazil problem seen to be a reality, one would expect that the funds shall feel secure with their long positions within the markets for the longer term.  Thus one might expect to see more active selling activity coming forth from the new crop stocks in Central America, as farmers and mills start to reconsider the merit of holding back stocks and showing price resistance, in anticipation of much improved value to come from the volatile New York market.   

The question is now within the very competitive consumer markets, when the dramatic rise in coffee prices shall start to impact significantly upon the wholesale prices of coffee within these markets.   It has to come, but with concerns over market share, there shall be many main stream roasters who shall be obliged to accept thinner profit margins, as they fight off the raw material cost pressure to raise their prices.   Thus the producers looking to increase volumes of sales into the consumer industries shall most certainly encounter some strong resistance, to make physical coffee trading for the short term, rather erratic in nature.  But so long as the washed arabica differential premiums remain in place, there shall be little interest in using the alternative market of tendering to the New York certified stocks and option to move larger volumes of new crop stocks.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 320 bags yesterday, to register these stocks at 2,593,448 bags.   There was meanwhile a relatively sharp 6,510 bags decline to the already modest number of bags pending grading for the exchange; to register these pending grading stocks at 3,941 bags.

The commodity markets were again mixed in trade yesterday, with the funds tending to step back from support within many markets in line with the increased concerns over the prospects for longer term growth within the Chinese economy, albeit that it is the level of growth and not the lack of it, which is a concern.  The London robusta Coffee, Cotton, Copper, Wheat, Corn, Gold, Silver and Palladium markets showed buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Orange Juice, Soybean and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.11% lower; to see this Index registered at 564.02.  The day starts with a softer U.S. Dollar trading at 1.666 to Sterling and 1.394 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 108.15 per barrel.

The London coffee market started the day yesterday near to steady and followed by a dip in value and in line with a dip in the fortunes for the New York market, but with the London market recovering in the afternoon, as did the New York market likewise return back into positive territory.   The London market continued for the rest of the day within positive territory but losing some weight late in the day and to end the day with 52.63% of the gains of the day intact, while the New York market ended the day on a marginally softer note, but having recovered 93.4% of the earlier losses of the day by the close.   This mixed close does not bring much to the markets but one might expect that with the weaker U.S. dollar in play and despite the probability of some producer price fixation selling pressure over the markets, that the downside risk for the markets shall be modest for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2251 + 6                                                MAR     204.80 – 0.25
MAY     2200 + 20                                              MAY     205.30 – 0.35
JUL      2199 + 23                                               JUL      207.15 – 0.35
SEP      2201 + 26                                              SEP      208.85 – 0.40
NOV     2204 + 30                                              DEC      210.55 – 0.35
JAN      2202 + 37                                              MAR     212.15 – 0.10
MAR     2199 + 43                                              MAY     213.35 + 0.45
MAY     2198 + 35                                               JUL      214.05 + 0.90
JUL      2200 + 45                                               SEP      214.45 + 1.05
SEP      2200 + 45                                              DEC      214.55 + 1.15

12th. March, 2014.
All the main coffee districts in Brazil have apparently been in receipt of supportive rains so far this month and with still some light rain showers to come, but with forecasts for drier weather to come into play by the end of the week.   Thus unless there are more substantial rains experienced closer to the end of the month and following what is presumably due to be a relatively dry week next week, one can expect that the talk of partial drought shall continue to support bullish sentiment within the markets for the foreseeable future.

What remains a question in respect of the forecasts for dramatically lower than expected new crop from the main arabica coffee growing districts in Brazil is the continued selling aggression within the internal markets in Brazil, which is related to the very good carryover stocks that remain with the farmers from the previous crop, as there is no doubt that the new crop shall be smaller.   These stocks which have been widely seen to afford an 8 to 10 million bags of carryover stocks into the new harvest that is due to soon start, might even by the evidence of the sales, be larger than expectations and therefore, well able to secure good Brazil arabica coffee supply through to the 2015 crop.

Supporting this view would be the report from Brazil’s Export Association Cecafe yesterday, which has forecasted that coffee exports from Brazil for 2014 shall be approximately 6% higher than last year, at a total of 33 million bags.   This figure if one is to apply domestic consumption at 21.5 million bags, would indicate an overall demand for Brazil coffees of 54.5 million bags and therefore indicating an approximate 5 million to 8 million bags deficit new crop on the horizon, depending upon which new crop forecasts one is to work with.

One would think that such figures which would indicate complete elimination of stocks by the start of the still questionable in potential 2015 crop would be encouraging for Brazil’s farmers to be showing some degree of price resistance, even against the much improved international market prices.   Thus the lack of such resistance for the present, would seemingly indicate that either the farmers who are best placed to evaluate the potential of the new crop do not believe that the damage is as severe as many indicate, or they are actually holding larger past crop arabica coffee stocks than most have assessed.    Most probably, when looking at the evidence of the rains so far this year, that it is more the latter than the former that is causing this relatively easy selling scenario.

Meanwhile with the much improved value of the reference prices of the London market, there has been good internal market selling activity within the internal market in Vietnam over the past week and with traders in the country talking in terms of farmers having so far sold approximately 50% of what is widely seen to have been an approximately 28 million bags new crop.    This would indicate that there is still quite some volume of internal market selling to come in the seven month ahead of the start of the delivery of the next crop, during the latter half of the last quarter of the year.

The evidence of good medium to longer term coffee supply from Vietnam is supported by the fact that added to a new crop of 28 million bags, were approximately 2.5 million bags in carryover stocks, as against less than 10 million bags having been exported over the first five months of the October 2013 to September 2014 coffee year.  Thus with a domestic consumption of approximately 2 million bags per annum aside, a potential coffee supply of mostly robusta coffees of 18.5 million bags for the last seven months of the present coffee year and with prospects for a carryover stock to be taken into the next harvest of up to 3 million bags, a still significant 15.5 million bags due to be shipped up to the end of September.   This would indicate not reason to fear medium to longer robusta coffee supply, albeit that the farmers in Vietnam have managed so far to be controlled about their selling activity, which has assisted to maintain buoyancy in the value of their sales.

Meanwhile and mirroring the situation in Vietnam two to three decades ago and in terms of longer term Asian coffee supply and with political stability returning to Myanmar, there are international investors starting to plant out commercial coffee farms within the country.  This with the rural communities actively looking for good value crops to grow is likely to encourage the smaller scale farmers to also start planting coffee and learning their skills from the neighbouring commercial farmers, which is likely to see Myanmar becoming a more important player within the Asian coffee industry over the coming years and adding a cup of Burma to the international coffee supply mix.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by 4,120 bags yesterday, to register these stocks at 2,593,768 bags.   There was meanwhile no change to the relatively modest number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The commodity markets were mixed in trade yesterday with the Brent Oil, Cocoa, Coffee, Orange Juice, Wheat, Corn and Gold markets showing buoyancy, while the U.S. Oil, Natural Gas, Sugar, Cotton, Copper, Soybean, Silver, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.05% higher; to see this Index registered at 564.61.  The day starts with a steady U.S. Dollar trading at 1.663 to Sterling and 1.386 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.95 per barrel.

The London coffee market started the day yesterday with some buoyancy and followed by a similar start for the New York market, and with both markets managing to maintain a positive stance throughout the day’s trade, but with some pressure coming into play to dull the positive track of the day.   The London market continued to end the day on a positive note and with 68.7% of the earlier gains of the day intact, while the New York market also ended the day on a positive note but with only 40.9% of the earlier gains of the day intact.    It was while relatively quiet still a positive close and one might expect to see a steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2245 + 49                                               MAR     205.05 + 2.55
MAY     2180 + 33                                               MAY     205.65 + 2.25
JUL      2176 + 34                                                JUL     207.50 + 2.30
SEP      2175 + 37                                               SEP      209.25 + 2.40
NOV     2174 + 39                                               DEC      210.90 + 2.45
JAN      2165 + 37                                               MAR     212.25 + 2.65
MAR     2156 + 33                                               MAY     212.90 + 3.25
MAY     2163 + 27                                                JUL      213.15 + 3.65
JUL      2155 + 27                                                SEP      213.40 + 4.00
SEP      2155 + 27                                               DEC      213.40 + 4.25

11th. March, 2014.
Firstly it is with apologies for the error in yesterday’s market report that we have to correct the reported London robusta coffee Certified Stocks, which were rather dramatically inflated in volume.   The Certified robusta coffee stocks held against the London exchange were seen to have decreased by a modest 3,667 bags or 0.91% during the two weeks of trade leading up to Monday 3rd. March, to register these stocks at a relatively modest 399,333 bags, which are unlikely to register any growth until such time as the inverted nature of value in the London market returns to normal, so as to allow for the trade to finance the carry of stocks.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 17.59% in the week of trade leading up to Tuesday 4th. March; to register a net long position of 20,184 Lots on the day.  This net long which is the equivalent of 3,364,000 bags has most likely been further extended during the overall positive trade, which has since followed.

One would think that there might be some caution on the part of the speculators and the funds to invest too long into the London market, as they look to the large volume of unsold robusta coffee stocks within Vietnam, which are soon to be joined in April by the new robusta crop starting to come onto the field of play from Indonesia.  However with the arbitrage as of yesterday’s close sitting at 106.01 usc/Lb., which equates to a very attractive to the roasters 52.12% price discount for the London robusta coffee market relative to the New York arabica coffee market, one has to believe in a rising demand for robusta coffees from the roasters of the main stream price sensitive consumer market blends.   Thus to potentially reduce the prevailing surplus robusta coffee supply factor, which should by nature buoy the spirits of the bulls within the London market.

The more detailed coffee export figures from Brazil for the month of February were forthcoming yesterday, with the exports of green coffee reported to be 27.54% higher than the same month last year, at a total of 2,515,000 bags.   Added to these green coffee exports are the exports of value added soluble coffees that are calculated in terms of their green coffee equivalent, which were seen to have been 3.35% lower than the same month last year, at a total of 228,876 bags.   Thus the total coffee exports for the relatively short month of February were 24.22% higher than the same month last year, at a total of 2,743,876 bags.

Interesting to see however and illustrative of the percentage of the exports in February that were related to forward fixed prices, is the fact that despite a 24.22% increase in the volume of exports for the month, that the revenue from these exports was 9.66% lower than the same month last year, at a total of 386.45 million U.S. dollars.   One has to expect however that following the sharp rise in the value of the reference prices of the international against which the Brazil coffees are being sold that this relatively low value of exports factor shall soon change and by as early as this month, one shall see the value of Brazil’s coffee exports starting to rise above the value of exports for the same months in the previous year.

Meanwhile the focus of the market remains very much upon the rainfall reports from the main Brazil arabica coffee districts in Minas Gerais and the north of Sao Paulo states, where there have been some rains but so far not in sufficient volume so as to significantly buoy the relatively low ground water retention levels.   These reports having been joined by the Vietnamese Coffee and Cocoa Association who are repeating their reports at the same time last year, that they are experiencing dry weather and fear drought damage to the prospects of their next October 2014 to January 2015 harvest.

These reports from Vietnam do however, have to be seen as market manipulative in nature as this is the historic dry season for the country and with the rain season only due to start in the second half of April, to carry on through to October and ahead of the start of the new harvest.  But with the word drought already very much a factor within most coffee conversations of late, there are some who do not stop to think when it is linked to Vietnam and such reports, can contribute towards the overall bullish sentiment that prevails within the market.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 600 bags yesterday, to register these stocks at 2,589,648 bags.   There was meanwhile no change to the relatively modest number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The commodity markets selectively reacted to the concerns over the evidence of a relatively sharp drop in exports from China in February, which bring with them fears of a tapering off in longer term demand.  The Natural Gas, Sugar, Coffee, Gold and Platinum markets showed buoyancy and the Cocoa and Cotton markets were steady, while the Oil, Copper, Orange Juice, Wheat, Corn, Soybean, Silver and Palladium markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.17% lower; to see this Index registered at 564.35.  The day starts with a steady U.S. Dollar trading at 1.664 to Sterling and 1.386 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 108.30 per barrel.

