30th. January, 2015.
The rains continue to impact upon the main arabica coffee districts within south east Brazil, but so far not all districts have reported heavy rains.  The prospects are however for more rains over the coming week and the perspective remains for relatively good coverage and for much relief for the farmers, who have been voicing concerns over the development of the coffee cherries towards the new crop.

These rainfall reports are being followed by new forecasts for not only good rains for the first week of February, but further rains to come during the month.   These rains for south east Brazil to result in February to be a wetter month than January and in terms of moisture, to assist to build up ground water retention levels ahead of the relatively drier months to follow.

But more important in terms of the market which has been focusing upon the relatively fresh memories of the two months of dry and damaging weather to start off last year is that there really has been no repeat of the partial drought of last year, which has dampened speculative spirits towards the New York arabica coffee market and accompanied by technical chart based speculative and fund selling.   With the London market that is fundamentally more secure, following the track set by New York.

Weather issues aside Brazil’s Ministry of Agriculture have officially declared a Phytosanitary emergency for the mostly arabica coffee producing state of Sao Paulo and the mixed arabica coffee and conilon robusta coffee producing state of Espirito Santo, due to the increasing incidences of the Broca or Coffee Borer beetle (Hypothenemus hampei) being experienced by coffee farmers in these states.   There are measures that can be taken by farmers to control Broca but they are difficult and while one would expect that the countries very experienced and efficient farmers will apply good degrees of control that one might expect to see an increased percentage of damaged, rather than lost bean from these states from the forthcoming new crop.

Fortunately Brazil has a very large domestic coffee market that can presently absorbs approximately 20 million bags of coffee per annum and is a market that aside for quality coffees, also absorbs the price competitive lower grades.   Therefore one might speculate that damaged beans from this Broca problem shall have no real impact upon the export potential of the still undetermined in size new Brail crop and in this respect, the Broca infestation should have no influence upon market sentiment.

In the meantime there is nothing in the way of supportive fundamental news coming to the markets from any of the other main producer blocs which by nature of the silence, confirms that there are no concerns and aside from the prospects of a relatively modest new crop in Brazil this year, that overall world coffee production shall be good.   This good overall production is presently chasing a consumer market that is still showing some growth in terms of the second largest North American market and within the new markets in Asia, but countered by the dip in consumption within the largest European market and economic difficulties for Eastern Europe, which is likely to impact negatively upon consumption for this year.   

The arbitrage between the markets has narrowed yesterday to register this at 71.82 usc/Lb., while this equates to a relatively attractive 44.89% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,065 bags yesterday, to register these stocks at 2,275,456 bags.   There was meanwhile a larger in volume 3,213 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,880 bags.

The commodity markets were under pressure again yesterday and with the macro commodity index slipping further south, which is well illustrated by the fact that the Reuters Equal Weight Commodity index is now 132.32 points or 23.76% below peak in June last year.   Of course in terms of its weighted dominance, the reversal in the fortunes of commodities is heavily weighted towards the collapse of the Oil markets.   The Brent Oil, Cotton, Wheat and Soybean markets had a day of buoyancy, while the U.S. Oil, Cocoa, London robusta Coffee, Copper, Orange Juice and Corn markets had a softer day and with the Natural Gas, New York arabica Coffee, Gold, Silver and Platinum markets experiencing a very soft day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.69% lower; to see this Index registered at 424.48.   The day starts with the U.S. Dollar steady and trading at 1.508 to Sterling and 1.134 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 47.35 per barrel.

The London and New York markets started the day yesterday, on a softer note and within and environment of very thin and lacklustre trade as has been the case for the past few weeks during early trade, as players remain uncertain over the fortunes for the day once the Americans both north and south, enter the field of play.  As the afternoon progressed and with trade still thin, the New York market lost some more weight and followed by a softer stance being taken within the London market.    This set the markets on a solid negative track for the rest of the day and despite some support coming from opportunist industry price fixations, both markets continued to lose more weight.   The London market continued to end the day on a soft note and with 93% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 85.6% of the earlier losses of the day intact.   This dismal close does little to inspire confidence and one might expect to see little better than a cautiously steady start for early thin trade today against the prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1921 - 42                                                         
MAR     1944 – 40                                               MAR     160.00 – 7.70
MAY     1972 – 40                                               MAY     162.75 – 7.65
JUL      1996 – 40                                                JUL      165.45 – 7.60
SEP      2017 – 40                                               SEP      167.95 – 7.50
NOV     2028 – 41                                                DEC     171.25 – 7.40
JAN      2038 – 41                                               MAR     173.60 – 7.20
MAR     2055 – 41                                               MAY     174.35 – 7.10
MAY     2074 – 41                                                JUL     174.50 – 7.10
JUL      2096 – 41                                                SEP     174.25 – 7.15

29th. January, 2015.
There has been a new Reuters Poll held on the basis of 13 traders and analysts and with a somewhat bullish outcome, in that the poll came out with a forecast that the New York market would end the year for the New York market at 198.00 usc/Lb. and the London market at US$ 2,115.00 per Mt.   These figures based on the averages for the new Brazil crop to come in at a modest 46.5 million bags and the recently completed Vietnam crop as having been 27.2 million bags, which would result in a deficit coffee supply of 6 million bags.  

It is however in terms of this poll still a relatively modest deficit and one that does not look to scare the international coffee industry, who would rather look to the very significant stocks that would very easily counter such a deficit and without doing much damage to world coffee stocks.  While in terms of the year end value for the market, one must consider that by the second half of the year the focus shall rather be on the prospects for the year end new Vietnam crop, the forthcoming new Colombian and Central American crops and the prospects for the follow on 2016 Brazil crop, which if looking good in numbers, would most certainly counter any bullish sentiment within the market and the related values of the markets.   

There were meanwhile during the afternoon yesterday, more rainfall reports for south eastern Brazil and reports that were talking in terms of good rains for the rest of the month, which would be followed by good rains for the first week of February.  These reports were accompanied by a comment from the U.S. Commodities Weather Group that while these rains might not be enough in some districts to achieve their monthly average rainfall in January, they would most likely be quite sufficient to maintain the steady development of the new coffee crop within these districts.  

With all the talk and focus having been on the rainfall for the south east of Brazil and the related main arabica coffee districts of the country, there has been little said about the conilon robusta districts further to the north east and the north west of the country.      In this respect there have been conilon robusta farmers in the costal state of Espirito Santo who have also been talking in terms of relatively dry weather of late, which might negatively affect their developing new crop.   But such comments have so far not been as loud as the comments coming forth from their southern neighbours within the arabica coffee districts and for the present and with rains also forecasted for Espirito Santo for the end of this month, such comments have so far had little impact upon market sentiment.  
 
The arbitrage between the markets has narrowed yesterday to register this at 77,71 usc/Lb., while this equates to a relatively attractive 46.34% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,200 bags yesterday, to register these stocks at 2,277,521 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

These modest certified stocks remain dominated by the 1,291,632 bags or 56.71% contributed by Mexico and Central America, which is followed by the 457,055 bags or 20.07% share held by coffees from Peru and the 321,788 bags or 14.13% share held by the African countries, Burundi, Rwanda, Tanzania and Uganda.    Added to this and somewhat minor players in terms of these stocks, Colombia contributes 142,732 bags or 6.27% and India 58,432 bags or 2.56% and Brazil 5,882 bags or 0.26% of the stocks.

However with price resistance prevalent within most of the internal markets within the arabica producing countries, there is little in the way of arabica coffee availability at prices low enough to make the price dictates of the New York market attractive enough to inspire tendering new coffees to this market, which has stalled any potential growth for these stocks.   However one would think that by the second quarter of this year and by which time there shall be clarity to the prospects of the new Brazil crop, that internal market selling aggression shall increase within many markets and export prices come closer to the price levels of the New York market, which might bring increased volumes of coffee to the related certified stocks.

The commodity markets were mostly soft yesterday and with the macro commodity index drifting lower through the day, with world economic data doing little to inspire confidence within most markets.  The Cotton and Copper markets did however show some modest buoyancy and the Sugar, London robusta Coffee and Gold markets were close to steady, while the Oil, Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets were softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.81% lower; to see this Index registered at 431.77.   The day starts with the U.S. Dollar maintain its muscle and trading at 1.515 to Sterling and 1.128 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.25 per barrel.

The London market started the day yesterday on a softer note and followed by a degree of buoyancy for the New York market, with both markets maintaining this track into the afternoon’s trade, with the New York market shrugging off a dip south to maintain its modest gains.   However as the afternoon progressed the New York market once again dipped back, to join the London market in negative territory.   The downside for the markets was however limited and the London market continued to recover most of its losses to end the day on a near to steady note and having recovered 83.3% of the earlier losses of the day by the close, while the New York market ended the day on a marginally softer note and having recovered 80.8% of the earlier losses of the day by the close.   This marginally softer close but with the markets having shown a degree of stability is likely to set the markets for a hesitantly near to steady start for early thin trade today against the prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1963 + 4                                                          
MAR     1984 – 3                                                 MAR     167.70 – 0.50
MAY     2012 – 3                                                 MAY     170.40 – 0.50
JUL      2036 – 4                                                  JUL      173.05 – 0.45
SEP      2057 – 4                                                 SEP      175.45 – 0.45
NOV     2069 – 3                                                  DEC     178.65 – 0.45
JAN      2079 – 3                                                 MAR     180.80 – 0.45
MAR     2096 – 3                                                 MAY     181.45 – 0.50
MAY     2115 – 3                                                  JUL     181.60 – 0.60
JUL      2137 – 3                                                  SEP     181.40 – 0.75

28th. January, 2015.
With the month of January export registrations in hand; the Vietnamese authorities are estimating that due to slow internal market sales and the corresponding relatively high asking differential for new business on the part of exporters that the country’s exports for this month of mostly robusta coffees, shall be approximately 14.4% lower than the same month last year, at a total of 2 million bags.    This relatively poor seasonal export performance shall precede a potentially slow and relatively low volume month of February that is not only a short month, but shall include the week long Tet New Year holiday.

The latest rainfall reports from Brazil are seemingly indicating that rainfall for the leading arabica coffee state of Minas Gerais over the next two weeks, might only be 50% of average for this time of the year, but for the neighbouring prominent arabica coffee state of Sao Paulo, the rains might exceed the average rainfall for this time of the year.   These rainfall forecasts to come to the fore, following the past few days of scattered rains and further confirm that there is no reason to believe in any chance of a repeat of the partial drought conditions that were experienced during the first two months of last year, however the late in the day activity within the New York market did not indicated that these rains have completely dampened all of the speculative spirits within the volatile New York market.