The London coffee market started the day yesterday with some buoyancy and followed by a similar start for the New York market, but with the New York market in particular maintaining its positive stance within and environment of thin trade.  Thus indicating a lack of producer selling pressure, with contributed to the ability of the market to maintain buoyancy upon steady speculative and roaster fixation under the market.   The London market maintained its upside track for the day and ended the day on a firm note and with 70.6% of the gains of the day intact, to be followed by a strong close for the New York market that ended the day with 65.5% of the earlier gains of the day intact.   This overall strong close of the markets is unlikely to attract early sellers and might suggest another steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2196 + 39                                               MAR    202.50 + 6.45
MAY     2147 + 48                                               MAY    203.40 + 6.55
JUL      2142 + 47                                                JUL     205.20 + 6.50
SEP      2138 + 49                                               SEP     206.85 + 6.45
NOV     2135 + 51                                               DEC     208.45 + 6.20
JAN      2128 + 50                                               MAR    209.60 + 5.90
MAR     2123 + 47                                               MAY    209.65 + 5.70
MAY     2136 + 48                                                JUL    209.50 + 5.45
JUL      2128 + 48                                                SEP    209.40 + 5.30
SEP      2128 + 48                                               DEC    209.15 + 5.00

10th. March, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 1.69% in the week of trade leading up to Tuesday 4th. March; to register a net long position of 29,468 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 4.42%, to register a net long on the day of 50,933 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 2.79%, to register a net long position of 20,801 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 5,896,991 bags has most likely been further buoyed over the following days of positive trade, which has since followed.

It was all Brazil weather and speculation over its effects upon the forthcoming new crop that dominated the coffee press on Friday, with a Reuters Poll over a wide range of 20 industry players having resulted in an over 10% dip in their new crop forecast from the last poll in January, to come forth with an average figure of 48.9 million bags for this new crop.   What does make this poll rather questionable in its accuracy is the fact that the predictions from these twenty contributions varied from as low as 39 million bags to as high as 56 million bags, which is clear evidence of the uncertainty of the industry towards what the effects of a partial drought over he central arabica districts might actually be.

In the meantime and quoting the drought conditions in Brazil, the International Coffee Organisation and with the forthcoming new Brazil crop to be related to the next October 2014 to September 2015 coffee year, have announced on Friday that they foresee that global coffee supply for this next coffee year shall prove to be at least a 2 million bags deficit coffee supply year.    This ICO report is at face value bullish news, but with Brazil more than likely to enter the new crop with between 8 to 9 million bags of coffee stocks and a stock level that shall dwarf the expected by the ICO dip in world coffee supply, it would indicate that the short to medium term world coffee supply is actually not under threat.  

The report did mention that this projected deficit crop year for the 2014/2015 coffee year would be the first deficit crop year in five years, which would confirm that as it has followed a string of surplus coffee supply years, that there are good supportive stocks to counter the problem.   Thus in reality and while there is no doubt that the Brazil weather is a problem, the real question is what shall be the Brazil crop in 2015 and how it shall impact upon coffee supply for the follow on 2015/2016 coffee year.   For the present one might suggest that due to some aggressive pruning and excessive stress due for many farmers in Brazil, that the next 2015 crop is unlikely to be a bumper crop and if one is to presume this to be the case, one might foresee a follow on deficit crop year as against steadily rising global consumption and therefore, good reason to believe in a firmer trading range for the markets into at least the second quarter of 2016.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 2,310 bags on Friday, to register these stocks at 2,590,248 bags.   There was meanwhile a more modest 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The Certified robusta coffee stocks held against the London exchange were seen to have decreased by 220 Lots or 0.91% during the two weeks of trade leading up to Monday 3rd. March, to register these stocks at 23,960 Lots.  This figure which equates to 3,993,333 bags is unlikely to register any growth until such time as the inverted nature of value in the London market returns to normal, so as to allow for the trade to finance the carry of stocks.

Logically and with the short to medium term surplus in robusta coffee supply from the origins overall this return to a conventional price structure for this London market should prove to be the case; it is seemingly just a matter of time.  But is of course very much related to the dominant supplier Vietnam, where the past six months of price resistance within the internal market has slowed the flow of the significant robusta coffee stocks that are being held within this market.

The commodity markets were in receipt of supportive U.S.A. jobs data on Friday, but countered by some concerns over mixed economic indicators from China.   The Oil, Natural Gas, Cocoa, Coffee, Cotton, Wheat and Soybeans markets had a day of buoyancy, while the Sugar, Copper, Orange Juice, Corn, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.36% lower; to see this Index registered at 565.33.  The day starts with the soft U.S. Dollar neat to steady and trading at 1.673 to Sterling and 1.388 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.55 per barrel.

The London coffee market started the day on Friday on a softer note and followed by a modestly softer start for the New York market, but with the New York market soon recovering and starting to attract renewed buoyancy that was followed by a recovery for the London market.  Trade within both markets was however relatively thin through the day and with both markets attracting relatively modest origin selling activity that assisted with sufficient underlying roaster and speculative support, for the buoyancy remain in play throughout the rest of the day’s trade.   The London market continued to end the day on a positive note and with 57.1% of the earlier gains of the day intact, while the New York market likewise ended the day on a positive note but with only 22.8% of the earlier in the day’s gains intact.  This close while positive might with the unconvincing modest nature of the close for the more volatile New York market attract some producer selling activity for early trade today, to influence as steady to soft start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2157 + 23                                               MAR     196.05 + 1.25
MAY     2099 + 16                                               MAY     196.85 + 1.30
JUL      2095 + 14                                                JUL      198.70 + 1.20
SEP      2089 + 16                                               SEP      200.40 + 1.10
NOV     2084 + 17                                               DEC      202.25 + 1.05
JAN      2078 + 18                                              MAR      203.70 + 1.00
MAR     2076 + 21                                              MAY      203.95 + 0.90
MAY     2088 + 20                                               JUL      204.05 + 0.85
JUL      2080 + 20                                               SEP      204.10 + 0.75
SEP      2080 + 20                                              DEC      204.15 + 0.70

7th. March, 2014.
The latest weather forecasts from Brazil indicate good rains are due over the coming two weeks for the main coffee growing districts, which shall assist to build up ground water retention levels and reduce the stress on the coffee trees, following the hot and dry first two months of this year.  This shall not reverse the damage already done to the potential of this new crop, but shall dampen some speculative spirits within the market at present.

Countering to a degree the potentially devastating effects of the near drought conditions over the main arabica coffee growing districts of Brazil has been the news that the steadily growing domestic coffee consumption within Brazil suffered a reversal last year, with domestic consumption that was generally expected to exceed 21 million bags, was in fact only close to 20 million bags.  This factor in terms of overall demand for Brazil coffee would reduce the demand to approximately 53 million bags, which partially reduces the negative effects of the potential for a lower crop for this year.

The complete and official Brazil coffee export figures for the month of February have been delayed by the long weekend carnival holiday, but the Trade Ministry have so far indicated that Brazil exported approximately 2.6 million bags of coffee during this relatively short month.  This figure is marginally higher than the previous month and reflects the rising demand for the relatively cheaper Brazil arabica coffee option, within the consumer markets that are struggling to follow the surging prices that are dictated by the speculatively driven New York arabica coffee market.

The surging supply of fine washed arabica coffee from Colombia over the past year has been accompanied by the dominant share that Colombia takes within the speciality sector of the consumer markets, with the Colombian Coffee Growers Federation reporting that over 1 million bags of exports over the past year being destined for the Speciality sector of the export markets.  These exports adding value to the coffee exports of the country, as by nature of the market and the special care an preparation taken with these exports, there are significant premiums being paid for the coffees that are shipped under the speciality flag.

The improved value of the international coffee markets has inspired sales of new crop coffees in India, with the country reporting that exports for the first two months of this year have increased by 15% over the same period last year, to total 1,049,267 bags.  This rise in exports however and with the new crop harvest still in progress, has not squashed the forecasts on the part of the Coffee Board of India and the farmers, that the new crop has suffered from erratic weather last year, that shall result in the new crop being lower than the past crop, at a total of 5.19 million bags.  

This new Indian crop figure being the official Coffee Board number, which is further discounted by reports from farmers, who still talk in terms of a new crop that might be significantly lower.  However in terms of these very conservative farm estimates, one has to see them to be mostly market manipulative in nature and designed to scare prices higher, rather than being realistic estimates.  Meanwhile India is experiencing a growing domestic consumption, which is now estimated to absorb over 2 million bags of coffee per annum.

The well respected Climate Protection Agency in the U.S.A. has changed their earlier forecasts and now talks of a strong chance for an El Nino Phenomenon developing with the Pacific Ocean this year, with this due to come into play during the second half of the year.   Such a phenomenon would create overly dry conditions within the Pacific Rim countries, which include in terms of its impact upon coffee, Colombia, Peru and Indonesia.  One must however comment that an El Nino if not severe would not prove to be a problem and with this latest prediction only supported by a 50% chance factor, is so far of no influence upon market sentiment.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 6,385 bags yesterday, to register these stocks at 2,592,558 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,811 bags.

The commodity markets were mixed yesterday, but overall taking a positive track.   The Sugar, London robusta Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, New York arabica Coffee and Wheat markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.67% higher; to see this Index registered at 567.40.  The day starts with the soft U.S. Dollar trading at 1.673 to Sterling and 1.386 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 108.75 per barrel.

The London coffee market started the day yesterday with predictable buoyancy and followed by a steady to softer start for the New York market, which developed into steady follow through support for the London market and a softer sideways track for the New York market.   The London market continued despite a short dip late in the day into negative territory to end the day on a positive note and with 34% of the gains of the day intact, while the New York market ended the day on a softer note and with 73.3% of the earlier losses of the day intact.   This mixed close provides for uncertain indicators for the market, but one might expect that the softer nature of the New York market might well inspire producer price fixation selling for early trade in the London market and an overall steady to softer start for both markets today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2134 + 21                                               MAR     194.80 – 5.85
MAY     2083 + 18                                               MAY     195.55 – 6.85
JUL      2081 + 24                                                JUL      197.50 – 6.85
SEP      2073 + 22                                               SEP      199.30 – 6.85
NOV     2067 + 20                                               DEC      201.20 – 6.85
JAN      2060 + 20                                               MAR     202.70 – 6.70
MAR     2055 + 21                                               MAY     203.05 – 6.80
MAY     2068 + 21                                                JUL     203.20 – 6.80
JUL      2060 + 21                                                SEP     203.35 – 6.70
SEP      2060 + 21                                               DEC     203.45 – 6.65

6th. March, 2014.
The Brazilians started to come back to work yesterday late afternoon, following their extended long weekend carnival holiday, to find report that the widespread rainfall, which has fallen over all of the coffee districts for the first few days of the month were relatively modest in volume.   These rains are however expected to continue for a few days and while bringing relief to the parched coffee farms in the north of Sao Paulo and Minas Gerais, are not contributing much to the rebuilding of ground water retention levels and therefore, the speculative sector of the New York market maintains its bullish stance and one that late in the day yesterday, took the market to two year highs.

This surge in value that came with the late in the day rally in New York and while the London market tended to take a sideways stance, has seen the arbitrage widen to 108.73 usc/Lb., which now equates to a significant 53.72% price discount for the London robusta coffee market, relative to the New York arabica coffee market.   It is a discount that is so attractive now and with the majority of the mainstream international brands unable to quickly follow the increased value of arabica coffee prices that have risen by over 91% in a matter of only three months, that has to inspire the financial controllers within these companies to try to encourage the use of increased percentages of robusta coffees in the blends.

The big question remains how much damage has been done to the potential of the forthcoming new Brazil crop, which will only become evident post the new crop harvest and in the last quarter of the year.   While in terms of world coffee supply and with a projected annual consumption of approximately 148 to 149 million bags for this year, one would need to see a Brazil crop of in excess of 51 million bags, to maintain an even supply and demand ratio.   There are however good carryover stocks in Brazil into this new crop and one would suspect that unless it once again turns dry in Brazil over the next eight weeks, that there shall be no shortage of coffee supply for the next twelve months, but the country is now vulnerable to a supply problem should any unforeseen climatic problems develop for the prospects of the follow on 2015 Brazil crop.

This scenario and with it unlikely now that the new Brazil crop that many are already talking down to below 48 million bags, due to exceed 52 million bags, can be expected to support the markets to remain within a new and higher trading range for the foreseeable future, albeit that it is not impossible to see a modest negative correction from the present levels.   This trading range will however be beneficial to producers at large and shall assist farmers in Mexico and Central America to invest in the combating of Roya or Leaf Rust, as it shall assist coffee farmers worldwide in the investment in yield enhancing farm inputs.   Thus contributing to improved coffee overall world coffee supply, so long as there are no more climatic shocks due from Brazil.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 1,300 bags yesterday, to register these stocks at 2,598,943 bags.   There was meanwhile a modest 2,755 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,811 bags.

These stocks are traditionally reliant upon Mexico, Central America and Peru for their supply, with these countries still contributing to 2,151,517 bags or 82.78% share of the stocks.  However with the prevailing premium differentials that the new crop coffees that these producers are still able to attract from the consumer market buyers, there is little chance of new crop coffee stocks being tendered in any volume to these stocks and for the present, no chance of growth in the stocks.   Thus one might see the relatively modest nature of these stocks to be a further support factor for speculative sentiment within the New York market, for the coming months.   Meanwhile the European warehouses of this exchange in Antwerp, Barcelona, Bremen and Hamburg, are hosting 74.48% of the stocks and 52.35% of the coffees pending grading for the exchange.

The commodity markets were mixed yesterday and lacking any significant economic input to provide direction for sentiment, ahead of tomorrow’s U.S. jobs data that shall provide some indicators towards this leading economies growth.  But these figures are expected to be somewhat misleading, as they would have been influenced by the negative effects to the interference of bouts of severe cold weather over the past couple of months.   The Sugar and New York arabica Coffee markets surged yesterday, while the softer U.S. dollar assisted for the Cocoa, Orange Juice, Soybean, Gold, Silver, Platinum and Palladium markets to have a day of buoyancy, but the Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Wheat and Corn markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.43% higher; to see this Index registered at 563.61.  The day starts with the soft U.S. Dollar trading at 1.672 to Sterling and 1.373 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 107.25 per barrel.

The London coffee market started the day yesterday taking a softer track and with producer selling pressure weighing upon the market, while the New York market started the day on a steady note, but succumbing to negative pressure during thin morning and early afternoon trade.   The New York market did however start to attract support later in the afternoon and with producer selling quiet, to pick up in volume and value and with buy stops being triggered to accentuate the gains, which finally assisted to buoy sentiment within the London market, which moved briefly back into positive territory.  The London market did however falter and come under late in the day pressure to end the day marginally softer and with 27.3% of the losses of the day intact, while the New York market experienced a late in the day step up second rally to end the day on an extremely firm note and with 90.9% of the gains of the day intact.  This close while London was somewhat side-lined by the bulls for the day is positive for sentiment, which should buoy the London market for early trade today, but with perhaps some profit taking and price fixation pressure coming forth for the New York market against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2113 + 2                                                 MAR     200.65 + 15.50
MAY     2065 – 12                                               MAY     202.40 + 16.95
JUL      2057 – 10                                                JUL      204.35 + 16.90
SEP      2051 – 13                                               SEP      206.15 + 16.90
NOV     2047 – 12                                               DEC      208.05 + 16.85
JAN      2040 – 12                                               MAR     209.40 + 16.85
MAR     2034 – 12                                               MAY     209.85 + 16.85
MAY     2047 – 13                                                JUL     210.00 + 16.85
JUL      2039 – 13                                                SEP     210.05 + 16.90
SEP      2039 – 13                                                DEC    210.10 + 16.70

5th. March, 2014.
The National Coffee Association of Guatemala has reported that the countries coffee exports for the month of February were 17,577 bags or 5.11% lower than the same month last year, to total 326,704 bags.  This lower performance has contributed to the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year being 176,239 bags or 17.27% lower than the same period in the previous coffee year, at a total of 844,195 bags.

The National Coffee Association of Guatemala have appropriated the dip in exports to the Roya or Leaf Rust affected new crop, but are seemingly confident in their coffee farmers ability to counter this problem for the next 2014/2015 harvest, which they expect to recover.  While one must comment however, that with the competition of lower priced Colombian washed arabica coffees over the past five months, that this factor has also contributed to a reduction in the exports from Guatemala, with many consumer market roasters switching to the use of these more affordable coffees from Colombia.   Thus it shall only be in another five to six months that one shall truly be able to assess how much lower the new Guatemala crop has been, albeit that there is no doubt that it is a lower crop.

The Coffee Growers Federation in Colombia has reported that the countries coffee exports for the month of February were 257,000 bags or 35.74% higher than the same month last year, to total 976,000 bags.  This lower performance has contributed to the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year being 1,415,000 bags or 40.19% higher than the same period in the previous coffee year, at a total of 4,936,000 bags.

This surge in coffee exports from Colombia has been fuelled by sharply increasing production, which is evident from the 249,000 bags or 39.84% increase in production for the month of February, with production for the month having totalled 874,000 bags.  This figure having contributed the countries cumulative production for the first five months of the present October 2013 to September 2014 coffee year being 1,342,000 bags or 35.05% higher than the same period in the previous coffee year, at a total of 5,171,000 bags.  With all expectations that following a 2012 to 2013 coffee year crop of 10.9 million bags that the present coffee year shall see Colombian coffee production getting close to approximately 11.5 million bags and with the past few years of replacement of aged trees with new trees now coming into play, that production shall further increase steadily over the next few years.

The well respected German commodity and market analysts F O Licht reported yesterday that they foresee that due to the negative effects of two months of dry weather within the main arabica coffee districts of Brazil, that it shall lower their initial new crop forecast for Brazil by 5 million bags, to result in a new crop for this year of a relatively modest 48 million bags.  This 5 million bags decline in crop potential is very much in line with many other respected forecasts, but does come off what would be seen to have been a somewhat conservative pre dry weather forecast and the report does little to add influence to the prevailing market sentiment.

F O Licht have however also reported that despite this view towards a decline in Brazil production for this year, that with the previous 2013 Brazil crop appropriated to the present October 2013 to September 2014 coffee year, that this prevailing 2013/2014 coffee year shall see a 7.2 million bags surplus coffee supply.   Thus highlighting that despite the prevailing problems within Brazil in terms of the problems for the new crop, that one need not fear a short to medium term tightening in overall coffee supply.

The funds do however traditionally focus on the longer term fundamentals of the commodity markets and despite the clear evidence that Brazil shall enter a potentially deficit new crop this year with approximately 7 to 9 million bags of carry over coffee stocks, these shall start to be eroded during the second half of this year and the first half of next year, ahead of what might well not be a bumper new Brazil crop in 2015.    Thus one can expect that despite the reports of no real short term problems for overall coffee supply, that they shall remain supportive for the coffee markets for the foreseeable future.  Albeit that there remains the potential for some degree of corrective profit taking due to come into play, following the surge in value for the coffee markets.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 8,363 bags yesterday, to register these stocks at 2,600,243 bags.   There was meanwhile no change to the relatively modest number of bags pending grading for the exchange; to register these pending grading stocks at 7,056 bags.

In a bid to attract more coffees to be tendered to the New York exchange, the executives of this ICE Futures exchange have announced yesterday that they shall raise the premium for Colombian coffees tendered to this exchange by 2 usc/Lb., to tender these coffees a premium of 4 usc/Lb.   Added to this they have announced that they shall reduce the discount for Brazil washed arabica coffees by 3 usc/Lb., to make these tenderable at a discount of 6 usc/Lb.   These improved values for these coffees with the majority of tenderable origins still tendering at par to the exchange, are unlikely to have a short term effect upon these stocks, as with the present price resistance that is in play from all washed arabica origins, these coffees are still able to attract better value from the mainstream consumer market industry buyers.   

The commodity markets selectively lost some of their lustre with the news yesterday that Russia has partially stepped back from its aggressive stance over the Ukraine, with the Oil and Gold markets tending softer.   The Natural Gas, Cocoa, Cotton, Copper, Corn, Wheat, Soybean, Silver, Platinum and Palladium markets had a day of buoyancy, while the Oil, Sugar, Coffee, Orange Juice and Gold markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.61% higher; to see this Index registered at 561.20.   The day starts with the U.S. Dollar near to steady and trading at 1.666 to Sterling and 1.373 to the Euro, while Brent Crude is steady in early trade and is selling at $ 109.25 per barrel.

The London coffee market started the day yesterday with follow through buoyancy and followed by a similar start for the New York market, but with both markets starting to attract the negative effects of producer price fixation hedge selling in the afternoons trade.  The London market did however show more resilience and traded either side of par for most of the day, but with perhaps some negative influence from the reversal in fortunes in New York to dip at the end of the day and end on a softer note with 80.8% of the losses of the day intact, while the New York market having attracted sell stops to extend the losses ended the day on a soft note and with 87.4% of the losses of the day intact.    This overall soft close and with thoughts of an increase in post carnival holiday selling pressure due to start coming into play over the next two days, might well inspire little better than a steady to soft start for the markets in early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2111 – 44                                               MAR     185.15 – 7.45
MAY     2077 – 21                                               MAY     185.45 – 8.00
JUL      2067 – 17                                                JUL     187.45 – 7.95
SEP      2064 – 14                                               SEP      189.25 – 7.90
NOV     2059 – 15                                               DEC      191.20 – 7.65
JAN      2052 – 14                                              MAR      192.55 – 7.30
MAR     2046 unch                                             MAY     193.00 – 7.15
MAY     2060 unch                                              JUL     193.15 – 7.15
JUL      2052 unch                                              SEP     193.15 – 7.15
SEP      2052 unch                                             DEC     193.40 – 7.05

4th. March, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market in the week of trade leading up to Tuesday 25th. February, to register a net long position of 17,165 Lots on the day.  This net long which is the equivalent of 2,860,833 bags, has most probably been further extended during the period of positive trade that has since followed.

We note with apologies, that we had in error reported the Commitment of Traders report for the New York arabica coffee market as at Tuesday 18th. February when in fact, the figures were related to Tuesday 25th. February.   Not that these figures mean very much any longer, as the funds have since taken on a lot more weight and one shall have to wait until this weekend, to see what these substantial longs are now sitting at.  

The National Coffee Institute of Costa Rica has reported that the countries coffee exports for the month of February were 18,001 bags or 11.79% lower than the same month last year, to total 134,620 bags.  This lower performance has contributed to the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year being 95,894 bags or 20.39% lower than the same period in the previous coffee year, at a total of 374,453 bags.

The National Coffee Institute of Honduras has reported that the countries coffee exports for the month of February were 7,110 bags or 1.22% lower than the same month last year, to total 574,438 bags.  This lower performance has contributed to the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year being 151,055 bags or 8.83% lower than the same period in the previous coffee year, at a total of 1,559,559 bags.   

These lower performances are in terms of Costa Rica partially related to the negative effects of Roya or Leaf Rust, which has lowered the countries crop potential for the near to completed new crop harvest, but in terms of Honduras it is related more to the combination of internal market price restraint and to the rising volumes of new crop coffees that are being smuggled into the higher value neighbouring Guatemala market.   This issue of smuggled coffees is not new to the country, as it is traditional that a percentage of the Honduras coffees move into Guatemala to both escape local taxes and to take advantage of the higher prices that Guatemalan lower altitude mills can pay for additional coffee stocks, in line with the higher prices that the Guatemalan brand can demand from the consumer markets.

The windfall of increased value of the reference prices of the London robusta coffee market are having an effect upon internal market selling activity within Vietnam, where new crop sales that have over the past five months have been retarded by internal market price resistance.  This has inspired private trade and industry players to forecast that exports during the month of March of mostly robusta coffees shall be recorded at between 2.5 million to 3 million bags, with these exports due to assist to fuel the rising consumer market demand for robusta coffees, which comes with the inability of roasters to follow the sharp 83% rise in the New York arabica coffee market that has occurred over the past three months.

This discount for the robusta coffees is well illustrated by the arbitrage for the London and New York markets having broadened to a significant 98.29 usc/Lb.   This figure equates to a very attractive to the roasters 50.81% price discount for the London market, relative to the New York market.   It is a discount that makes the price sensitive brands that are struggling to maintain profitable wholesale prices within the competitive main stream consumer markets, very interested to find ways to increase their percentages of robusta coffees within their blends.  Many such changes shall prove to be irreversible once the consumers get used to the taste profile of these blends and unless there is some unforeseen dramatic climatic damage done to world robusta coffee supply, one might presume that robusta coffees shall soon be looking at a close to 45% market share within the world consumer markets.    

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 5,775 bags yesterday, to register these stocks at 2,608,606 bags.   There was meanwhile a more modest 551 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 7,056 bags.

The commodity markets continued to react to the political tensions around the Ukraine yesterday, with the Oil, Gold and fundamentally related Wheat markets being directly buoyed by this crisis.   The Oil, Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn, Gold, Silver, Platinum and Palladium markets had a firmer day, while the Cocoa, Copper and Soybean markets bucked the trend and had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.40% higher; to see this Index registered at 557.80.   The day starts with the U.S. Dollar near to steady and trading at 1.667 to Sterling and 1.375 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 110.70 per barrel.