However while the further rainfall reports from south eastern Brazil did not put further negative pressure upon the New York coffee markets, they contributed to a further dip within the soft sugar market, which is yet another commodity heavily influenced by the large sugar production areas in south east Brazil.   Albeit that that the negative nature of the sugar market is also being influenced by the prospects for increased export subsidies coming to the fore, for the Indian sugar industry.

The question for Brazil is however no longer the short term weather which is providing much needed rains to the main arabica coffee districts, but more so if these rains shall continue into a normal rainfall pattern for the second half of February and through to April, as following the relatively modest rains since the few weeks delayed start of the spring and summer rain season late in October last year, the new arabica coffee crop shall require a good end for the rain season, so as to guarantee a reasonable crop.    This new crop in terms of the arabica coffees, already expected to be relatively modest, albeit that most independent trade and industry forecasts do not believe in the dismal figures that are being indicated by the National Coffee Council in Brazil.

Nevertheless there remains uncertainty over the forthcoming new Brazil crop and even the bears within the market are apparently cautious over the prospects for medium term rains in Brazil and one would think that the downside potential of the market is somewhat limited, until there is more clarity over the rainfall for south eastern Brazil for the months of March and April.   Meanwhile the weather for all the other main producer blocs is proving to be positive for coffee production, with Central America, Colombia, Peru, Vietnam, Indonesia, India and Africa all reporting normal seasonal weather conditions, which should be positive for worldwide coffee production volumes from most producers, aside from Brazil.

The uncertainty over medium term Brazil weather does however continue to fuel a degree of internal market price resistance within most of the producer countries, as farmers and internal traders hold back for better value that might come to the market, should there be further problems for Brazil.   This is tending to buoy the export differentials from the majority of the producers and is dampening trade house spirits in terms of taking on stocks at relatively firm differentials, while the firm differentials do likewise inflate values to above tenderable levels and for the present there is little attraction to buy stocks to tender to the flat and relatively low in volume stocks being held against the terminal markets.

The arbitrage between the markets has broadened yesterday to register this at 78.07 usc/Lb., while this equates to a relatively attractive 46.41% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,511 bags yesterday, to register these stocks at 2,283,721 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed yesterday with trade in many markets being slowed by the lack of participation of a number of leading players in north east U.S.A., who were somewhat snowed in for the day, albeit that in the end the weather was not as severe as initially expected.  The slightly weaker U.S. dollar die however assist to buoy value in a number of markets, with the macro commodity index taking a positive track for the day.    The Oil, Natural Gas, Cocoa, Coffee, Cotton, Wheat, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Copper, Orange Juice, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.31% higher; to see this Index registered at 435.29.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.136 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.85 per barrel.

The London market started the day yesterday on a softer note and followed by a steady start for the New York market, within an environment of hesitant and thin trade.    The New York market shrugged off some wobbles to enter the afternoon’s trade with buoyancy and joined by a recovery for the London market and with both markets trading on a positive sideways track as the afternoon progressed, but with trade remaining thin and lacklustre. This all changed however late in the day as the markets started to trigger buy stops and encountered little in the way of resistance and with further buy stops being triggered, to see both markets surge out of the days positive but narrow trading zone.   The London market ended the day on a positive note and with 87.5% of the gains of the day intact, while the New York market ended the day on a very positive note and with 95.5% of the gains of the day intact.   This positive close is constructive for the markets but unless there is early buoyancy in the usual thin morning trade, they might attract a degree of modest profit taking reversal against the firmer prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1959 + 35                                                         
MAR     1987 + 35                                               MAR     168.20 + 6.35
MAY     2015 + 34                                               MAY     170.90 + 6.35
JUL      2040 + 34                                                JUL      173.50 + 6.35
SEP      2061 + 34                                               SEP      175.90 + 6.35
NOV     2072 + 32                                                DEC     179.10 + 6.35
JAN      2082 + 32                                               MAR     181.25 + 6.20
MAR     2099 + 32                                               MAY     181.95 + 6.10
MAY     2118 + 32                                                JUL     182.20 + 6.25
JUL      2140 + 32                                                SEP     182.15 + 6.20

27th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net long position within this market by 2.36% in the week of trade leading up to Tuesday 20th. January, to see this long position turned into a net long that was registered at 13,977 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,329,500 bags has most likely been little changed during the period of mixed but overall steady trade that has since followed.

What is assisting the London robusta coffee market to hold its value is the value while the more volatile New York has been taking a softer stance against speculative negative pressure that has come with the Brazil rains, has been the price resistance being shown within the internal market in Vietnam for their new crop robusta coffees, which has limited to a degree the volumes of price fixation selling coming into play over the London market.   The question is however how long this resistance might continue, but while there is some competition coming to Vietnam from the new Indian robusta coffee and the new West African robusta crops the further competition from Uganda and Indonesia is only likely to start picking up in volume during the second quarter of this year, which might assist to see the London market remain relatively stable.    Albeit that if the New York market were to lose some more weight in the coming weeks against further rain reports from Brazil, the London market would most certainly shed some more modest weight in sympathy.

The week long Tet New Year Holiday (Tết Nguyên Đán) in Vietnam shall start on Sunday 15th. February and trigger the New Year of the Goat from Thursday 19th. February, but while traditionally the advent of this holiday has seen farmers become aggressive sellers of new crop coffees to finance their celebrations, this has not been the case for this year.   Farmers and internal traders fully aware of the short sold export commitments on the part of the mills and exporters are rather playing their stocks and holding back for higher relative value against the price dictates of the London market, which is likewise providing positive buoyancy for asking differentials from the exporters and tending to slow new business activity for the new crop robusta coffees.    These actions assisting to a degree, to be supportive for the London market at present, but there remains a chance that some of the less well financed farmers might look to become more aggressive sellers ahead of this all important family holiday period.

The latest forecasts from within Brazil and from some of the international meteorological centers and now talking of the present rains that are falling over the main arabica coffee districts in Brazil, to continue through to the end of the first week in February.   These are not however constant rains, but are nevertheless related to regular scattered showers and are expected to provide reasonable all over coverage for these coffee districts.  While the U.S.A. based Commodities Weather Group is also hinting at the rains most likely to continue through to the middle of next month.

These reports do most certainly confirm that the weather conditions in Brazil are not anything like the eight to nine weeks of mostly dry weather that was experienced for the first two months of last year, as in reality this year’s dry spell for these arabica coffee districts has been a relative modest three to perhaps four weeks for some districts and a spell that has mostly been bridged, by the ground water retention reserves that had been built up with the rains over the preceding two months.    Thus for the present, the Brazil weather and despite a number of reports that it is meaningless as the damage has already been done, has taken the wind out of the sails of the speculative bulls within the New York market.   

The arbitrage between the markets has narrowed yesterday to register this at 73.31 usc/Lb., while this equates to a relatively attractive 45.29% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,750 bags yesterday, to register these stocks at 2,286,232 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed yesterday but with many leading players located in the North East of the U.S.A. somewhat distracted by the oncoming weather issues, as a severe snow storm is now impacting upon the area and keeping many away from the desk.  The Oil, Sugar, London robusta Coffee, Cotton, Copper and Soybean markets had a day of buoyancy, while the Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.28% lower; to see this Index registered at 433.92.   The day starts with the U.S. Dollar steady and trading at 1.509 to Sterling and 1.23 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 45.85 per barrel.

The London market started the day yesterday on a steady to positive note, while the New York market started the day taking a thinly traded negative track.  The New York market did however as the markets entered the afternoon’s trade recover to join the London market in positive territory, but with trade remaining generally thin and lacklustre and seemingly lacking much in the way of industry participation.    The New York market did however come under some pressure as the afternoon progressed and head back to par, while the London market retained a degree of buoyancy.    The London market continued on its modest upside track for the rest of the day and ended the day on a positive note and with 84% of the gains of the day intact, while the New York market stuttered towards a marginally softer close but having recovered 64.7% of the earlier losses of the day by the close.   This mixed might well bring in some light producer selling and a softer start for the relatively firm London market but a cautiously slow sideways start for the New York market for early trade today, against the prices set yesterday, as follows;

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1924 + 21                                                         
MAR     1952 + 21                                               MAR     161.85 – 0.60
MAY     1981 + 21                                               MAY     164.55 – 0.60
JUL      2006 + 22                                                JUL      167.15 – 0.60
SEP      2027 + 22                                               SEP      169.55 – 0.55
NOV     2040 + 25                                                DEC     172.75 – 0.55
JAN      2050 + 26                                               MAR     175.05 – 0.40
MAR     2067 + 25                                               MAY     175.85 – 0.30
MAY     2086 + 23                                                JUL     175.95 – 0.35
JUL      2108 + 22                                                SEP     175.95 – 0.35

26th. January, 2015.
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 10.52% in the week of trade leading up to Tuesday 20th. January;  to register a net long position of 24,718 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 8.21%, to register a net long on the day of 25,718 Lots.   This decrease on the part of the Index funds long positions, having been related to the tail end of the New Year fund rebalancing activity, which is correcting the relatively inflated value share that the commodity was holding within the overall funds positons.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 16.26%, to register a net long of 20,196 lots on the day.   This net long position that is the equivalent of 5,725,476 bags has most likely been marginally decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The pre-weekend weather reports from Brazil confirmed rains coming into the main arabica coffee districts within south eastern Brazil and with forecasts for the rains to continue during this week, while there are indications coming from some forecasts for rains to continue into early February.   These rains coming one would think just in time, to confirm that the arabica coffee weather for early this year shall not mirror the damaging partial drought that was experienced over the first two weeks of last year.

This does not however dampen the pessimistic spirits of the National Coffee Council of Brazil who came forth with their forecast that due to the past three weeks of dry weather and the resulting dry soils, that it shall have done irreversible damage to the prospects for the forthcoming new crop that is presently developing upon the trees.  With the comment that this damage makes the official government forecasts for a new crop of between 44.1 and 46.6 million bags far too optimistic and indicating that the National Coffee Council’s doing a new survey, which they do not expect to forecast the new crop at above 40 million bags.