The London coffee market started the day on a steady note yesterday and followed by a similar start for the New York market, but with both markets taking a dip into negative territory, in the early afternoon and indicating a softer trend for the day.   The New York market did however soon take heart from the positive influences of the macro commodity index and with Brazil on holiday and producer price fixation selling pressure over the market thin, to recover and set a steady upside track and triggering buy stops to maintain the direction of this unforeseen rally, which was accompanied by a recovery and upside track for the London market.  The London market continued to end the day on a firm note and with 76.4% of the gains of the day intact, which the New York market ended on an extremely strong note and with 75.1% of the earlier gains of the day intact.   This firm close is constructive for market sentiment, but might well inspire producer price fixation selling activity and speculative profit taking to come into play against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2155 + 37                                               MAR     192.60 + 12.80
MAY     2098 + 55                                               MAY     193.45 + 13.15
JUL      2084 + 61                                                JUL      195.40 + 13.15
SEP      2078 + 61                                               SEP      197.15 + 13.10
NOV     2074 + 65                                               DEC      198.85 + 12.90
JAN      2066 + 66                                               MAR     199.85 + 12.75
MAR     2046 + 54                                               MAY     200.15 + 12.55
MAY     2060 + 54                                                JUL      200.30 + 12.30
JUL      2052 + 54                                                SEP      200.30 + 11.95
SEP      2052 + 54                                               DEC      200.45 + 11.50

3rd. March, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 15.30% in the week of trade leading up to Tuesday 18th. February; to register a net long position of 28,979 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 4.77%, to register a net long on the day of 53,290 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 23.56%, to register a net long position of 20,236 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 5,736,816 bags has most likely been further buoyed over the following days of positive trade, which has since followed.

The question is now with the Managed Money Funds and the Non Commercial Speculative sectors of this market not holding on to relatively substantial long positions within the New York market and over and above the significant long position of the Index Funds, how much more appetite might they have to invest significantly further into this market.   Especially so as with no previous experience of a mid-crop development semi drought, there remain many questions as to how much damage might actually have been caused to the forthcoming new Brazil crop.

The Government Trade Data from Sumatra the leading coffee producing island of Indonesia, has reported that the islands robusta coffee exports for the month of February were 272,552 bags or 68.39% lower than the same month last year, at a total of 125,983 bags.   This lower performance during the month of February does however follow relatively high volume exports for the last quarter of 2013 and the islands cumulative robusta coffee exports for the first five months of the present October 2013 to September 2014 coffee are still 333,883 bags or 17.55% higher than the same period in the previous coffee year, at a total of 2,235,988 bags.

The National Coffee Association of Mexico have announced on Friday and with the new crop harvest having peaked that they foresee that the devastating Roya or Leaf Rust infestation within many of the country’s coffee districts, will have caused the loss of 40% of the crops potential.   This damage thy foresee, shall result in a new crop of no more than 3.1 million bags, while there are some indications it might even be less and as low as 2.7 million bags.

There might however be some questions asked in terms of this rather dramatic announcement from Mexico as the percentage mentioned would have indicated an initial crop forecast for a new crop of 5.17 million bags, which is significantly higher than the recent coffee crop levels for the country, which have been between 4.3 million to 4.7 million bags and in fact forecasted for this new crop by reliable private trade and industry players, at around 4.3 million bags.   Thus while there is no doubt that there have been some negative influences upon the potential of the new 2013/2014 crop from this issue of Roya, one might suggest that the report is partially market manipulative in nature and that the new crop might not actually be as low as has been suggested.

Brazil has ended off the month of February with two months of well below average rainfall for the important arabica coffee states of Minas Gerais and northern Sao Paulo, which the dry hot weather having been seen to be close to drought conditions for some districts.   There is however a new cold front and rains forecasted to head into these districts during this week, which would be expected to assist to rebuild the ground water retention levels, albeit that there has been some degree of irreversible damage caused to the overall new crop potential.    One would expect however with Brazil now distracted by their annual carnival holidays, that the discussion on these weather issues shall be put on hold for a couple of days, but shall nevertheless remain a matter of focus in terms of sentiment within the international markets.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a relatively substantial 10,122 bags on Friday, to register these stocks at 2,614,381 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 6,505 bags.

The commodity markets are selectively being influenced by the uncertainty of developments within the Ukraine, which is becoming a worry for the major powers.  Meanwhile the softer nature of the U.S. dollar on Friday also assisted to buoy spirits within many markets.  The Oil, Natural Gas, Cocoa, Coffee, Wheat, Corn, Soybeans, Gold, Silver and Palladium markets showed buoyancy, while the Sugar, Copper, Cotton, Orange Juice and Platinum markets tended softer.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.29% higher; to see this Index registered at 550.08.   The day starts with the soft U.S. Dollar near to steady and trading at 1.674 to Sterling and 1.378 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 110.00 per barrel.

The London coffee market started the day on Friday on a softer note and followed by a softer start for the New York market, but with both markets recovering during the afternoon’s trade.  The recovery was however on a steadier track for the London market, while the New York market was erratic in terms of the negative influences of producer price fixation hedge selling and one would think further influenced by such activity from Brazil, ahead of their long weekend carnival holiday.   The London market continued to end the day on a positive note, but having rather dramatically shed 76.9% of the earlier gains of the day in the closing minutes of the day, while the New York market attracted a late support to end the day on a firmer note and with 51.3% of the earlier gains of the day intact.  This overall positive close is perhaps supportive for a steady start for early trade today, against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2118 + 19                                               MAR     179.80 + 1.05
MAY     2043 + 9                                                 MAY     180.30 + 1.00
JUL      2023 + 7                                                  JUL      182.25 + 1.05
SEP      2017 + 8                                                 SEP      184.05 + 1.25
NOV     2009 + 6                                                 DEC      185.95 + 2.00
JAN     2000 + 4                                                  MAR     187.10 + 1.90
MAR    1992 + 4                                                  MAY     187.60 + 1.95
MAY     2006 + 3                                                  JUL     188.00 + 1.85
JUL      1998 + 3                                                  SEP     188.35 + 1.80
SEP      1998 + 3                                                 DEC     188.95 + 1.45

28th. February, 2014.
The National Coffee Institute in Honduras with the new crop harvest getting close to completion, have reduced their forecast for this new crop, which they had previously forecasted to increase by 6% over the previous crop and thus, they have likewise reduced their forecasts for exports for the present October 2013 to September 2014 coffee year.   This latter export forecast they now foresee to be 1.74% lower than previously forecasted, to total 4.52 million bags.

One might note however that while Honduras have reduced their export forecast for this coffee year, they have nevertheless forecasted exports to be 179,981 bags or 4.15% higher than the country’s exports for the previous coffee year, which is remains a positive news in terms of the dismal forecasts from most of their Roya or Leaf Rust affected neighbours.  Albeit that with the new crop now close to completion, that Nicaragua is starting to look like it shall also bring in a much better crop than the earlier forecasts for a 20% dip in production for this new crop.  

Meanwhile with the new crop harvests regionally within Mexico and Central America having peaked and with the tail end pickings due to finish over the next four weeks or so, there is very little confirmation of the sizes of the individual crops, as many farmers and mills continue to play the tight supply story to buoy their asking prices and maintain their relatively high price differentials, relative to the reference prices of the New York market.  One would expect however that as and when this market does finally hit an obvious ceiling and the windfall of rising reference prices would seem to be over, that this shall inspire significant quantities of new crop coffee stocks to start coming to the market and to take advantage of the relatively good price levels that are now dictated by the market.

The question is where is the ceiling to this market, as even though the speculative and fund sectors of the New York market have seemingly filled their coffers with extensive long positions and many might have reached their safe limits to go long within coffee as an individual commodity, there is always the question as to what is the reality of the damage that has been done to the forthcoming new crop by the two months of mostly dry and hot weather in Minas Gerais and north Sao Paulo states in Brazil and if it shall inspire even more investment in longs within the market.   In this respect the actual extent of the damage shall not be clear until post-harvest in September, but more important is what shall be the extent of the forecasted new cold front and rains that are due to impact from Tuesday to Sunday next week.   Should these rains alike the forecasted rains for this week not prove to be as beneficial for these leading coffee districts as are expected, it could well inspire a further step up into an even higher trading range and thus, next week can be expected to be another volatile week for the market.

What remains a very big question are the actions of the farmers within the internal market in Brazil, as despite all the reports of extensive damage to the new crop, they remain very active sellers of their past crop coffee stocks and at relatively well discounted price levels.  One has to question and without disputing that there has of course been some damage to the potential for the next crop, why with the prospects of tighter supply, the farmers are presently not holding out for higher relative values for their coffee stocks.   It would seem from these actions that the farmers, who presumably know best the reality of the extent of the damage, do not believe it is as bad as many have been reporting to the market.  But perhaps next week’s rains or lack of them shall prove to be a deciding factor for both the internal market and the international coffee markets in general, as another follow on dry week would most certainly sharply accentuate the stress upon the developing new crop.

The rising values of the London robusta coffee market have evidently been encouraging for exporters in the Ivory Coast, with the country reporting that their cumulative coffee exports for the first four months of the October 2013 to September 2014 coffee year are 156,133 bags or 73.23% higher than the same period in the previous coffee year, at a total of 369,333 bags.    It is however early days in the new crop and with a forecasted coffee export potential of in excess of 1.5 million bags, there is quite some coffee still to come to the market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 2,457 bags yesterday, to register these stocks at 2,624,503 bags.   There was meanwhile a very modest 320 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 6,505 bags.

The commodity markets were again mixed in trade yesterday and overall the macro commodity index is relatively steady, at the higher levels that have been achieved since the start of this year.  The Sugar, Coffee, Cocoa, Cotton, Orange Juice, Soybean, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Oil, Natural Gas, Copper, Wheat and Corn markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.08% higher; to see this Index registered at 548.51.   The day starts with the U.S. Dollar near to steady and trading at 1.669 to Sterling and 1.369 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 108.35 per barrel.

The London coffee market started the day yesterday taking a positive stance and followed by a positive start for the New York market and with both market retaining this stance into the afternoons trade, with the markets shrugging off bouts of negative producer price fixation selling, to maintain their positive track for the day.  The London market continued to end the day on a strong note and with 82.6% of the gains of the day intact, while the New York market ended the day on a positive note but with only 53.3% of the earlier gains of the day intact.  This positive close is supportive for sentiment today, but there is a chance with Brazil closed for Carnival for the first half of next week that some increase in pre-holiday internal market selling and the resulting price fixation hedges selling into New York, might dent spirits for the markets later in the day, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2099 + 78                                               MAR     178.75 + 1.65
MAY     2034 + 38                                               MAY     179.30 + 1.60
JUL      2016 + 33                                                JUL      181.20 + 1.55
SEP      2009 + 29                                               SEP      182.80 + 1.55
NOV     2003 + 28                                               DEC      183.95 + 1.40
JAN     1996 + 25                                                MAR     185.20 + 1.30
MAR    1988 + 20                                                MAY     185.65 + 1.20
MAY     2003 + 28                                                JUL      186.15 + 1.30
JUL      1995 + 28                                                SEP      186.55 + 1.30
SEP     1995 + 28                                                DEC      187.50 + 1.55

27th. February, 2014.
The fine washed arabica coffee producer bloc of Mexico, Central America, Dominican Republic, Colombia and Peru have reported that their combined exports were marginally higher for the month of January, to register exports of 2.38 million bags.   These higher exports being related to the sharply increased production and export performance on the part of Colombia, which is so far countering the lower export performances from Mexico and Central America.

Despite this improved performance from this leading quality coffee producer bloc, their combined cumulative export performance for the first four months of the present October 2013 to September 2014 coffee year is 5.2% lower than the same period in the previous coffee year, at a total of 8.4 million bags.   This decline is not only related to the lower crop for all but Honduras in Central America, but also to the dip in exports from Mexico and Central America for the first couple of months of the coffee year, as there were overall much lower carryover stocks in Central America from the previous crop available for export at the start of this coffee year.

This dip in exports from the top end suppliers to the consumer markets is perhaps not as serious as it would seem at face value, as these now comparatively expensive coffees that have risen in terms of the 66% rise in the reference prices of the New York market, will have already forced many price sensitive consumer market blends to decrease their fine washed arabica coffee percentages within their blends.   Turning such roasters back towards higher percentages of the more affordable natural arabica coffees that mostly emanate from Brazil and where possible, higher percentages of robusta coffees and steam processed robusta coffees, which offer significant discounts to the prevailing prices of arabica coffees.   This discount for the robusta coffees well illustrated by the arbitrage at yesterdays close of 87.16 usc/Lb., which equates to a very attractive 49.05% price discount for the London robusta coffee market, relative to the New York arabica coffee market.

The markets were further buoyed yesterday by the report from the Brazilian exporter Terra Forte that has lowered its pre partial drought new crop forecast by 9.4% to 13.2% to now estimate a new crop of between 46 million to 48 million bags, but this percentage discount factor is based on what was a new crop forecast that was between 3 million to 7 million bags lower than many other private trade and industry forecasts.  The report was however forthcoming at the same time as reports from state officials which did likewise talk of considerable damage to the new crop from the overly dry conditions encountered by approximately 50% of the country’s coffee farms and these mostly related to arabica coffee districts, which assisted to support the overall perception of a deficit crop due for this year.

One has to however keep in mind the fact that Brazil shall potentially enter this new crop with carryover stocks of approximately 8 to 9 million bags and therefore, have in hand a coffee supply through to the next 2015 crop of at least 54 million bags and more than likely as some of the lower figures are somewhat market manipulative in nature, close to 58 million bags.    As against an annual domestic and export market demand of approximately 55 million bags and therefore for the coming twelve months at least, there would appear to be sufficient Brazil coffee supply.

The question is though if there shall be rains due during March and following what can now be seen to have been relatively dry conditions for both January and February for the majority of the arabica coffee districts, as if not and there proves to be only modest rains forthcoming, the damage to the new crop potential might well be increased.   Likewise with Brazil due to see stocks decline over the next twelve months, what shall be the potential for next year’s crop which shall need to be well in excess of 56 million bags, if it is to ensure steady supply for the 2015 to 2016 coffee year.  These uncertainties and they are truly matters of concern, would support the bullish stance that the funds and speculative sectors of the New York market have taken this month and with these sectors most likely to remain supportive for the markets for the foreseeable future.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 2,850 bags yesterday, to register these stocks at 2,626,978 bags.   There was meanwhile a slightly larger 4,945 increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 6,185 bags.

The commodity markets were mixed in trade yesterday and against little in the way of striking news around, to provide for general direction, but with a firmer dollar taking the edge out of selected markets and sufficient to see the macro commodity index taking a softer track.  The Oil, Sugar, Cocoa, New York arabica Coffee, Orange Juice, Corn and Soybean markets ended the day on buoyant note, while the Natural Gas, London robusta Coffee, Cotton, Copper, Wheat, Gold, Silver, Platinum and Palladium markets were softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.54% lower; to see this Index registered at 548.06.   The day starts with the U.S. Dollar steady and trading at 1.666 to Sterling and 1.368 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 108.95 per barrel.

The London coffee market started the day yesterday tending easier and under some degree of producer price fixation selling pressure, while the New York market started the day with a degree of modest buoyancy.  The buoyancy for the New York market was however short lived and both markets entered the afternoon on a softer track and with the somewhat exhausted speculative and fund sectors of the markets not showing sufficient muscle to counter the negative effects of producer selling, but with perhaps the support of the latest threatening weather news from Brazil finally coming into play later in the day, to support a recovery for the New York market.  The London market continued to end the day on a softer note and with 65.6% of the earlier losses of the day intact, while the New York market that had at its lows been posting an over 5 usc/Lb. loss, ended the day on a positive note and with 70.7% of the gains of the day intact.   This late in the day recovery for the New York market is perhaps supportive for overall sentiment and one might therefore expect to see a steady to buoyant start for the markets for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2021 – 17                                               MAR     177.10 + 1.45
MAY     1996 – 21                                               MAY     177.70 + 1.45
JUL      1983 – 15                                                JUL      179.65 + 1.35
SEP      1980 – 15                                               SEP      181.25 + 1.20
NOV     1975 – 14                                               DEC      182.55 + 1.00
JAN      1971 – 17                                               MAR     183.90 + 0.95
MAR     1968 – 18                                               MAY     184.45 + 0.95
MAY     1975 – 15                                                JUL      184.85 + 1.00
JUL      1967 – 15                                                SEP      185.25 + 0.95
SEP      1967 – 15                                                DEC     185.95 + 1.00

26th. February, 2014.
The Government authorities in Vietnam have with the months export registrations in hand, estimated that the country’s exports of mostly robusta coffees for the month of February, shall be 59.4% higher than the same month last year, at a total of 2.67 million bags.  This figure however and following the past months of price resistant relatively slow internal market selling and exports, would still see the cumulative exports for the first five months of the present October 2013 to September 2014 coffee year, being 18.5% lower than the same period in the previous coffee year, at a total of 9,668,333 bags.

This latest estimate for February exports from Vietnam on the part of the authorities is noted to be significantly higher than the 1.67 million bags to 2 million bags that had earlier been estimated by the countries traders, who still experience a degree of step up rising market focus, price resistance from the internal market.  This resistance that maintains relatively firm differentials against the reference prices of the London market, continuing along with the restrictive nature of the inverted price structure of the London market, to restrain international trade buying activity.    With most business more related to hand to mouth covering of short term industry short sale export commitments, rather than any interest in taking on medium to longer term robusta coffee stocks.

The indication of exports for the first five months of the present coffee year of less than 9.7 million bags does however in terms of carryover stocks into the new coffee year of approximately 2.5 million bags, a new crop of approximately 28 million bags and a domestic consumption of less than 1.5 million bags, indicate a coffee supply for the remaining seven months of this coffee year of 19.3 million bags.   One would however expect to see another follow through carry over stock of approximately 2.5 million bags of mostly robusta coffee into the next 2014/2015 coffee year, but there nevertheless remains a potential for 16.8 million bags of exports over the next seven months.  

This potential availability of approximately 2.4 million bags per month of Vietnam coffee exports over the rest of the coffee year is good news for the consumer market roasters, who following the sharp rise in the value of arabica coffee prices this year and a rise that cannot immediately be countered by corresponding wholesale price increases, shall be looking to higher percentages of robusta coffees in their blends.   While with the prospects for increasing demand for robusta coffees over the next few months and the competition from the new Indonesian crop still a couple of months to the fore, the farmers and internal market traders in Vietnam can continue to show a degree of price resistance and slowly feed coffees into their exporters, so as to maximise profits from their new crop stocks.   Meanwhile to assist in this stance, the improved value and profits from these new sales, is further assisting the farmers and internal traders to finance the carry of these stocks.

There is likewise evidence of price resistance within Mexico and Central America where lower export volumes for the coffee year so far not only reflect the reality of Roya or Leaf Rust lower crops for most of the producers, but also the restraint on the part of the internal trade towards the rising market.   Many are playing the lower crop factor in their bid to demand higher differentials and ambitiously continue to ask prices from the mills and exporters that are ahead of the market, which is slowing the volumes of new export sales.   While on the consumer side the main stream international roasters are already starting to find that the dictates of their present wholesale roast coffee prices, make it difficult to pay up for new stocks.  Therefore trade from this important producer bloc is not quite stalled, but is very slow.  The question is with the new harvests from this region having peaked and due to come to a close in a few weeks, how much coffee shall eventually be forthcoming and when it does, what impact it might bring with it in terms of price fixation hedge selling into the New York market from whichever level the speculative sector and the funds might have taken it.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 3,525 bags yesterday, to register these stocks at 2,629,828 bags.   There was meanwhile a sharp 14,339 decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 1,240 bags.

The commodity markets that have been on an overall uptrend for this year are tending to lack some lustre, with many markets hitting nearby ceilings.  This markets were mixed yesterday with the London robusta Coffee, Corn, Soybean, Gold and Platinum markets showing buoyancy, while the New York arabica Coffee market ended on a steady note and the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Silver and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.15% lower; to see this Index registered at 551.04.   The day starts with the U.S. Dollar steady and trading at 1.668 to Sterling and 1.374 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 108.75 per barrel.

The London coffee market started the day yesterday with modest buoyancy and followed by a softer start for the New York market, but with the London market starting to come under pressure and both markets taking a dip into negative territory.    There was however good support at the lows and with producer price fixation selling pressure thin, both markets recovered as the afternoon progressed and reflected the positive sentiment that is coming to the markets with the much less than expected rainfall reports from Brazil for this week so far.    The London market continued to maintain it buoyancy through to the close and end the day on a firm note and with close t0 52% of the earlier gains of the day intact, while the New York market lost its way late in the day but recovered from a late dip in value to end the day on what would be considered to be a steady note.   This overall steady close remains constructive for sentiment and one would think that it shall assist for a near to steady start for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2038 + 14                                               MAR     175.65 + 0.05
MAY     2017 + 14                                               MAY     176.25 – 0.10
JUL      1998 + 20                                                JUL     178.30 unch
SEP      1995 + 22                                               SEP     180.05 + 0.15
NOV     1989 + 20                                               DEC     181.55 + 0.45
JAN     1988 + 19                                                MAR    182.95 + 0.75
MAR     1986 + 19                                               MAY    183.50 + 0.75
MAY     1990 + 21                                                JUL     183.85 + 0.65
JUL      1982 + 21                                                SEP     184.30 + 0.60
SEP      1982 + 21                                                DEC    184.95 + 0.65

25th. February, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within the market by 5.87% during the week of trade leading up to Tuesday 18th. February; to register a net long of 11,056 Lots on the day.   This net long which is the equivalent of 1,842,667 bags might however have been further extended over the period of overall positive trade within this market, which has since followed.

The National Coffee Organisation in Mexico have reported that the countries coffee exports for the month of January were 28,676 bags or 12.07% lower than the same month last year, at a total of 208,941 bags.   This lower performance and following price resistant lower volumes over the previous months, has contributed to the Mexico’s cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 246,601 bags or 26.98% lower than the same period in the previous coffee year, at a total of 667,310 bags.

The over 66% increase in value of the reference prices of the New York market in eleven weeks and 55% for this year alone, has seen the domestic prices for coffee in Colombia rise above the levels that trigger state assisted price subsides for the countries coffee farmers, will prove to be something of a relief for the Colombian government.   The subsidy program does of course remain in place and the Colombian farmers while taking improved profits out of the new crop coffee sales from the waning new main crop stocks and ahead of the forthcoming smaller Mitaca crop due to impact from April to August, shall feel confident that any speculative dip in value shall soon encounter the state assisted price support base.

The question is however how high the market can go as while one might have thought that there might soon be something of a ceiling coming into play, against a degree of exhaustion on the part of the now heavily long funds.   The weather reports from Brazil continue to come forth to support sentiment and this was accentuated by the report yesterday from the respected Brazilian meteorologist Somar, who countered last week’s forecasts for wide spread rains this week for the main arabica coffee districts, with new forecasts for this new weather front to weaken and only bring a few scattered showers.  

This latest report seemingly encouraged the majority of producers to step back from the markets and with the resulting thin producer price fixation selling over the markets, it allowed for further buoyancy to come into play for the New York market and joined by similar buoyancy for the London market.   This buoyancy is perhaps being compounded by the restraint on the part of the international trade houses that fearing the costs of finance of margin calls for their hedges of new stocks are tending to be slow buyers and are not prepared to buy into the relatively firm differentials for new purchases that are being demanded by the ambitious producers looking for new highs and thus, allowing the fund inspired ceiling to float higher.  

It is similarly the case in Vietnam where farmers having experienced rising internal market prices for their relatively large new crop robusta coffee stocks over the past few weeks, are holding back for more value for their remaining stocks.   Taking full advantage of the unforeseen a few weeks ago windfall that would come with the fund and speculative reaction to the Brazil weather issues in the New York market that has inflated arabica coffee prices and made robusta coffees more attractive to the consumer industries, which in a way shall remove the sentiment of surplus robusta coffee supply from market sentiment for the reference prices of the London market.   Thus while exporters in Vietnam remain ready sellers, they are restrained by internal market supply and are not actually proving to be aggressive sellers and thus, contributing to continued muscle for the London market that remains with its unfriendly to the trade inverted price structure and with relatively high premium prices for the prompt delivery month.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have been unchanged yesterday, to register these stocks at 2,626,303 bags.   There was likewise no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,579 bags.

The commodity markets were mixed yesterday, but with some degree of confidence coming with what was an apparently friendly G20 meeting in Sydney.   The Oil, Cotton, Orange Juice, Wheat, Soybean, Gold, Silver, Platinum and Palladium markets showed buoyancy, while the Brazil weather related Sugar and Coffee markets once again surged higher, with the Natural Gas, Cocoa, Copper and Corn markets experiencing a softer days trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.45% higher; to see this Index that is now 8.62% higher for the year, registered at 551.86.   The day starts with the U.S. Dollar near to steady and trading at 1.667 to Sterling and 1.374 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 109.55 per barrel.

The London coffee market started the day yesterday with modest buoyancy and followed by buoyancy for the New York market, with the somewhat unexpected muscle for both markets limiting producer selling activity and attracting early support in thin trade.  Both markets entered the afternoon in a positive trading range with remained mostly sideways in nature for the New York market, but with the London market tending to add to its gains, as the afternoon progressed.   The London market continued to shed a little weight late in the day but to nevertheless end on a positive note and with 53.3% of the earlier in the day’s gains intact, while the New York market likewise ended the day on and with a more substantial 69.5% of the earlier in the day’s gains intact and with the arbitrage at 85.5 usc/Lb., which equates to a narrower but still very attractive 48.48% price discount for the London robusta market.   This overall positive close is likely to result in follow through support for a hesitantly steady start for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     2024 + 43                                               MAR     175.60 + 7.05
MAY     2003 + 48                                               MAY     176.35 + 6.85
JUL      1978 + 41                                                JUL      178.30 + 6.95
SEP      1973 + 41                                               SEP      179.90 + 7.00
NOV     1969 + 41                                               DEC      181.10 + 7.00
JAN      1969 + 43                                               MAR     182.20 + 6.95
MAR     1967 + 44                                               MAY     182.75 + 6.70
MAY     1969 + 44                                                JUL      183.20 + 6.40
JUL      1961 + 44                                                SEP      183.70 + 6.20
SEP      1961 + 44                                                DEC     184.30 + 6.00

24th. February, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 50.48% in the week of trade leading up to Tuesday 18th. February; to register a net long position of 25,134 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.16%, to register a net long on the day of 55,959 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 118.39%, to register a net long position of 16,377 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 4,642,807 bags has most likely been further buoyed over the following days of positive trade, which has since followed.