This rather market supportive report from the National Coffee Council of Brazil provided some support for the waning spirits of the speculative bulls within the New York arabica coffee market on Friday, but one would think that it shall be very much questioned in the coming days and might not have sufficient muscle to do much more than bring some caution to the spirits of the speculative bears who have recently been taking the market on its recent softer path.   Especially so as while it has indeed been mostly dry and hot over most of the main arabica coffee districts for the first three weeks of the year, there would have been reasonable ground water retention levels inherited from the fair rains that were experienced over November and December.

Meanwhile with the Brazil Real having regained some muscle relative to the strong U.S. dollar over the past week, while the reference prices of the New York arabica coffee market has been on a decline, it has resulted in a degree of internal market resistance for new sales.  This having the effect of firming up the asking differentials for new business, but not to a degree that would indicate that farmers foresee a severely tightening longer term Brazil arabica coffees supply.   Which is a factor that would make one presume that the farmers whom one would be the best to assess the prospects for the forthcoming new crop, do not believe in the radically lower figures being forwarded by the Brazil’s National Coffee Council.

The arbitrage between the markets has broadened on Friday to register this at 74.86 usc/Lb., while this equates to a relatively attractive 46.08% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,835 bags on Friday, to register these stocks at 2,288,982 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed on Friday, but with the overall macro commodity index tending easier for the day.   The Brent Oil, Natural Gas, New York arabica Coffee, Orange Juice and Corn markets had a day of buoyancy, while the U.S. Oil, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Soybean, Gold, Silver and Platinum markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.71% lower; to see this Index registered at 435.13.   The day starts with the U.S. Dollar tending firmer and trading at 1.501 to Sterling and 1.119 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 45.85 per barrel.

The London market started the day on Friday on a steady note and with the New York market showing some early buoyancy, in cautiously thin and lacklustre trade.   The remained the track into the afternoon’s trade but while the New York market retained it buoyancy while the afternoon progressed the London market started to lose its way and moved back into negative territory.    The London market continued on its sideways negative track to end the day on a softer note and with 66.7% of the earlier losses of the day intact, while the New York market added to its modest buoyancy in late in the day’s trade to end the day on a positive note and with 86.2% of the earlier gains of the day intact.    This mixed close and with little in the way of fundamental news other than rain reports from Brazil coming forth to fuel market sentiment is likely to inspire yet another slow and hesitant near to steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1903 – 10                                                         
MAR     1931 – 10                                               MAR    162.45 + 2.50
MAY     1960 – 8                                                 MAY    165.15 + 2.50
JUL      1984 – 9                                                  JUL     167.75 + 2.55
SEP      2005 – 8                                                 SEP     170.10 + 2.60
NOV     2015 – 6                                                  DEC    173.30 + 2.70
JAN      2024 – 5                                                 MAR    175.45 + 2.70
MAR     2042 – 4                                                 MAY    176.15 + 2.65
MAY     2063 – 2                                                  JUL    176.30 + 2.65
JUL      2086 + 3                                                  SEP    176.30 + 2.60

23rd. January, 2015.
The Coffee Development Authority of Uganda have reported that the countries coffee exports for the month of December were 32,583 bags or 12.66% lower than the same month in the previous year, at a total of 224,803 bags.   This figure which follows a relatively lower export performance in November and a marginally better export performance in October last year has contributed to the cumulative exports from Uganda for the first three months of the present October 2014 to September 2013 coffee year having been 57,482 bags or 7.86% lower than the same period in the previous coffee year, at a total of 674,189 bags.

However in terms of value for these Ugandan coffee exports during the month of December which were made up from an 78.61% to 21.39% mix of robusta and arabica coffees, the value of the exports for the month were US$ 4,560,437 or 18.09% higher than the same month in the previous coffee year, at a total of US$ 29,778,184.   This improved value and despite the lower volumes of exports has contributed to the cumulative value of coffee exports for Uganda for the first three months of this present coffee year having been US$ 15,335,394 or 20.56% higher than the same period in the previous coffee year, at a total of US$ 89,941,011.

This improved income from coffee exports that within the free market nature of coffee farming and marketing environment within Uganda sees the majority of the value of sales ending up in farm hands, continues to encourage improved coffee production within the country and is very evident, by the areas of replanted coffee farms and new coffee trees being planted out within farms that had previously not planted coffee or had long since abandoned their coffee.   Thus while for this coffee year the countries coffee production is expected to match the previous coffee year’s production and bring forth approximately 3.6 million bags, the prospects are for improved levels of production for the coming years.   With the country very likely to see production start to return to the production levels of in excess of 4 million bags per annum that were experienced eighteen years ago.

The National Cocoa and Coffee Board of the Cameroon have reported that the countries robusta coffee exports for the month of December were 7,700 bags or 195.78% higher than the same month in the previous coffee year, at a total of 11,633 bags.   While they reported no arabica coffee exports for the month, from their much smaller arabica coffee share of total production.   Illustrated that while the Cameroon works on a December to November for robusta coffees it works on a more universal October to September coffee year for their arabica coffees and so far for this present October 2014 to September 2015 coffee year, the arabica coffee exports are so far only registered at 4,150 bags.

What is a concern for the coffee authorities in the Cameroon though, is the fact that this country which used to produce coffee crops of in excess of 2 million bags per annum 28 years ago, is that their production for the previous coffee year and made up from a 90 to 10 mix of robusta and arabica coffees was only a modest 364,650 bags, which illustrates the demise of this once significant player within the West African coffee producing bloc that has seen coffee production decrease by 73% over the last 28 years, while in the meantime over these 28 years the world production has registered an approximate 84% increase.    It is however not a situation unique to Cameroon but is a West African problem as the producer blocs leading player the Ivory Coast who are forecasted to produce a 1.9 million bags robusta coffee crop for the present coffee year, are presently producing annual coffee crops that are 55% lower than the coffee crops that they used to bring in 28 years ago.  

The arbitrage between the markets has narrowed yesterday to register this at 71.91 usc/Lb., while this equates to a relatively attractive 44.96% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,252 bags yesterday, to register these stocks at 2,291,817 bags.   There was meanwhile a larger in volume 2,060 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,453 bags.

The commodity markets were mixed again yesterday, but with the overall macro commodity index tending easier for the day.   The Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.70% lower; to see this Index registered at 438.26.   The day starts with the U.S. Dollar tending firmer and trading at 1.499 to Sterling and 1.133 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 47.10 per barrel.

The London market started the day yesterday on a relatively quiet and steady to softer note and followed by a steady to buoyant start for the New York market, but with both markets experiencing lacklustre trade and thin trade, while they maintained a similar through the into the early afternoon.   The more positive New York market came under some pressure to dip back into negative territory for short period and quite quickly recovered, while the London market maintained is steady to soft sideways track.   The New York market however came under late in the day speculative selling that was presumably encouraged by the combination of the negative nature of the macro commodity index, the Brazil rains and the stronger U.S. dollar, to see the market move back into negative territory and mirrored to a lesser degree, by the London market.   The London market continued to register a marginally softer close and with 40% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 83.9% of the losses of the day intact.   This soft close for the volatile New York market that is threatening to dip towards the next bout of speculative sell stops is likely to contribute towards cautious hesitancy but there might be some opportunist industry price fixation activity within early trade, to contribute towards a steady start for4 the day against the soft prices set yesterday, as follows:
 
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1913 – 4                                                           
MAR     1941 – 6                                                 MAR     159.95 – 1.30
MAY     1968 – 8                                                 MAY     162.65 – 1.30
JUL      1993 – 7                                                  JUL      165.20 – 1.25
SEP      2013 – 7                                                 SEP      167.50 – 1.15
NOV     2021 – 7                                                  DEC     170.60 – 1.15
JAN      2029 – 7                                                 MAR     172.75 – 1.25
MAR     2046 – 6                                                 MAY     173.50 – 1.25
MAY     2065 – 4                                                  JUL     173.65 – 1.20
JUL      2083 – 2                                                  SEP     173.70 – 1.55

22nd. January, 2015.
The cold front is moving north within south east Brazil and is heading into the main arabica coffee districts of the country, which is due to bring relief to the farmers who have seen their ground water retention levels declining over the past three weeks of hot and dry weather.   But more important as most likely there was enough moisture inherited from the preceding fair rains over November and December, to support the steady development of the maturing coffee cherries towards the coming new crop.  Meanwhile the rains are dampening speculative spirits for the present, within the New York arabica coffee market.

But perhaps more important for the consumer market industries in terms of the advent of the rains and the probability that there might be no further damage due for the forthcoming new crop, is that it shall inspire those farmers who have been holding back some reserve stocks to value add should there be damage and the resulting higher prices, to once again become more aggressive sellers.   Therefore to reduce the price resistance and price supportive activities within the internal market, which would by nature bring more and price competitive Brazil arabica coffees to the consumer markets.   While the resulting price fixation selling activity into the New York market, is likely to put some modest pressure upon the market.  

Agronomists from the National Coffee Federation in Colombia have cautioned that the probability of a mild El Nino developing within the Pacific Ocean and the resulting drier weather in the coming months for the countries coffee districts, shall make it important for farmers to start taking aggressive steps to control the threat of Broca or Berry borer beetle.   While in terms of Roya or Leaf Rust that develops during wet conditions, the prospects of drier weather are a positive factor and shall further limit its potential.   In this respect one must take note that over the past couple of years of improved controls, that Colombia boasts of the fact that Roya infestations within the Colombian coffee farms has been reduced by 85%, which is a success story that provides guidance for their neighbours in Central America.

The report does meanwhile stress that with the guidance of good agronomy support programs for the Colombian coffee farmers that these issues of insect and fungus controls are well in hand, while historically the periods of modestly drier weather have been related to better flowerings and larger crops.   Thus with the past few years of relatively aggressive farm replanting programs that has seen the average age of coffee trees within Colombian coffee farms reduced by 42% to an average of 7.2 years old and therefore much better yielding trees, one can feel some degree of confidence that unforeseen weather issues aside, that the annual crops shall continue to steadily increase over the next two to three years.

The new Central American crops that had experienced some cold and wet weather delays in cherry development and maturity late last year are now in full swing and with good volumes of new crop coffees being processed, but with still evidence of price resistance being experienced within the internal markets.  But one might question how long this can continue, as while farmers can take advantage of exporters having to pay up to cover their short sold nearby export commitments, there must certainly be a point were nearby supply shall exceed short term demand and one might expect this to start impacting upon the presently relatively firm export differentials from this important fine washed arabica coffee producer bloc.