The question is following this rather dramatic switch from a net short sold position within the New York market to what is now an extensive net long position on the part of both the Managed Money Funds and the Speculative sector of the market, is how much more appetite they might have to further extend these positions.   This shall become clearer during trade this week, which might well as it did on Friday, see the market tending to consolidate, rather than continue to surge in value.  One would further speculate that should the market take this more settled consolidation track and start to establish a new trading range, that this might start to attract some more aggressive selling activity on the part of many producers, who have been showing restraint and awaiting new highs against which to sell and add value to the liquidation of their stocks.

Although the earlier in the year long range forecasts had indicated that there is little chance for a return of a strong El Nino phenomenon in the Pacific Ocean this year, there are nevertheless some who are speculating that there remains a possibility that an El Nino might still develop in the coming months.  This would in terms of coffee tend to dry out the weather conditions for some of the Pacifica Rim producers and in particular Colombia, Peru and Indonesia, which if the phenomenon were severe enough, could impact upon production yields.

The El Nino is however a phenomenon that at longer range, brings with it warmer winter weather and more rains to Brazil, which would be supportive for the countries longer term coffee production.  While the El Nino conversely brings drier weather for Central America, which would assist to counter the influence of Roya or Leaf Rust, which is accentuated by heavy rains.  Thus in terms of coffee and with this factor nevertheless still to be seen to be believed, the influence would if it comes about and does not prove to be a severe one, be somewhat neutral in its influence upon global coffee supply.

On the short term however it is the uncertainty of the negative effects upon the developing new arabica coffee crop in Brazil that dominates market focus and there shall be a keen focus upon this weeks forecasted rains for the main arabica coffee districts, which still require some good rains to assist in the recovery of the ground water retention levels.   These reports are likely to maintain the volatility for the New York market for this week, which experienced its largest one week increase in value in fourteen years last week, with this surge assisting to buoy spirits and value for the London market.    This latter market ending the week with an arbitrage of 85.36 usc/Lb., which equates to a very attractive for the roasting industry, 50.36% price discount for the London robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a 4,992 bags on Friday, to register these stocks at 2,626,303 bags.   There was meanwhile a more modest 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,579 bags.

The Certified Robusta coffee stocks held against the London market were seen to have decreased by a modest 13,000 bags in the two weeks of trade leading up to Monday 17th. February, to register these stocks a likewise relatively modest 403,000 bags, on the day.   This modest decline reflective of the continued price resistance on the part of the producers and more so, of the continued inverted price structure of the London market, which is not conducive to the taking on of stocks by the international trade and so far as this inverted price structure continues, one cannot expect these stocks to add any weight.  

The commodity markets gained little input from the G20 meetings on Friday, but there was some degree of confidence coming with some improved economic forecasts from China.   The Natural Gas, Sugar, Cotton, Copper, Soybean, Gold, Silver, Platinum and Palladium markets showed buoyancy and the Coffee markets ended on a steady note, while the Oil, Cocoa, Orange Juice, Wheat and Corn markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.14% higher; to see this Index registered at 549.39.   The day starts with the U.S. Dollar steady and trading at 1.664 to Sterling and 1.374 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 109.40 per barrel.

The London coffee market started the day on Friday tending softer against some producer selling activity, while the New York market attracted support and showed early buoyancy, which was followed in the early afternoon by a recovery for the London market.   The positive nature of the markets was however not sustained and with both markets tending to take an erratic sideways track and within a trading range either side of the previous days close, as they consolidated ahead of the weekend and with both markets ending the day on what would best be described as taking a steady stance.   This close is unlikely to inspire excitement or direction for early trade today and one might expect to see a near to steady start for the markets, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1981 + 6                                                MAR     168.55 – 0.25
MAY     1955 – 4                                                MAY     169.50 + 0.05
JUL      1937 unch                                             JUL      171.35 – 0.05
SEP      1932 unch                                            SEP      172.90 – 0.20
NOV     1928 + 1                                                DEC      174.10 – 0.25
JAN      1926 + 1                                                MAR     175.25 – 0.55
MAR     1923 + 1                                                MAY     176.05 – 0.75
MAY     1925 + 3                                                 JUL      176.80 – 1.00
JUL      1917 + 3                                                 SEP      177.50 – 1.15
SEP      1917 + 3                                                DEC      178.30 – 2.00

21st. February, 2014.
The Brazil rainfall over the main coffee districts in Brazil has tapered off, but a new cold front and rains are due to enter from the South over this coming weekend and to impact upon the main central arabica coffee districts during the coming week, with these fronts forecasted to continue for the coming month.  Thus there is relief for the central main arabica coffee districts due over the coming weeks, but there shall need to be some good rains included, if the ground water retention levels are to recover in time for the dry winter harvest season and one might expect that it is now too late for these ground water retention levels to be substantial ahead of the winter.

This scenario of relatively low ground water retention levels would be expected to increase the stress upon the trees during the harvest and post the harvest, but there is a positive factor that the stressed trees and so long as there is good spring rainfall, will increase the potential of the flowering for the new 2015 crop.   Thus while the coffee world awaits the outcome of the results from the new crop arabica coffee harvest over May to August to truly asses the levels of damage that have been caused by the six weeks of hot and dry weather, there shall now be much focus upon the prospects for the forthcoming late September to December spring and early summer rain season.   This to indicate the potential for the next 2015 crop, which with Brazil stocks likely to decline a little this year, shall need to be a relatively fair to good crop if it is to support a continued good supply of Brazil arabica coffees to the consumer markets.

Meanwhile and with the assistance of rising value of the reference prices of the New York market, there has been active selling of arabica coffee stocks within the internal market in Brazil, with the prices accepted by farmers maintaining their usual discounts to the New York market value.   This prevailing lack of price resistance on the part of the farmers cannot only be seen to be related to the higher values that are now being dictated by the higher international market prices, but also indicates that many farmers do not yet believe in a dramatically lower crop that would allow them to hold back stocks for higher relative values to the international market prices.   Thus one has to comment that the farmers who in reality know best, do see a potential for a lower than earlier forecasted new crop, but not one that is going to inspire a severe price supportive deficit crop.

Nevertheless and despite the questionable nature of some damage reports from Brazil which are not so far supported by the evidence of farmer price resistance, there are regular negative reports coming to the market and yesterday the Institute of Agricultural Economy for Sao Paulo state estimated that due to the drought that it shall cause an average 15% decline to the states coffee crop.    One has to however consider that Sao Paulo state only accounts for approximately 10% of Brazil’s production and therefore a 15% factor would in reality equate to a 1.5% impact upon the overall forecasted Brazil crop.

More important perhaps are the reports from the leading arabica coffee state of Minas Gerais where some have reported potential losses of up to 30% and with this state accounting for approximately 50% of the countries production, it would if true indicate a potential loss of 15% to the overall crop.  The question is however, how accurate are these reports and to what degree are they market manipulative in nature and the majority of agronomists agree that only time shall tell, what the actual damage shall be in terms of the combination of overall smaller and lighter weight beans and actual damaged undeveloped beans with the harvested cherries.  There is of course no doubt that there has been some damage.

The National Cocoa and Coffee Board of the Cameroun have reported that the country exported no arabica coffee during the month of January and thus the countries cumulative arabica coffee exports for the first four months of the October 2013 to September 2014 coffee year, are 8,783 bags or 87.11% lower than the same period in the previous coffee year, at a total of only 1,300 bags.   This is really a very dismal performance from the Cameroun, as it follows a year of already declining production and exports of arabica coffees and is long way down from the vibrant annual 380,000 bags of arabica coffee production twenty five years ago.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 823 bags yesterday, to register these stocks at 2,631,295 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,939 bags.

The commodity markets were mixed in trade and yesterday.   The Natural Gas, Cocoa, Orange Juice, Corn, Soybean, Platinum and Palladium markets showed buoyancy, while the London robusta Coffee market was steady and the Oil, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Gold and Silver markets were softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.08% lower; to see this Index registered at 548.63.   The day starts with the U.S. Dollar steady and trading at 1.666 to Sterling and 1.371 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 109.60 per barrel.

The London coffee market started the day yesterday on a steady note and showing early buoyancy, while the New York market following an initial dip into negative territory, did likewise recover and show a degree of buoyancy for early trade.   The market did however come under pressure in the afternoon and both markets with producer fixation hedge selling and some light speculative profit taking coming into play dipped back into negative territory, but with underlying support coming in at the lows to reduce the losses.    The London market continued to post a late full recovery and end the day on a steady note, while the New York market while having recovered 70.1% of the earlier losses of the day, nevertheless ended on a softer note.   This close did not reflect any reason to believe that the recently bullish funds have lost heart, but rather might indicate that there is some degree of exhaustion and that the markets are starting to look consolidate into a new trading range.  However as the well long funds step back from the markets one might expect to see some degree of producer selling pressure impacting and perhaps a steady to soft start is due for the markets today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1975 – 7                                                 MAR     168.80 – 2.95
MAY     1959 + 2                                                 MAY     169.45 – 3.15
JUL      1937 – 3                                                  JUL      171.40 – 3.05
SEP      1932 – 3                                                 SEP      173.10 – 2.95
NOV     1927 – 5                                                  DEC     174.35 – 2.95
JAN      1925 – 4                                                 MAR     175.80 – 3.15
MAR     1922 – 6                                                 MAY     176.80 – 3.25
MAY     1922 – 3                                                  JUL      177.80 – 3.35
JUL      1914 – 6                                                  SEP      178.65 – 3.50
SEP      1914 – 6                                                  DEC     180.30 – 3.80

20th. February, 2014.
The latest report from the well-respected meteorologist Somar in Brazil yesterday, has forecasted that following the general but relatively modest rains over the past weekend and the scattered showers over many of the main coffee districts this week, that there is a wave of fresh rains due to move into the main coffee districts during the coming week.   These rains due to assist further to alleviate the stress that has been caused by a partial six week drought to the main arabica coffee districts in Minas Gerais and the north of Sao Paulo state, that had prevailed since the New Year.

The same report albeit at face value a little bearish for the market, did however concede that these catch up rains shall not reverse any damage that might already have been caused to the potential for the new Brazil arabica coffee crop that is due to start being harvested in May, with the inexperience of mid-crop development drought in Brazil making it very difficult for farmers to accurately assess the damage potential.   Brazil has in previous years and particularly so in 1985 experienced the damaging effects of a delayed start to the rain season in October and November, which resulted in poor flowerings and a significantly reduced crop, but have never really experienced the negative effects of an extended period of dry weather following a good rain induced flowering and cherry set for a new crop.

Thus while the rains are once more in play for the main arabica coffee districts, there are now a variety of forecasts coming forth from Brazil that vary between an 10% to a 30% decline in the new crop potential for the 70% of the coffee districts affected, which would indicate a new crop figure of between 43 million to 51 million bags.   Of course added to these new crop forecasts would be the 8 to 9 million bags of carryover arabica coffee stocks from the previous year, which would indicate Brazil coffee supply for the 2014 to 2015 coffee year of between 51 million to 60 million bags, as against a domestic and export demand of approximately 53 to 54 million bags and this makes it very difficult for the markets to truly asses the significance of a hot and dry weather.

The biggest question is however not so much the negative effects of short to medium terms Brazil coffee supply as the carryover stocks to soften the blow, but what shall be the situation for the longer term 2015 to 2016 coffee year, which shall be related to the follow on 2015 crop.    Under normal circumstances one would expect to see this 2015 crop to be a biennially bearing lower new crop, but with stressed trees likely should good rains be forthcoming for the last quarter of this year likely to provide good flowerings, this might not necessarily be a lower crop.    It is nevertheless all supportive news for the funds who have turned very bullish over the past couple of weeks, to take the markets back up to a new and very much unexpected earlier in the year, trading range.

Meanwhile with the New York market surging and with the farmers and internal traders in Vietnam still holding substantial stocks of new crop coffees, they are still holding back and showing some degree of step up price resistance to the higher prices that are being influenced by the buoyancy of the reference prices of the London market, but one might suggest that if the markets take a breather and dip in the coming days, that it will influence some catch up selling within Vietnam.   These Vietnam robusta coffees and with the arbitrage between the London and New York markets now broadened to a very attractive to roasters 83.83 usc/Lb., which equates to a 48.57% price discount, are becoming even more attractive to the price sensitive main stream coffee brands that cannot quickly follow the 63% increase in the value of the New York arabica coffee market that has occurred over the past twelve weeks.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 1,005 bags yesterday, to register these stocks at 2,632,118 bags.   There was meanwhile a similarly modest 1,421 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,939 bags.