The arbitrage between the markets has narrowed yesterday to register this at 72.94 usc/Lb., while this equates to a relatively attractive 45.23% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 207 bags yesterday, to register these stocks at 2,293,069 bags.   There was meanwhile a larger in volume 2,880 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,513 bags.

The commodity markets were mixed again yesterday, but with the dominant Oil markets that are heavily weighted within the mix showing some degree of buoyancy.  While the continued muscle being shown by the U.S. dollar continues to have an impact within many markets and with the European Central Bank expected to announce a more aggressive and Euro weakening quantitative easing package, the dollar can be expected to maintain its negative pressure within many fundamentally well supplied markets.   The Oil, Natural Gas, Sugar, Copper, Wheat and Platinum markets showed buoyancy and the London robusta Coffee, Orange Juice and Gold markets were near to steady, while the Cocoa, New York arabica Coffee, Cotton, Corn and Soybean markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.48% higher; to see this Index registered at 441.34.   The day starts with the U.S. Dollar relatively steady and trading at 1.513 to Sterling and 1.159 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 46.60 per barrel.

The London market started the day yesterday on a relatively quiet and steady note and followed by a steady to buoyant start for the New York market, but with both markets experiencing lacklustre trade and thin trade, while they maintained a positive stance through the early afternoon and with the New York market adding some additional value and posting 2.55 usc/Lb. gains for the day.   This positive stance was however unsustainable and the pathfinder New York market started to lose its way and with industry and speculative support thin, was pressured back into negative territory.  The relatively thinly traded London market followed this negative track but was able to attract support and limit its losses, while the New York market continued on its steady downside track.  The London market continued to end on a near to steady note and having recovered 66.7% of the earlier late in the day losses, while the New York market ended the day on a soft note and with 92.4% of the losses of the day intact.   This close and the lack of fundamental supportive news does little to buoy confidence and one might expect to see a steady to soft start for thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1917 – 1                                                           
MAR     1947 – 3                                                 MAR     161.25 – 3.05
MAY     1976 – 3                                                 MAY     163.95 – 3.05
JUL      2000 – 2                                                  JUL      166.45 – 3.00
SEP      2020 – 2                                                 SEP      168.65 – 3.00
NOV     2028 – 2                                                  DEC     171.75 – 3.05
JAN      2036 – 2                                                 MAR     174.00 – 3.30
MAR     2052 – 2                                                 MAY     174.75 – 3.55
MAY     2069 unch                                              JUL      174.85 – 3.65
JUL      2085 + 3                                                 SEP      174.85 – 3.65

21st. January, 2015.
The relatively high profile Brazilian trade house Comexim reported yesterday that with the have assessed the 2014 Brazil coffee crop to have been 48.45 million bags, which is a number that is very much in line with many other respected trade and industry reports.   Added to this they have assessed that the private cooperative, farm trade and industry stocks into this new crop and as at 1st. July last year, were 10.6 million bags and therefore indicating a coffee supply of 59.05 million bags and this aside from the 1.7 million bags of government coffee stocks.

These Comexim figure with an approximate combined domestic and export coffee demand of around 54 million bags per annum would indicate the potential for carryover coffee stocks into the new 2015 Brazil coffee crop of approximately 5 million bags and this aside from the additional 1.7 million bags of government stocks, which would further indicate that unless the new crop were to dip below 48 million bags, that Brazil coffee supply is potentially safe trough to the 2016 crop.   Thus with the prospects for rains to end of this month and with many still forecasting a new crop that shall exceed 48 million bags, the report tended to dampen some of the spirit of the speculative bulls within the New York market.

One might comment in terms of demand for Brazil coffees where the critical factor has been and continues to be the arabica coffee districts in south east Brazil, rather than the main conilon robusta coffee districts further to the north that have not suffered as much from the low rain factor, that the consumer market demand for Brazil arabica coffees is no longer as critical as it was over the past two years.   This year sees rising washed arabica coffee supply now coming in from Central America and Colombia and soon to be followed as the year progresses, by rising washed arabica coffee supply from Peru and thus the potential for the consumer markets to live with 2 to 3 million bags less Brazil arabica coffee supply for the year.

Thus with the evidence of good levels of consumer market coffees stocks, flat to even weakening demand from the Europe the largest consumer market and rising Latin American washed arabica coffee supply and still reasonable natural arabica coffee stocks within Brazil, there remain for the present little in the way of concern over longer term coffee supply on the part of the consumer market industries.   This is of course so long as there are no further weather problems for south eastern Brazil, to threaten and significantly lower the developing new Brazil arabica coffee crop potential and this can really only be known better by the end of next month and with the evidence of the January and February rains in hand.

Meanwhile more damaging to market confidence yesterday afternoon was a host of weather forecasts that are coming to the market that now not only indicate a wet end to the month for south east Brazil and following the three weeks of hot and dry weather, but some not talking of a wet start to the month of February.  These forecasts indicating that there is little chance to see a repeat of the partial drought that was experienced over the first two months of last year within south east Brazil and dampening the spirits of the speculative bulls within the more volatile and active New York market, which is now showing a degree of exhaustion.   

The arbitrage between the markets has narrowed yesterday to register this at 75.85 usc/Lb., while this equates to a relatively attractive 46.17% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,315 bags yesterday, to register these stocks at 2,293,276 bags.   There was meanwhile a larger in volume 3,738 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,393 bags.

The commodity market were mixed yesterday with the influential American players returning from their long weekend Martin Luther King holiday to the news of a twenty four year low in Chinese growth, albeit still nevertheless impressive growth due for this year.  While in terms of sentiment for the day there were many who were distracted by yesterday’s state of the nation address by the American President which did prove to be positive in terms of its confirmation of longer term positive growth for the U.S.A.   The Sugar, Wheat, Corn, Gold, Silver and Platinum markets had a day of buoyancy and the Orange Juice market was steady, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper and Soybean markets had softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.24% lower; to see this Index registered at 439.24.   The day starts with the U.S. Dollar relatively steady and trading at 1.517 to Sterling and 1.159 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.25 per barrel.

The London and New York markets started the day on a steady note and started to add value and take a positive track into the afternoon’s trade, but with volumes remaining relatively thin.  As the afternoon progressed however and with the Americans entering the field of play both markets came under seemingly speculative pressure and headed down into negative territory and with sell stops being triggered to both increase the volumes of trade and accentuate the losses.   The London market continued on a very much sideways track at its lower levels and the end the day on a soft note and with 67.7% of the earlier losses of the day intact, while the New York market that was suffering from both the negative influences of a softer macro commodity index and the Brazil rain reports dent to speculative confidence ended the day on a very soft note and with 93.7% of the earlier losses of the day intact.   This close has to be seen to be negative for sentiment and especially so with the Brazil rains now so close and one might expect to see little better than a cautious steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1918 – 21                                                         
MAR     1950 – 21                                               MAR     164.30 – 6.70
MAY     1979 – 20                                               MAY     167.00 – 6.65
JUL      2002 – 21                                                JUL      169.45 – 6.65
SEP      2022 – 21                                               SEP      171.65 – 6.45
NOV     2030 – 21                                                DEC     174.80 – 6.30
JAN      2038 – 19                                               MAR     177.30 – 6.05
MAR     2054 – 16                                               MAY     178.30 – 5.90
MAY     2069 – 16                                                JUL     178.50 – 5.90
JUL      2082 – 10                                                SEP     178.50 – 5.80

20th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market increase their net long position within this market by 31.06% in the week of trade leading up to Tuesday 13th. January, to see this long position turned into a net long that was registered at 14,315 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,385,833 bags has most likely been little changed to perhaps register a marginal decrease during the period of mixed trade that has since followed.

This London robusta coffee market with the new Vietnam crop largely seen to have been steady to modestly smaller than the previous crop, is likely to shrug off the negative influences that come with the prospects for larger new robusta coffee crops due from Indonesia and India this year, along with modestly rising supply from Africa, as the main driver of growth in world consumption is heavily weighted towards the new markets and the relatively inexpensive robusta coffees.   However this does not detract from the fact that the London market with robusta coffee demand seemingly matching supply shall to a degree, continue to track the fortunes of the more volatile New York market.   This latter market presently shrugging off the negative influences of rising washed arabica coffee supply and perhaps even surplus washed arabica coffee supply, on the speculation for deficit new natural arabica coffee supply, which would come with another modest Brazil crop this year.

In terms of the prospects for the new Brazil arabica coffee crop which has been negatively affected by the stresses experienced within many coffee farms during the partial drought they experienced during the first two months of last year and followed by a late start to the present spring and summer rain season, there remain some concerns over the relatively modest rains experienced for the start of this year.   The latest forecasts do however talk of a new cold front and fair rains for most of the Brazil arabica coffee districts for the latter half of this week and through to the end of the month.

These rains that follow a couple of weeks of mostly hot and dry weather and are not expected to do much more than influence the rainfall for the month to be much more than 50% of the monthly average for the month, but they do nevertheless bring much needed moisture to the developing new coffee crop.   Thus while there are many that have suggested that the modest nature of these rains might have done some further damage to the new arabica coffee crop potential, the question is with at least fair ground water retention levels following the reasonable November and December rains if the two to three weeks of dry weather has in fact been damaging, which is a factor that took some of the wind out of the sails of the speculative bulls within the New York market at the end of last week.

But there is no question that the relatively dry January would have lowered ground water retention levels and that fair follow through rains shall be required during February in south east Brazil, if there is to be stability for the development of the new arabica coffee crop.   Thus while the New York market might have lost some of its steam, there is still the possibility for renewed volatility and buoyancy during the coming month, should hot and dry weather return and thus one might think, that there might be some degree of short term caution shown by the speculative sector of the market in the coming days, which may limit the downside potential for the market.

The arbitrage between the markets has narrowed yesterday to register this at 81.60 usc/Lb., while this equates to a relatively attractive 47.72% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 500 bags yesterday, to register these stocks at 2,291,961 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,131 bags.

Many of the commodity markets were closed yesterday, with the observation of Martin Luther King Day in the U.S.A., which resulted in a long weekend for many market players.   Meanwhile with the world’s economic drivers distracted by the safari to Davos Switzerland for the World Economic Forum that shall take place over Wednesday to Saturday this week, one might expect that is shall prove to be something of a distraction in terms of fundamental influences within many markets.  The London robusta Coffee and Platinum markets showed buoyancy yesterday, while the Oil, Natural Gas, Sugar, Cocoa, Copper Gold and Silver markets tended softer.   With many markets closed the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is unchanged; to see this Index registered at 444.74.   The day starts with the U.S. Dollar steady and trading at 1.508 to Sterling and 1.158 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 46.60 per barrel.

The London trading solo yesterday and following the soft end to last week for both markets, started the day yesterday on a thinly traded lower note.  This remained the track into the early afternoon trade, which remained lacklustre in nature, but with some degree of recovery coming into play later in the afternoon.  This saw the market recover its losses and move into modest positive territory and briefly build upon its gains, but soon encountering selling activity to pressure the market back towards par.   The London market continued to end the day with very modest buoyancy and with only 7.7% of the earlier gains of the day intact, which gives little guidance for sentiment and one might expect little better than a steady to soft start for early trade today against the prices set in London yesterday and New York on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1939 – 2                                                           
MAR     1971 + 1                                                 MAR     171.00 – 5.65
MAY     1999 + 2                                                 MAY     173.65 – 5.65
JUL      2023 + 2                                                  JUL      176.10 – 5.60
SEP      2043 + 3                                                 SEP      178.10 – 5.65
NOV     2051 + 3                                                  DEC     181.10 – 5.55
JAN      2057 + 3                                                 MAR     183.35 – 5.55
MAR     2070 + 3                                                 MAY     184.20 – 5.65
MAY     2085 + 3                                                  JUL     184.40 – 5.50
JUL      2092 + 3                                                  SEP     184.30 – 5.45

19th. January, 2015.
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 12.05% in the week of trade leading up to Tuesday 13th. January;  to register a net long position of 27,623 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 29.85%, to register a net long on the day of 28,017 Lots.   This latter sharp drop on the part of the Index funds long positions, having been related to the New Year fund rebalancing activity, which is correcting the relatively inflated value share that the commodity was holding within the overall funds positons.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 57.76%, to register a net long of 24,117 lots on the day.   This net long position that is the equivalent of 6,837,063 bags has most likely been decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Council in Nicaragua have reported that the countries coffee exports for the month of December were 21,779 bags or 83.87% higher than the same month in the previous year, at a total of 47,746 bags.   This figure contributes to the countries cumulative exports for the first three months of the new October 2014 to September 2015 coffee year being 78,649 bags or 79% higher than the same period in the previous coffee year, at a total of 178,210 bags.

The Vietnam Customs authorities have reported that following coffee exports of mostly robusta coffees during the month of December of 1.92 million bags, the countries cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year are 7% higher than the same period in the previous coffee year, at a total of 4,920,000 bags.    It is noted however that the exports in December have been reported and well below the forecasted expectations for exports for the month of between 2 million to 2.5 million bags, which perhaps is related to the present internal market price resistance that is being experienced within Vietnam, which is inflating asking differentials for new business and is slowing new business activity on the part of the international coffee trade.

The National Coffee Council in Brazil has reported on Friday that the latest new crop forecast by the National Crop Supply Agency CONAB has not really given sufficient consideration to the dry start to the month of January and that in reality, the new crop might be smaller than the 44.1 to 46.6 million bags CONAB forecast.   This report alike the CONAB report, does not take into account the very much discounted Conilon robusta coffee factor included within the overall figures and with this in mind, most private trade and industry players would already be adding at least 4 million bags and perhaps even more, to these quoted official figures.  

Adding to these further comments on the matter of Brazil weather was a report on Friday by the Brazilian Electrical Grid Operators in South East Brazil, who forecasted that they expect to see only 44% of the monthly average rainfall for their hydro power reservoirs during January.   This report by nature indicating the lower rainfall that could be expected for the neighbouring coffee districts, but one might comment that unlike last years’ experience of almost no rain in these districts in January, that there is at least some rain and one cannot repeat the drought talk of last year.   Thus one needs to show a degree of caution towards some of the more dramatic scare stories that are being voiced, over the negative weather effect upon the prospects for the new and relatively modest 2015 Brazil crop.

The arbitrage between the markets has narrowed on Friday to register this at 81.64 usc/Lb., while this equates to a relatively attractive 47.74% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 825 bags on Friday, to register these stocks at 2,292,461 bags.   There was meanwhile a larger in volume 4,196 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,131 bags.

The commodity markets were mixed on Friday, but with the recently battered Oil markets that are now trading well below cost for many leading producers, finally showing some modest reversal in their fortunes.  The Oil, Copper, Wheat, Corn, Gold, Silver and Platinum markets had day of buoyancy and the Orange Juice and Soybean markets were steady, while the Natural Gas, Sugar, Cocoa, Coffee and Cotton markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.56% higher; to see this Index registered at 444.74.   The day starts with the U.S. Dollar steady and trading at 1.514 to Sterling and 1.156 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 48.00 per barrel.

The London and New York markets started the day on Friday on a steady not in very thin trade, but with the markets tending marginally softer in hesitant, thin and lacklustre afternoon trade.    As the afternoon progressed and with the reports and forecasts for improved rains for south eastern Brazil for this week coming into play to dampen speculative spirits, both markets continued on a steady downside track for the rest of the relatively quiet days trade.   The London market continued to end the day on a soft note and with 70% of the losses of the day intact, while the New York market ended the day on a very soft note and with 90.4% of the losses of the day intact.     This soft close and with the further Brazil weather reports and forecasts only due later in the day, is likely to see the markets encounter thin and cautious near to steady activity for early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1941 – 32                                                         
MAR     1970 – 28                                               MAR     171.00 – 5.65
MAY     1997 – 30                                               MAY     173.65 – 5.65
JUL      2021 – 30                                                JUL      176.10 – 5.60
SEP      2040 – 30                                               SEP      178.10 – 5.65
NOV     2048 – 31                                                DEC     181.10 – 5.55
JAN      2054 – 33                                               MAR     183.35 – 5.55
MAR     2067 – 33                                               MAY     184.20 – 5.65
MAY     2082 – 33                                                JUL     184.40 – 5.50
JUL      2089 – 33                                                SEP     184.30 – 5.45

16th. January, 2015.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 169,190 bags or 2.97% during the month of December, to register these stocks at 5,524,964 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.

Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6,524,964 bags, it would have equated to at least a very safe 13.3 weeks of roasting activity and still a safe reserve, ahead of the pending delivery of increasing volumes of new crop coffees from Mexico, Central America, Colombia and Vietnam.  These new crop coffees and however not expected to surge in supply, as the North American roasters alike the consumer industries worldwide, remain slow and steady buyers against what many predict to be a market that should the rains come in Brazil next week, might still lose some more weight.

One might further comment that with these 2014 year-end U.S.A. stocks seen to be a significant 438,246 bags or 8.62% higher than they were at the end of the previous year, the report is not really that supportive for market sentiment.   With only the uncertain and erratic weather issues within Brazil proving to be a factor that can counter the negative nature of the evidence of good consumer stock levels and potentially more than adequate coffee supply, from most of the producer blocs.

While their southern neighbours in Central America are all coming out of the past two years of severe problems from Roya or Leaf Rust and are looking to increased new crops from the harvest that is presently in progress, the Mexican National Coffee Association has reported that due to the devastating effects of the Roya infestation, they are looking at a the probability of an 12.8% to 17.9% lower new crop.    In this respect and with the new crop presently being harvested, they are forecasting a relatively modest new crop of between 3.2 and 3.4 million bags.   

This forecast is rather dramatically lower than the many trade and industry forecasts that have been talking a New Mexican crop of fine washed arabica coffee, which they expected to be well in excess of 4 million bags and likewise a past crop of in excess of 4 million bags.  While this Mexican National Coffee Association forecast and percentage dip, has been based on the past crop having been a lower figure of 3.9 million bags.   Thus one might suggest that with the rather high percentage drop that has been quoted, that it is likely that there might be some degree of market manipulation might be related to the forecast, which shall see the market players take a cautious wait and see stance towards this report.

The well respected Brazil analysts Safras & Mercado who have assessed the 2014 Brazil crop at 48.9 million bags, have estimated that by the end of last week 72% of the coffees from this new crop had been sold.   This is a significantly higher percentage than the 63% factor they applied for the same time last year from the previous crops coffees, which would indicate that this well sold factor shall see internal market selling activity start to slow for the first half of this year.   Thus lessening the price fixation selling activity on the part of Brazilian exporters, but perhaps to be replaced by similar activity on the part of exporters hedging their purchases out of the new crops in Mexico, Central America, Vietnam and India and thus, one would say the news is somewhat neutral to the market.

Somar Meteorologists in Brazil reported yesterday that they foresee hot and mostly dry weather for south eastern Brazil over the weekend and for the first couple of days of next week, but with rains to come during the second half of the week and through to the end of the month.   These are however very much catch up rains so to speak and the report forecasted that the January rainfall for many districts shall be 48% below average, but unlike last year where there was almost no rain for many of the districts.  Thus one might comment that there are at least some rains forthcoming and perhaps sufficient so long as rainfall over the coming two to three months is close to average levels, to ensure the steady development of the forthcoming new crop.  

But there is no guarantee that the rains in February shall be normal, as the U.S.A. based Commodity Weather Group has forecasted the potential for a hot and dry spell for south eastern Brazil for early February, but without any comment from thereon.    Thus one can foresee these issues of rain and the focus of the speculative trade shall remain upon the day by day weather reports out of Brazil, to maintain volatility within the New York market for the coming weeks.   

The arbitrage between the markets has narrowed yesterday to register this at 86.02 usc/Lb., while this equates to a relatively attractive 48.70% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,092 bags yesterday, to register these stocks at 2,293,286 bags.   There was meanwhile a similar in volume 2,028 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,935 bags.

The commodity markets were mixed yesterday, but with some relatively sharp moves either side of par encountered within many of the markets.    The Sugar, London robusta Coffee, Cotton, Copper, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, New York arabica Coffee, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.21% lower; to see this Index registered at 442.27.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.163 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 48.10 per barrel.