The commodity markets despite some softer economic figures out of China are mostly managing to maintain a steady stance, while fundamentals of cold weather and dry weather are assisting to buoy the Oil and, Coffee markets, respectively.  The Oil, Natural Gas, Sugar, Wheat, Corn, Gold, Platinum and Palladium markets showed buoyancy and the Coffee markets surged, while the Cocoa, Cotton, Copper, Orange Juice, Soybean and Silver markets tended softer.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.02% higher; to see this Index registered at 549.09.   The day starts with the softer U.S. Dollar tending to steady and trading at 1.668 to Sterling and 1.376 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 109.75 per barrel.

The London coffee market started the day near to steady yesterday and followed by a similar start for the New York market and with both markets tending easier against light volumes of producer price fixation selling, but the afternoon brought with it some renewed fund and speculative buying that mopped up the producer selling activity and took both markets back into positive territory.  The players within the New York market shrugged off the negative effects of forecasts for more rains in Brazil to maintain the positive trading range, while the London market continued on a steady upside track through the day.   The London market continued to end the day on a strong note and with 76.6% of the earlier gains of the day intact, while the New York market triggered late in the day buy stops and ended the day of extremely high volumes of trade on a very high note following a trading range of 21 usc/Lb. and with 93.2% of the gains of the intact.    This very strong close is constructive for the charts but might nevertheless start to attract opportunist catch up producer price fixation selling activity and if the funds might show some degree of exhaustion, there is a chance for a negative correction for early trade today against the prices set yesterday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1982 + 101                                           MAR     171.75 + 19.10
MAY     1957 + 82                                             MAY     172.60 + 17.75
JUL      1940 + 86                                              JUL     174.45 + 17.85
SEP      1935 + 86                                             SEP     176.05 + 17.85
NOV     1932 + 87                                             DEC      177.30 + 17.40
JAN      1929 + 90                                             MAR     178.95 + 17.25
MAR     1928 + 98                                             MAY     180.05 + 17.05
MAY     1925 + 98                                              JUL      181.15 + 17.00
JUL      1920 + 98                                              SEP      182.15 + 16.85
SEP      1920 + 98                                             DEC      184.10 + 16.40

19th. February, 2014.
The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks declined by 57,380 bags or 1.13% during the month of January, to register these stocks at the end of the month at 5,029,338 bags.    These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of 480,000 bags per month, equate to approximately 10.5 weeks of roasting activity.

However the stocks do not include the bulk container transit coffees, the onsite roaster inventory stocks and the coffee stocks held within non reporting warehouses in both the U.S.A. and Canada and these would have been at least another 1 million bags.   Therefore in terms of North American coffee supply the end January stocks would have safely exceeded 12.5 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

Albeit that the end January stocks included 670,622 bags of mostly aged arabica coffee Certified stocks that were held within the U.S.A. based approved warehouses of the New York exchange, which would mostly not participate in North American roaster off take.   Thus the reality was that the North American coffee stocks at the end of the month still were the equivalent of in excess of 11 weeks of roasting activity, which is a very safe number in terms of the flow of new crop South American and Asian coffees that are now coming to the market.

The advent of wide spread weekend rains over the main coffee districts in Brazil and including the important state of Minas Gerais that accounts for close to 50% of the country’s coffee production, has not dampened bullish spirits and with forecasts for only modest rains to follow for the rest of this week, the funds once again stepped in to buoy value within the New York market.   This activity having triggered fund buy stops and perhaps some degree of trade buying in to lift hedges so as to reduce margin calls, causing the market to surge in yesterday’s trade and with the London market following the lead of the New York market.

This surge in activity within the New York market that equated to 66,763 Lots or the equivalent of 18,927,015 bags of coffee in one day, was threefold the average days trade and while it would have included some degree of pre First Notice Day switching, shall have seen the Funds and Speculative sectors of the market significantly extend their net long positions within this market.    Thus indicating that while there is no doubt that coffee supply for the present October 2013 to September 2014 coffee year remains in surplus, that the funds are now speculating upon a significantly smaller new Brazil crop and a tightening deficit coffee supply for the follow on October 2014 to September 2015 coffee year.

Meanwhile with the surge in value for the New York market and while accompanied by added buoyancy for the London market, the arbitrage between these markets has widened to 69.80 usc/Lb., which equates to a very attractive to the roasters 45.08% price discount for the London robusta coffee market, relative to the New York arabica coffee market.  This discount with the majority of the consumer roasters unable to quickly adjust wholesale prices to counter the 46% increase in value for the New York market over the past eleven and half weeks, will most certainly encourage the mainstream consumer market roasters to look to include higher percentages of robusta coffees within their price sensitive blends.  

Thus one can presume that there shall be increasing demand developing for the significant stocks of new crop robusta coffees that are still being held within the internal market in Vietnam, accompanied by demand for the new crop robusta coffee stocks from India, Uganda and West Africa.  These to be followed by the new Indonesian robusta coffee crop, which shall start to impact upon international market supply from late April to early May this year.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 1,527 bags yesterday, to register these stocks at 2,631,113 bags.   There was meanwhile a larger 4,718 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 13,518 bags.

The commodity markets took an overall positive track yesterday with the fundamentals of severe cold weather in North America and Japan buoying the energy markets, while the relatively low rainfall reports from Brazil encouraged the surge for the coffee markets.   The Oil, Natural Gas, Sugar, Coffee, Copper, Wheat, Corn, Soybeans and Silver markets had a positive day’s trade, while the Cocoa, Cotton, Orange Juice, Gold, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.79% higher; to see this Index registered at 543.53.   The day starts with the softer U.S. Dollar near to steady and trading at 1.669 to Sterling and 1.376 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 111.00 per barrel.

The London coffee market started the day near to steady yesterday and followed by a similar start for the post long weekend holiday New York market, but with both markets soon recovering to show some buoyancy as the morning progressed.   The early afternoon did however become a feature, as the New York market started to rise and triggering buy stops to accelerate both the gains and the volume and followed by a similar reaction in sympathy, from the London market.   Both markets settled into their new and much improved price levels and maintained the positive trading range for the rest of the day’s trade, which was erratically sideways in nature.  The London market ended the day on a positive note and with 81.5% of the earlier gains of the day intact and likewise, the New York market ended the day on a positive note and with 87.5% of the earlier in the day’s gains intact.   This overall positive close can be seen to be constructive to market sentiment, but one might nevertheless encounter some degree of speculative exhaustion and producer price fixation selling for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1881 + 56                                               MAR     152.65 + 12.75
MAY     1875 + 57                                               MAY      154.85 + 12.65
JUL      1854 + 61                                                JUL      156.60 + 12.25
SEP      1849 + 64                                               SEP      158.20 + 12.00
NOV     1845 + 67                                               DEC      159.90 + 11.75
JAN      1839 + 74                                               MAR     161.70 + 11.55
MAR     1830 + 72                                               MAY     163.00 + 11.40
MAY     1827 + 69                                                JUL      164.15 + 12.05
JUL      1822 + 65                                                SEP      165.30 + 10.75
SEP      1822 + 65                                               DEC      167.70 + 10.75

18th. February, 2014.
The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative sector of the market decrease their net long position within the market by 6.12% during the week of trade leading up to Tuesday 11th. February, to register a net long position of 11,643 Lots on the day.  This net long which is the equivalent of 1,940,500 bags is more than likely little changed over the period of mixed trade which has followed for the latter half of last week and the very quiet day, yesterday.

The National Exports Association in Nicaragua have reported that the countries coffee exports for the month of January were 10,008 bags or 10.05% lower than the same month last year, at a total of 89,550 bags.  This lower performance and following the modest volumes of exports recorded for the last quarter of 2013, sees the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year 331,215 bags or 63.66% lower than the same period in the previous coffee year, at a total of 189,110 bags.

The authorities have as is now common for the region, attributed the sharp decline in Nicaraguan coffee exports to the devastating effects of Roya or Leaf Rust, but while one cannot discount the fact that Roya has caused some damage it is in this particular case, not the main reason for the sharp dip in the cumulative exports.   This dip is much more related to the fact that during 2012 the Nicaraguans had been holding back from coffee sales in anticipation of much higher value sales to their socialist friends in Venezuela and finding that these were not forthcoming entered the last quarter of 2012 with substantial stocks, which they then liquidated over October and November of that year.

Furthermore one might comment that with the price resistance that prevails within the internal markets in Central America in general while the subsidised Colombian farmers have been freely selling increased volumes of new crop coffees to the consumer markets, that this has switched many commercial roasters away from higher priced Central American coffees to the Colombian alternative.   This has so far resulted in lower export volumes from all of the Central American producers and has inflated the comparative lower figures for the first four months of this year that while related partially to dips in production for all but Honduras, are also lower due to declining market demand for their relatively higher value priced coffees.   They nevertheless and without exception are all somewhat market manipulative in their reference to these lower volumes, as the attribute the lower exports to severely Roya damaged new crops.

The past weekend has seen most of the main coffee districts in Brazil in receipt of rains, but so far nothing very substantial and particularly so for the main arabica coffee state of Minas Gerais and their neighbours in north Sao Paulo state, with these districts having only reported receipt of between 20% to as low as 10% of their five year average rainfall for the month so far.   There are however more rains forecasted and with them comes cooler weather and so long as they continue, it is bringing with it a relief from the hot and dry stress that the coffee trees have encountered over January and early February.  Meanwhile the farmers within the internal market in Brazil proved to be relatively free sellers of their arabica coffee stocks during the previous week and at relatively low prices against the reference prices of the New York market, which does not indicate that they that can truly assess the potential of the forthcoming new crop so far foresee any devastating damage to this new crop.

The new Indian arabica coffee crop is nearing completion of its harvest, which is anticipated to exceed 1.6 million bags, while the countries new robusta coffee crop has started and can be expected to reach a peak over the coming weeks.   This new robusta crop one might expect to exceed 3.7 million bags, of which approximately 14% shall be processed by the more expensive washed method, which does attract higher values from the consumer markets.   Thus with new crop coffees flowing into the market within India and with some support from the firmer nature of the reference prices of the international markets, one might expect to see steady export volumes emanating from India for the coming months.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 3,615 bags on Friday, to register these stocks at 2,632,640 bags.   There was meanwhile a sharper 6,937 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,800 bags.

The commodity markets were mostly closed yesterday for the Presidents day holiday in the U.S.A., which saw the Americans enjoy a long weekend albeit that many would have spent the day shovelling snow.  Thus there is very little to report on the markets for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets remains with the Index registered at 533.95.  The day starts with the softer U.S. Dollar steady and trading at 1.673 to Sterling and 1.371 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 109.30 per barrel.

The London coffee market with the New York market closed and trading solo started the day on a steady note, but within and environment of very thin and lacklustre trade.   The market nevertheless retained some degree of buoyancy throughout the day and adding some additional value in the late afternoon’s trade, to end the day on a firm note.   This close and ahead of the opening of the New York market today sees the arbitrage at an attractive to the roasters 59.84 usc/Lb., which equates to the consumer industry accounts to an attractive 42.05% price discount for the London robusta coffee market, relative to the New York arabica coffee market.   This positive close for the London market does not however in light of the low volume of trade that was related to the close provide any indication for direction today, but one might expect to see a slow and cautiously steady start for both markets for early trade today against the prices set in New York on Friday and London yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1825 + 15                                               MAR     139.90 + 0.20
MAY     1818 + 12                                               MAY     142.30 + 0.35
JUL      1793 + 12                                                JUL      144.35 + 0.35
SEP      1785 + 14                                               SEP      146.20 + 0.30
NOV     1778 + 13                                               DEC      148.15 + 0.05
JAN      1765 + 8                                                 MAR     150.15 – 0.20
MAR     1758 + 8                                                 MAY     151.60 – 0.10
MAY     1758 + 8                                                  JUL      152.10 – 0.95
JUL      1757 + 8                                                  SEP      154.55 + 0.20
SEP      1757 + 8                                                  DEC     156.95 + 0.40

17th. February, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 96.74% in the week of trade leading up to Tuesday 11th. February, to register a net long position of 16,703 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 2.20%, to register a net long on the day of 56,051 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net short sold position within the market by 530.24%, to switch to a net long position of 7,499 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 2,125,933 bags has most likely been further buoyed over the following days of mixed trade, which has since followed.