The London and New York markets started the day yesterday on a positive note and with both markets building upon their gains as they entered the afternoon trade, but with the New York market losing its way as the afternoon progressed and shedding its gains, while the London market maintained the earlier in the days muscle.   The New York market dipped back into negative territory while the London market remained positive and post a brief recovery for the New York market, the track for the rest of the day was south and with the London market shedding most of its weight.  The London market continued to end the day on a modestly positive note but with only 13.5% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 68.8% of the losses of the day intact.    This close is unlikely to inspire much more than a steady start in thin and cautious trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1973 + 5                                                          
MAR     1998 + 5                                                 MAR     176.65 – 3.20
MAY     2027 + 3                                                 MAY     179.30 – 3.25
JUL      2051 + 4                                                  JUL      181.70 – 3.25
SEP      2070 + 4                                                 SEP      183.75 – 3.15
NOV     2079 + 4                                                  DEC     186.65 – 3.05
JAN      2087 + 4                                                 MAR     188.90 – 2.70
MAR     2100 + 4                                                 MAY     189.85 – 2.45
MAY     2115 + 4                                                  JUL     189.90 – 2.45
JUL      2122 + 4                                                  SEP     189.75 – 2.40

15th. January, 2015.
The government in El Salvador have voiced their intent to invest in support programs to assist approximately 30% of their coffee farmers and presumably the small scale farmers in this country that has its coffee industry dominated by relatively wealthy commercial farmers, to replant their farms with new disease resistant and higher yielding coffee trees.    These programs which follow the very successful examples of Colombia and Honduras and are similarly to Honduras a five year plan, are designed to see the country that has seen the recent problems of Roya or Leaf Rust dip their crop from 1.3 million bags to below 700,000 bags, target annual crops of in excess of 2 million bags in the coming years.

The speculative sector of the New York coffee market took the reins of market sentiment yesterday to lead the markets into a rally and see New York briefly head towards a six week high, as concerns over the dry weather in south east Brazil fuelled positive sentiment, with the London market following the track being set by the volatile New York market.    There was however late in the day a cap to the market that was attracting light producer price fixation selling, from index fund re-balancing selling and the markets settled back to set a more modest positive end to the day.

One must however question within what is presently a very emotive and volatile New York market, what might be the reaction to the forecasted rains for latter half of next week and thereon, into what is forecasted to be normal rainfall conditions in February.    With the potential with new crop coffee stocks now building up in Mexico and Central America and competing with Colombia for market share within the top end fine washed arabica coffee sector of the mainstream developed consumer markets, for more aggressive selling activity and the resulting price fixation selling into the New York market.   In this respect there is the potential for rains to trigger both speculative profit taking selling and to bring to the market more aggressive producer selling activity, but the biggest question is how much more traction might there be for the presently rising New York market and at what level it might be when it shall potentially hit a Brazil rain inspired tipping point.

Meanwhile within an environment of a significant downside track for the macro commodity index that is being effected by soft economic forecasts for the year and the renewed muscle of the U.S. dollar, the coffee markets are something of a solo star for the present and with the New York market as at yesterdays close having posted a 7.95% increase for the year, while the London market is a more modest 4.02% higher for the year.   This relatively good buoyancy that follows the coffee markets having been the best performer out of all markets in 2014 and based on the supportive fundamentals of Brazil weather, might still be vulnerable to a couple of months of fair weather in Brazil that would influence a degree of speculative exhaustion and catch up producer selling activity within the coffee markets.    Thus focus for the present is very much upon the day by day Brazil weather reports and forecasts.

The arbitrage between the markets has broadened yesterday to register this at 89.45 usc/Lb., while this equates to a relatively attractive 49.74% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 5,245 bags yesterday, to register these stocks at 2,291,194 bags.   There was meanwhile a larger in volume 14,265 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,963 bags.

The commodity markets encountered the somewhat negative news of the World Bank’s lowering of their forecast for global growth to 3% from 3.4% for 2015 and the 0.9% dip in U.S. retail sales for November last year, which both impacted upon prospects for softer demand.   But with most markets already well sold, these reports had little influence upon the overall flat and soft macro commodity index.  The U.S. Oil, Natural Gas, Sugar, Coffee, Orange Juice, Gold, Silver and Platinum markets showed buoyancy and he Cocoa market was near to steady, while the Brent Oil, Cotton, Wheat, Corn and Soybean markets had a softer day’s trade and the Copper market with a 5.77% loss for the day, was perhaps the headline market for the day.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher; to see this Index registered at 443.19.   The day starts with the U.S. Dollar steady and trading at 1.522 to Sterling and 1.176 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 48.05 per barrel.

The London and New York markets started the day yesterday on a positive note and with both markets building upon their gains as they entered more active afternoon and with the New York market leading the way to peak with a rather impressive 4.44% increase in value for the day, while the more stable London market followed a more steady upside track and peaked near to the close at a 1.58% gain in value for the day.   The New York market with the increased late in the day selling activity did however experience a negative correction to limit its gains but nevertheless maintained its overall positive stance, while the London market maintained its steady upside track.   The London market ended the day on a positive note and with 93.5% of the gains of the day intact, while the New York market ended the day on a positive note and with 36.9% of the earlier gains of the day intact.   This overall positive close is likely to inspire a degree of confidence and along with the thoughts that index selling activity is most probably concluded, to support a steady to perhaps buoyant start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1968 + 26                                                         
MAR     1993 + 29                                               MAR     179.85 + 2.90
MAY     2024 + 31                                               MAY     182.55 + 2.90
JUL      2047 + 30                                                JUL      184.95 + 2.80
SEP      2066 + 30                                               SEP      186.90 + 2.70
NOV     2075 + 28                                                DEC     189.70 + 2.70
JAN      2083 + 28                                               MAR     191.60 + 2.75
MAR     2096 + 26                                               MAY     192.30 + 2.80
MAY     2111 + 26                                                JUL     192.35 + 2.80
JUL      2118 + 26                                                SEP     192.15 + 2.70

14th. January, 2015.
The National Coffee Association of Guatemala have reported that the countries coffee exports for the month of December were 30,581 bags or 24.71% lower than the same month in the previous year, at a total of 93,191 bags.  This relatively modest performance that is related to the weather delayed new crop harvest and a consumer market price resistance to the relatively high asking prices for Guatemala coffees contributes to the cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year being 75,658 bags or 27.17% lower than the exports for the same period in the previous coffee year, at a total of 202,786 bags.

Brazil’s official National Crop Supply Agency CONAB came forth with their latest coffee crop report and forecast yesterday, in which they have reported that contrary to many other market supportive suggestions, the rainfall for the countries coffee districts over November and December was sufficient to maintain ground water moisture levels for the coffee farms.    They did however state that the January rainfall reports shall need to be watched as they do have the potential, to have some impact upon the new 2015 coffee crop.

In terms of the new coffee crop they have forecasted the arabica coffee production to be marginally larger than their figure for the 2014 crop of 32.3 million bags, at between 32.5 million and 34.4 million bags.  While they have forecasted the conilon robusta production to be marginally lower than their figure for the 2014 crop of 13 million bags, at between 11.6 million and 12.2 million bags.    Therefore a new crop of between 44.1 million and 46.6 million bags, as against their assessment of last year’s crop having been 45.3 million bags.

At first sight this is a rather dismal crop forecast and potentially bullish in nature, but one has to seriously question the very modest conilon robusta coffee figure that is included within both their 2014 crop assessment and for the forthcoming new 2015 crop.  The usually very reliable trade and industry figures for the conilon robusta production in 2014 and supported by evidence of business concluded for these coffees since their harvest over March to June 2014, are that the crop was between 16.8 and 17.5 million bags.  While the forecasts by the trade and industry players are that the new 2015 crop shall most likely be close to these last figures.

Thus if one is to say work on a 17 million bags figure for conilon robusta coffees in 2014 and a 16 million bags figure for 2015, it would inflate their 2014 crop to 50.3 million bags and their minimum crop forecast for the 2015 crop to 48.5 million bags and their maximum forecast to 50.4 million bags.    These being numbers in terms of the still reasonable stocks of Brazil arabica coffees, that would not really threaten longer term Brazil coffee supply through to the 2016 Brazil crop.

But the question still remains over the prospects for rainfall over south east Brazil for the first quarter of this year, as this has to be cumulatively close to average levels, it the Brazil arabica coffee forecast of 32.5 million to 34.4 million bags is to be secure.  Thus while on analysis and adjustment for the conilon quantities this latest CONAB report would appear to be not very bullish for the market, the uncertain weather for the coming weeks would tend to make it  more neutral than bearish for short term market sentiment.

Vietnam’s week long Tet New Year holiday starts in four and half weeks’ time, with the countries commercial activities due to close for nine days from the 14th. February.   This holiday that shall celebrate the start of the Year of the Goat will however start to slow commercial activity a few days prior to the start of the holiday and traditionally within Vietnam the need to finance the holidays, it has encouraged more active selling of new crop coffee stocks in the weeks prior to it.   However this is seemingly not the case this year, as all evidence is that the farmers and internal market traders are showing price resistance to the robusta coffee prices that are being dictated by the London market and for the present, the export differentials out of Vietnam remain relatively firm.

Thus for the present new crop export selling activity is relatively lacklustre in nature, as the consumer market industries follow more a need to buy policy than taking a longer term premium differential cover for the Vietnam robusta coffee needs.   One might think though that in time and as and when the exporters have covered their short sold forward export commitments and are under less pressure to buy that it shall become more of a buyer’s market in Vietnam and that in time, once might expect to see export differentials soften a little bit.  But this is now looking to be more a medium term than a short term scenario and most probably more likely to occur for the second quarter rather than the first quarter of this year, by when Vietnam shall be actively competing with robusta coffee exports from Indonesia, India and Uganda.

The arbitrage between the markets has broadened yesterday to register this at 87.86 usc/Lb., while this equates to a relatively attractive 49.65% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,051 bags yesterday, to register these stocks at 2,285,949 bags.   There was meanwhile a smaller in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 26,228 bags.

The commodity markets experienced another mixed day yesterday, but with the negative influences of the World Bank’s latest forecast that lowered world growth expectations for 2015, many markets remained on a negative track.  The Natural Gas, Sugar, New York arabica Coffee, Cotton, Orange Juice, Gold, Silver and Platinum markets showed buoyancy, while the Oil, Cocoa, London robusta Coffee, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% lower; to see this Index registered at 441.71.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.179 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 45.25 per barrel.

The London market started the day yesterday shedding a little weight, while the New York market started on a steady note, but soon losing some value and joining the London market in negative territory.  Both markets lost more value as they moved into early afternoon’s trade, but with the markets recovering half of their early afternoon’s losses, as the afternoon progressed and the New York market finally breaking through to positive trade, while the London market remained below par.    The London market continued to end the day on a negative note and with 42.9% of the earlier losses of the day intact, while the New York market ended the day with modest buoyancy with only 9.3% of the earlier gains of the day intact.   This rather uninspiring close is likely to encourage little better than a near to steady start for early thin trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1942 – 11                                                         
MAR     1964 – 9                                                 MAR     176.95 + 0.20
MAY     1993 – 8                                                 MAY     179.65 + 0.25
JUL      2017 – 6                                                  JUL      182.15 + 0.30
SEP      2036 – 5                                                 SEP      184.20 + 0.35
NOV     2047 – 4                                                  DEC     187.00 + 0.35
JAN      2055 – 3                                                 MAR     188.85 + 0.30
MAR     2070 – 3                                                 MAY     189.50 + 0.15
MAY     2085 – 3                                                  JUL     189.55 + 0.05
JUL      2092 – 3                                                  SEP     189.45 + 0.10

13th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net long position within this market by 1.36% in the week of trade leading up to Tuesday 6th. January, to see this long position turned into a net long that was registered at 10,923 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 1,820,500 bags has most likely been little changed to perhaps register a marginal increase during the period of mixed trade that has since followed.

Supportive for the markets during the afternoon yesterday was a report from the Cocatrel Coffee Cooperative in the leading Brazilian arabica coffee state of Minas Gerais, which stated that following a meeting between fifteen cooperatives they estimate the coffee production in Minas Gerais might this year be as much as 20% less than last year’s already relatively modest deficit crop.    This modest forecast being based not only on the damage done to the potential of the coffee trees following the stress of the early in 2014 partial drought, but also upon the relatively modest rains experienced during the delayed start new spring and summer rain season.

In terms of this issue of Brazil rains over the main south eastern Brazil arabica coffee districts, the latest forecasts are talking in terms of many leading coffee areas within these districts likely to experience only around 50% of their monthly average rainfall.   With many of the districts already reporting very modest rainfall for the month so far and the potential that this scenario shall continue into the coming week, with the weather to only change during the second half of next week, when good widespread rains are presently forecasted to impact upon south eastern Brazil, but not in sufficient volume, to compensate for the relatively dry start to the month.

It has to be noted that these Brazil weather reports do most usually caution that the relatively dry weather for the start of the year is not a repeat of last year’s partial drought conditions, as there have been at least some light rains experienced over south east Brazil.   Thus highlighting that the present conditions are not a mirror of the previous year’s disastrous January and February partial drought and most certainly so with the late in the month rains being forecasted, but are more an indication of the more difficult conditions for new crop arabica coffee cherries to develop.  Therefore, only the potential for these lower moisture weather conditions to result in a higher percentage of smaller beans from this crop and a negative effect upon overall volume, rather than a dramatically lower crop.  

While not in any way striking new news the Brazilian Exporters Association highlighted yesterday that the countries green coffee exports for 2014 were 4.78 million bags or 17.02% higher than the previous year’s 28.08 million bags, at a total of 32.86 million bags.    This report is perhaps only significant in terms of the fact that it highlights that the consumer markets in terms of a potentially lower new Brazil crop, were only very recently able to live with a Brazil coffee supply of below 30 million bags per annum.    Thus in terms of the countries domestic coffee consumption of approximately 20 million bags per annum and the significant coffee stocks still in hand, the potential for a couple of million bags deficit crop this year, is something that the consumer markets could easily live with.   This report when it came to the board during the afternoon’s trade and following the month end rain reports from Brazil assisted to take some of the wind out of the sails of the speculative sector of the New York market.

The arbitrage between the markets has narrowed yesterday to register this at 87.26 usc/Lb., while this equates to a relatively attractive 49.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 526 bags on yesterday, to register these stocks at 2,288,000 bags.   There was meanwhile a similar in volume 550 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,948 bags.

The Certified robusta coffee stocks held against the London market were seen to increase by 61,667 bags or 2.92% over the two weeks of trade leading up to Monday 5th. January: to register these stocks at 2,171,333 bags on the day.  The New Year has however brought with it firming differentials within the internal market in Vietnam, which is inflating nearby robusta coffee prices and one would not expect to see for the short term, much in the way of growth potential for these stocks.

The commodity markets experienced another mixed day yesterday, but mostly towards the negative track for the day.   The Cocoa, London robusta Coffee, Orange Juice, Corn, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Wheat and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.19% lower; to see this Index registered at 442.83.   The day starts with the U.S. Dollar steady and trading at 1.516 to Sterling and 1.182 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 45.90 per barrel.

The London market started the day yesterday with a degree of buoyancy and followed by a follow through from Friday firmer start for the New York market, with the markets gaining support from speculative weather concerns in Brazil and some cautious price fixation activity.   The markets maintained their positive track into the afternoon’s trade and with the New York market having peaked at a 4.85 usc/Lb. gain for the day, but started to shed some weight as the afternoon progressed and both markets slipped back towards par.   The New York market further suffered from a degree of exhaustion later in the afternoon, which saw the market move below par and start on a downside track, while the London market maintained some modest muscle for the rest of the day’s trade.   The London market ended the day on a positive note and with 26.3% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 69.5% of the losses of the day intact.    This mixed close and with the more speculative New York market having lost is positive traction during the day, is perhaps not going to inspire much better than a cautious near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1953 + 20                                                         
MAR     1973 + 10                                               MAR     176.75 – 3.30
MAY     2001 + 11                                               MAY     179.40 – 3.30
JUL      2023 + 13                                                JUL      181.85 – 3.30
SEP      2041 + 15                                               SEP      183.85 – 3.30
NOV     2051 + 17                                                DEC     186.65 – 3.30
JAN      2058 + 17                                               MAR     188.55 – 3.25
MAR     2073 + 17                                               MAY     189.35 – 3.25
MAY     2088 + 17                                                JUL     189.50 – 3.20
JUL      2095 + 17                                                SEP     189.35 – 3.20

12th. January, 2015.
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 2.45% in the week of trade leading up to Tuesday 6th. January;  to register a net long position of 24,652 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 0.25%, to register a net long on the day of 39,940 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 11.42%, to register a net long of 15,287 lots on the day.   This net long position that is the equivalent of 4,333,797 bags has most likely been further increased over the period of positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

Relatively cool and wet weather over much of Central America late last year has delayed the development of maturing cherries and sees the new crops tending to come in a little later than normal for many farmers, which while a benefit in terms of overall quality that comes with a longer time on the tree, has taken some of pressure off the farmers to conclude early sales.   Thus with new crop shipments tending to be slow and not so much selling aggression being experienced, it does take some of the seasonal price fixation selling pressure away from the New York market.   This is to a small degree, assisting the market that has experienced an early year fund and speculative boost, on its overall upside track while in the meantime, there are some instances of late new crop shipments being experienced from Central America.

The Coffee Board of India who had been forecasting the countries new coffee crop for this present October 2014 to September 2015 coffee year at 5,745,833 bags and made up by a 30.6 to 69.4 ratio of arabica and robusta coffees, has downgraded its forecast by 229,166 bags or 3.99%, to a more modest figure of 5,516,667 bags.   This adjustment is related to what they have seen to be weather problems over mostly their arabica coffee districts, which has the new ratio adjusted to a 30.1 to 69.9 ratio of arabica and robusta coffees.   It is however a new crop forecast that still well exceeds the countries production during the previous coffee year and secures increased robusta coffee supply from India, for this present coffee year.

The continued speculation over the unseasonal relatively dry weather in South Eastern Brazil continued to play its part within the speculative sector of the New York market on Friday, with the reports of a dry start to the year coming into play, on top of resorts that some farms while having received steady bouts of rain over the past two months, the cumulative rainfall was below average.    The effects of these reports upon market sentiment are very obviously being accentuated as the memories of last year’s first two months of partial drought over most of these presently affected districts is still very fresh in mind, albeit that the prevailing medium term weather forecasts clearly state that the present situation is not yet a mirror of last year’s problems.

The international Coffee Organisation has reported that World coffee exports for the month of November were 0.5% lower than the previous year, at a total of 7.93 million bags.   This contributing to the cumulative World coffee exports for the first two months of the present October 2014 to September 2015 coffee year having been 0.06% higher than the same period in the previous coffee year, at a total of 16.82 million bags.   While the report highlights that the marginal dip in coffee exports in November last year was entirely influenced by slow buying interest in arabica coffees where exports were 3.58% lower than the previous year, as against the robusta coffee exports which were 5.64% higher than the previous year.   But one might expect that arabica coffee market share within world export volumes shall recover in the coming months, with the larger New Mexican and Central American crops now coming into play.  

The arbitrage between the markets has broadened on Friday to register this at 91.01 usc/Lb., while this equates to a relatively attractive 50.55% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,748 bags on Friday, to register these stocks at 2,288,526 bags.   There was meanwhile on change to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,398 bags.

The commodity markets experienced another mixed day on Friday and while the Oil markets maintained their downside track, there was support within selected markets from the marginally softer U.S. dollar.  The Natural Gas, New York arabica Coffee, Sugar, Cotton, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Cocoa, London robusta Coffee, Copper, Orange Juice and Wheat markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% higher; to see this Index registered at 448.15.   The day starts with the U.S. Dollar steady and trading at 1.516 to Sterling and 1.186 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 47.85 per barrel.

The London market started the day yesterday with a degree of buoyancy and followed by a firmer start for the New York market and to see both markets heading into the afternoon upon a thinly traded positive track.  The markets built upon these gains during the afternoon, but to see pressure coming upon both markets and to force the London market back into negative territory, but with the New York market maintaining a more modest positive stance.   The London market continued to end the day on a marginally softer note but having recovered 57.1% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 45.3% of the earlier gains of the day intact.    The positive end for the week for the New York market and with no significant contradictory reports in play to counter the supportive weather reports from Brazil is likely to inspire a steady to buoyant start for the markets for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1933 – 2                                                           
MAR     1963 – 6                                                 MAR     180.05 + 3.15
MAY     1990 – 3                                                 MAY     182.70 + 3.15
JUL      2010 – 3                                                  JUL      185.15 + 3.10
SEP      2026 – 3                                                 SEP      187.15 + 3.20
NOV     2034 – 3                                                  DEC     189.95 + 3.35
JAN      2041 – 3                                                 MAR     191.80 + 3.40
MAR     2056 – 3                                                 MAY     192.60 + 3.50
MAY     2071 – 3                                                  JUL     192.70 + 3.55
JUL      2078 – 3                                                  SEP     192.55 + 3.75

9th. January, 2015.
It is with apologies for the typo that we correct yesterday’s first paragraph which should have read December and not November:  The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of December was 29,000 bags or 2.6% lower than the same month in the previous year, at a total of 1,086,000 bags.   This contributes to the countries cumulative production for the first three months of the present October 2014 to September 2015 coffee year to be 16,000 bags or 0.49% higher than the same period in the previous coffee year, a total of 3,302,000 bags.