The Brazil hot and dry weather over the month of January which has inspired a bullish move within this market on behalf of both the funds and the speculative sector of the market over the past couple of weeks has seen the net long position of the speculative sector hit a thirty month high last week, but with this week’s rainfall reports from Brazil due to bring some degree of volatility to the market.   Meanwhile with the combination of both the managed money funds and the speculators now holding long positions, the advent of good rains might well bring forth some profit taking selling but should the rains prove to be modest, one would think that they might well hold on to their positions and maintain the market within the present trading range.

The Vietnam Customs Authority have reported that the countries coffee exports of mostly robusta coffees for the month of January were 36% lower than the same month last year, at a total of 2,383,333 bags.   This lower performance contributes to the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 31.3% lower than the same period in the previous coffee year, to total 7,001,667 bags.

Meanwhile with the interference of the Tet New Year holiday during the first week of February and this already a short month, while the continued inverted price structure of the reference prices of the London market do not encourage the international traders to take on medium terms stocks, the forecasts are for Vietnam coffee exports for the month of February to be a relatively modest 1.67 to 2 million bags.    This would indicate that with stocks in hand and a potential to export approximately 26 million bags during the present coffee year, that should rains be forthcoming for Brazil to dampen overall coffee market speculative spirits that there might be some more aggressive catch up selling pressure within the internal market in Vietnam due to come into play.  However if the Brazil rains are not up to expectations and the funds continue to buoy the markets, one might see the internal market traders in Vietnam continue to hold out for higher value sales.

The Uganda Coffee Development Authority has reported that the countries coffee exports of January was 12.5% higher than the same month last year, at a total of 391,514 bags.   This figure will assist to inspire confidence in the prospects for the country to maintain an export performance for the present 2013 to 2014 coffee year, which shall once again well exceed the 3 million bags mark.

The National Coffee Council in El Salvador have forecast that due to the prevailing Roya or Leaf Rust, that the countries new crop that is presently in harvest shall be nearly 60% lower than the past crop and therefore, a twenty four year low.  This decline related to both the damaging effects of the Roya and to the aggressive surgical pruning reaction that has been taken to the infestation, on the part of many of the commercial farmers in the country.  This latest report that has doubled the earlier decline indications, might however be somewhat market manipulative in nature, as the slow new crop deliveries of late are also related to many farmers maintaining their price resistance and holding back coffees, in their to pressure new crop sales values higher.

Following some light rain showers over Thursday and Friday for the main coffee districts in Brazil, there were fair rains forecasted for the past weekend and for this week, but this past weekends have yet to be assessed in terms of specific figures.   Thus one might expect to see a good deal of hesitancy for early trade today, as the coffee world awaits the meteorological reports from Brazil later on today.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 3,615 bags on Friday, to register these stocks at 2,632,640 bags.   There was meanwhile a sharper 6,937 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,800 bags.

The commodity markets on Friday were buoyed by the softer nature of the U.S. dollar, which encouraged support many of the markets, while the extreme cold weather in the eastern regions of North America further assisted to buoy confidence within the energy markets.  The Oil, Natural Gas, Cocoa, New York arabica Coffee, Copper, Wheat, Corn, Gold, Silver, Platinum and Palladium market had a day of buoyancy, while the London robusta Coffee, Sugar, Cotton, Orange Juice and Soybean markets had a softer day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.51% higher, to see the Index registered at 533.95.  The day starts with the soft U.S. Dollar trading at 1.677 to Sterling and 1.370 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 109.95 per barrel.

The coffee markets started the day on Friday with London market started the day on a softer note, with the negative sentiment that came with Brazil rain forecasts inspiring both producer fixation hedge selling and speculative selling pressure.    However while the London market remained under pressure from the combination of thoughts of rain in Brazil and rising volumes of Vietnam selling activity, the New York market with some support from the positive nature of the macro commodity index recovered and ended the day ahead of the long weekend on a positive note.   This mixed close and while players await news from Brazil and with the New York market closed for today’s Presidents Day holiday, is likely to see the London market take a cautious and hesitant slow and sideways start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAR     1810 – 14                                               MAR     139.90 + 0.20
MAY     1806 – 16                                               MAY     142.30 + 0.35
JUL      1781 – 8                                                  JUL      144.35 + 0.35
SEP      1771 – 4                                                 SEP      146.20 + 0.30
NOV     1765 – 3                                                 DEC      148.15 + 0.05
JAN      1757 – 3                                                 MAR     150.15 – 0.20
MAR     1750 – 4                                                 MAY     151.60 – 0.10
MAY     1750 – 4                                                  JUL      152.10 – 0.95
JUL      1749 unch                                              SEP      154.55 + 0.20
SEP      1749 unch                                              DEC     156.95 + 0.40

12th February, 2014.

Due to the abscence of the writers, our next detailed market report will follow on Monday 17th February and dailiy thereafter, as usual.

11th February, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of the market decrease their net long position within this market by 6.63% in the week of trade leading up to Tuesday 4th February, to see this net long position registered at 12,402 Lots, on the day.  

The more detailed January export figures from Brazil have been announced by the countries Coffee Export Association Cecafe, with green coffee exports for the month reported to be 140,000 bags or 6% higher than the same month in the previous year, at a total of 2.43 million bags.  In addition, the exports for the month of value added soluble coffees calculated in terms of their green coffee equivalent were 9,590 bags or 3.7% higher than the same month in the previous year, at a total of 268,655 bags. The combined exports for the month registered an overall increase on that of the same month last year, at a total of 2.7 million bags. 

Countering to a degree, the recent buoyancy within the terminal markets is latest weather reports from the Brazil coffee growing areas with prospects of rains to return to these areas within the fortnight, to bring some relief to the arabica coffee districts.  There are however varied independent reports of some damage already sustained due to the unusual onset of dry weather during January, while the forecasts for rainfall and improved dispersion of rains may be expected to remain a focal factor spurring speculative sentiment within the markets. 

Within Vietnam meanwhile, and following on from the lower robusta exports registered over the Tet New Year holiday month in January, the forecasts for an increase in exports in February are deemed to be positive.  The trade within Vietnam are forecasting that with forward trade export commitments to fulfil, they foresee exports of mostly robusta coffees for the month to potentially reach between 1.67 million to 2 million bags during the month of February.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 2,072 bags yesterday, to register these stocks at 2,641,755 bags. There was a further 2,710 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 11,802 bags.

It was a mixed day on the commodity markets and sentiment supportive of the possibility that the new U.S. Federal Reserve Bank chair may not accelerate the prevailing economic tapering program.  It was a firmer day for Gold, Wheat, Coffee, Silver, Platinum, Palladium and Cotton.  The Oil markets, Cocoa, Copper, Sugar, Corn, Soybeans and Orange Juice markets ended the day softer. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets registered 0.18% lower, to see the Index registered at 524.726. The day starts with the U.S. Dollar trading at 1.641 to Sterling and 1.366 to the Euro, while Brent Crude is selling at $ 109.70 per barrel.

The London market started the day on a positive note which met with origin sellers to cap the gains and narrowly negative morning progressed.  The New York market found limited upward support on opening although volumes increased during the session to a sizeable 56,235 Lots traded in the two front months in New York by the close of the day.  The softer morning attracted buying support toward the middle of the session and gained momentum into the afternoon to see the trading range stretch 3.98% from low to high on the prompt month, however this is relatively tight in respect of the volatility of recent days. The weather news in Brazil remains the driving force for speculative sentiment and with the forecasts of potential rains to come within the next two weeks, the speculative spirits were somewhat dampened. The New York market faltered toward the latter half of the session with origin sellers present above the market and a close near to unchanged on the day.  The London Robusta market managed to regain lost ground however toward the latter half of the day and a close in positive territory, to set the close yesterday somewhat mixed on a steady to softer note, as follows: 


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

MAR 1796 + 20         MAR 136.20 + 0.50
MAY 1788 + 21         MAY 138.45 + 0.60
JUL   1759 + 25         JUL 140.45 + 0.60
SEP 1750 + 25         SEP 142.35 + 0.65
NOV 1746 + 24         DEC 144.65 + 0.80
JAN 1743 + 25         MAR 147.05 + 0.95
MAR     1738 + 25                       MAY 148.45 + 0.90 
MAY     1738 + 25                       JUL 149.75 + 0.75
JUL     1733 + 25                       SEP     150.95 + 0.55
SEP     1733 + 25                       DEC     152.95 + 0.45

10th. February, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market liquidate their net short sold position within this market by 220.89% in the week of trade leading up to Tuesday 4th. February, to see this previous short sold position change to a net long position of 8,490 Lots on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.30%, to register a net long on the day of 57,309 Lots. During this same week of trade the Non Commercial Speculative sector of the market decreased their net short sold position within the market by 88.88%, to register a net short sold position of 1,743 Lots on the day. This speculative net short position within the New York market which is the equivalent of 494,133 bags has most likely been little changed over the following days of mixed trade, which has since followed.

Adding to the recent flurry of bullish news that has been coming forth to buoy sentiment within the New York market in terms of the dry weather news from Brazil, there was a report from the Brazilian exporter Terra Forte, which stated that due to the dry weather their earlier forecast for a 2014 Brazil crop of 53 million bags is now an unrealistic figure. The report did not specify a new lower figure for this forthcoming new crop, but was worded strongly enough to indicate a sharp decline might be on the cards. In terms of the Brazil weather factor the much respected Brazilian meteorologist Somar has indicated that this shall be another dry week for the main Brazil arabica coffee districts, but with the prevailing high pressure over these districts due to break up in ten days’ time, with new rains coming in with the cold fronts from the south and to bring relief for the farms from the 17th. February onwards. This forecast does not however dispute that there has not already been some damage to the potential of the new crop from the dry month of January and while it does dampen some bullish spirits, the partial drought factor remains in play to buoy speculative spirits. Countering to a degree the bullish news of the Brazil weather and its potential to lower the new crop potential for this year, is the news that the Colombian Government shall resume the price subsidies that the state provides to its coffee farmers. The uncertainty of the future of these subsidies has over the past week has been slowing internal market sales and likewise export sales and this latest news is likely to encourage increased catch up selling activity from Colombia, which shall contribute to increased volumes of price fixation hedge selling into the New York market.

The mixed nature of the markets closing prices on Friday has seen the week end with the arbitrage widening, to 55.14 usc/Lb., which increased the price discount to 40.63% for the London market. It is a very attractive discount for consumer market roasters who cannot easily increase their wholesale prices, in line with the positive nature of the markets. Thus one can presume that it shall further encourage consumer market buying interest for new crop Vietnam robusta coffees, during this week. The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 2,000 bags on Friday, to register these stocks at 2,639,683 bags. There was meanwhile a sharper 9,205 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,512 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to have decreased by 46,833 bags or 10.12% over the two weeks of trade leading up to Monday 3rd. February, when they were registered at 416,000 bags. This reduction was to have been expected, as the inverted nature of the value of the London market is not conducive to the buying in and financing the holding of new crop robusta coffee stocks, which can be tendered to this exchange. The commodity markets on Friday selectively reacted to a disappointing non-farms jobs growth report for the month of January, which was seen to potentially have some influence upon the U.S. Federal Reserve bank, in terms of the prevailing tapering program for their stimulus program, which some think might be slowed. The Oil, Natural Gas, Cocoa, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver and Palladium markets had a day of buoyancy, while the New York arabica coffee ended on a steady note and the London robusta Coffee, Sugar, Wheat and Platinum markets ended the day softer. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.49% higher, to see the Index registered at 525.70. The day starts with the U.S. Dollar trading at 1.642 to Sterling and 1.362 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 111.33 per barrel.

The London market started the day coming under pressure on Friday with producer selling coming into play and accompanied by some speculative profit taking, while the New York market came under less modest negative pressure. The afternoon saw the London market remaining within negative territory, but with the Brazil news seemingly once again becoming an inspiration for speculative and fund chart buying support returning to the market, which posted a 7 usc/Lb. positive move for the day. The London market continued to end the day on a soft note and with 96.55% of the earlier losses of the day intact, while the New York market did not manage to hold on to its rally and shed all of its gains to end the day on a barely steady note.

This rather disappointing end to the day’s trade for both markets is unlikely to encourage much better than a hesitantly steady to softer start for early trade today against the prices set on Friday, as follows:

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

                                                  

MAR    1776 – 84                                             MAR    135.70 – 0.05

MAY     1767 – 78                                             MAY     137.85 unch

JUL      1734 – 74                                             JUL      139.85 + 0.10

SEP     1725 – 74                                             SEP     141.70 + 0.30

NOV     1722 – 71                                             DEC     143.85 + 0.50

JAN     1718 – 69                                             MAR    146.10 + 0.50

MAR     1713 – 68                                             MAY     147.55 + 0.35

MAY     1713 – 68                                             JUL      149.00 + 0.20

JUL      1708 – 68                                             SEP     150.40 + 0.10

SEP      1708 – 68                                             DEC     152.50 + 0.05