The year has started with a week of scattered showers but below average rainfall for the main arabica coffee districts in Brazil, which has with the memories of last year’s partial drought over these districts for the first two months of the year, dampened the bearish spirits of the speculative and fund sectors of the New York market.   It is however noted that while lower than normal for this time of the year rainfall is being experienced that it is nevertheless not the same dry pattern as last year, but with forecasts now indicating modest rather than normal rains for probably the rest of the month, it is a factor that is proving to be supportive for the market.  The weather is however never completely predictable and the question is what might happen, should there be some good rain reports from Brazil in the coming weeks, which would be a factor to immediately take the wind out of the sails of the bulls in the market.  Thus with this in mind, one can see a degree of caution and nervousness within the presently erratic in nature New York market.

Meanwhile following the past months of relatively aggressive internal market selling in Brazil that has been assisted by the weakening Brazil real to the U.S. dollar, there is now a degree of price resistance being shown within the market and the prices being paid by exporters for arabica coffees to cover their forward commitments are being forced higher relative to the reference prices of the New York market.  Likewise the differentials for new business are starting to tighten, but Brazil arabica coffees still remain a relatively affordable coffee for the consumer markets.

The situation in Central America and Colombia with new crop coffees flowing into the market is similarly tighter than it has been over the past month, with a degree of price resistance being shown within the internal markets and differentials for new business tending to tighten.  While with consumer market industries having returned from the holidays and chasing short term fill in coffee supply commitments, there is apparently sufficient short term support for the overall relatively firmer prices for these new crop washed arabica coffees.   But volumes of physical business are relatively thin and with both sides seemingly playing a waiting game, which is a scenario that shall seemingly only change as and when there is certainty over the direction that outcome of the Brazil weather shall set for the longer term market.   

The U.S. Climate Prediction Centre has announced that they now foresee a 50% to 60% chance of a mild El Nino phenomenon developing within the Pacific Ocean within the next couple of months, but the emphasis on mild should be noted.   It really is only a strong El Nino that one would need to consider to be a real concern in terms of the Pacific rim producing countries, as modestly drier weather would actually be beneficial to counter Roya of Leaf Rust in Colombia and Peru and so long as there is still sufficient rainfall, the coffee crops from Colombia, Peru and Indonesia should not suffer unduly.   While one must keep in mind that on the longer range, an El Nino is usually a positive factor for rains in South East Brazil.
     
The arbitrage between the markets has broadened yesterday to register this at 87.59 usc/Lb., while this equates to a relatively attractive 49.51% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,595 bags yesterday, to register these stocks at 2,290,274 bags.   There was meanwhile a smaller in volume 680 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,398 bags.

The commodity markets experienced another mixed day yesterday, but with many markets experiencing concerns over the lack of positive economic coming from the presently struggling Euro zone bloc and the relatively strong U.S. dollar.  The U.S. Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper and Orange Juice markets ended the day on a firmer track, while the Brent Oil, London robusta Coffee, Wheat, Corn, Soybean, Gold, Silver and Platinum markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.09% lower; to see this Index registered at 447.40.   The day starts with the U.S. Dollar steady and trading at 1.509 to Sterling and 1.181 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 49.85 per barrel.

The London market started the day yesterday taking a softer stance, but with the New York market starting the day on a firmer note.    This remained the track for the day into the afternoon’s trade, with London remaining marginally softer and the New York market on the back of mostly chart based fund and speculative trade, retaining its buoyancy.   The New York market stuttered very briefly, but very quickly returned to an upside track and with the London market moving back up to par but to soon dip back into negative territory.  The London market continued to end the day on a softer note and with 50% of the losses of the day intact, while the New York market ended the day on a positive note but with only 25.3% of the earlier gains of the day intact.  This mixed close and the inability of the more volatile New York market to hold onto most of its gains is likely to see a very cautious and probably steady start to thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1935 – 26                                                         
MAR     1969 – 11                                               MAR     176.90 + 1.85
MAY     1993 – 10                                               MAY     179.55 + 1.80
JUL      2013 – 8                                                  JUL      182.05 + 1.85
SEP      2029 – 8                                                 SEP      183.95 + 1.70
NOV     2037 – 9                                                  DEC     186.60 + 1.50
JAN      2044 – 9                                                 MAR     188.40 + 1.45
MAR     2059 – 9                                                 MAY     189.10 + 1.45
MAY     2074 – 9                                                  JUL      189.15 + 1.45
JUL      2081 – 9                                                  SEP      188.80 + 1.20

8th. January, 2015.
The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of November was 29,000 bags or 2.6% lower than the same month in the previous year, at a total of 1,086,000 bags.   This contributes to the countries cumulative production for the first three months of the present October 2014 to September 2015 coffee year to be 16,000 bags or 0.49% higher than the same period in the previous coffee year, a total of 3,302,000 bags.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of December were 51,000 bags or 5% higher than the same month in the previous year, at a total of 1,061,000 bags.    This contributes to the countries cumulative exports for the first three months of the present October 2014 to September 2015 coffee year to being 56,000 bags or 1.87% higher than the same period in the previous coffee year, at a total of 3,049,000 bags.

Meanwhile following a coffee production of 12,128,400 bags for the October 2013 to September 2014 coffee year and an export performance of 10,960,000 for the same coffee year, there are many forecasts already talking of production to grow slightly for this present October 2014 to September 2015 coffee year, with longer term forecasts that are based on a large percentage of young coffee trees that are still to come to maturity, to see production exceed 14 million bags per coffee year within the next two to three years.    This is however whilst being a very realistic forecast, is subject to weather conditions over the coming years an while there have been many forecasts for a mild El Nino to start early this year, this is so far not foreseen to be threatening to Colombian coffee production and for the present, the longer term production target remains in place.

More significant in terms of Latin American fine washed arabica coffee production and supply for the present coffee year and the year to follow, is that while Colombia is steaming along with good supply, the Mexicans and Central Americans are forecasting an overall 1.4 million bags increase for their new crop that is presently in harvest.   This to be followed by an approximate 0.7 million bags increase in production from Peru, whose new crop shall start to come into play by May this year and therefore, the consumer markets can remain confident in longer term Latin American fine washed arabica coffee supply.

More significant perhaps is the fact that these fine washed arabica coffees are dominant only within the traditional higher value Western European and North American consumer markets, with similar support from the Japanese and Australasian markets, which are markets that are not overall registering any significant growth in consumption.  Therefore the rise in supply is perhaps moving into a marginal surplus situation for these coffees as the year progresses and one would think that unless there are some unforeseen climatic or disease issues developing, that one can expect steady growth in the alternative market for these coffees within the Certified coffee stocks of the New York market during the second half of this year.   This factor could in time prove to be somewhat negative for sentiment within the New York market which is supported for the present, but the caution over the prospects for the forthcoming mid-year new Brazil mostly natural arabica crop.    
     
The arbitrage between the markets has narrowed yesterday to register this at 85.24 usc/Lb., while this equates to a relatively attractive 48.69% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,825 bags yesterday, to register these stocks at 2,298,694 bags.   There was meanwhile a smaller in volume 4,543 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 25,078 bags.

The commodity markets experienced another mixed day yesterday, with the majority of the markets remaining within a narrow trading range with the exception of the broad trading range experienced within the coffee markets.   The U.S. Oil, Cocoa, London robusta Coffee, Orange Juice, Corn and Platinum markets ended the day with buoyancy and the New York arabica Coffee and Cotton markets were steady, while the Brent Oil, Natural Gas, Sugar, Copper, Wheat, Soybean, Gold and Silver markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.38% lower; to see this Index registered at 447,80.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.509 to Sterling and 1.182 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 49.85 per barrel.

The London market started the day yesterday on near to steady note, which was followed by early buoyancy for the New York market and very much a repeat of the previous day’s trade and with both markets building on their gains to take a positive track into the afternoons trade.     As the afternoon progressed the Americans entered the field of play and with the New York market triggering buy stops to accentuate the gains and with the London market following suit, with similarly good added value.   As the afternoon progressed however the New York market that at one stage was 7.95 usc/Lb. higher for the day hit a period of exhaustion and started to come under seemingly producer selling and speculative profit taking pressure and steadily shed all of the gains and move back into negative territory, with the London market that had posted gains of $ 37.00 for the day, lost some weight and moved back into modest positive territory.   The New York market did however steady and move to trade around par and remain either side of par for the rest of the day of relatively high volume trade, while the London market shrugged off a late in the day dip towards par to take a positive track to the close.   The London market ended the day on a positive note and with 75.7% of the earlier gains of the day intact, while the New York market ended the day on steady note and with only 1.9% of the gains of the day intact.   This close and with signs of a degree of exhaustion being seen within the more volatile New York market which has absorbed high volumes of overall supportive trade over the past few days, might see the markets due for a cautiously steady start to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1961 + 27                                                         
MAR     1980 + 28                                               MAR     175.05 + 0.15
MAY     2003 + 28                                               MAY     177.75 + 0.20
JUL      2021 + 27                                                JUL      180.20 + 0.30
SEP      2037 + 27                                               SEP      182.25 + 0.30
NOV     2046 + 26                                                DEC     185.10 + 0.25
JAN      2053 + 26                                               MAR     186.95 + 0.25
MAR     2068 + 26                                               MAY     187.65 + 0.15
MAY     2083 + 26                                                JUL     187.70 + 0.15
JUL      2090 + 26                                                SEP     187.60 + 0.10

7th. January, 2015.
The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of December were 40,514 bags or 15.86% higher than the same month in the previous year, at a total of 295,921 bags.   This follows a positive start for the previous months and the cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year are 88,014 bags or 26.34% higher than the same period in the previous coffee year, at a total of 422,166 bags.

This improved export performance from Honduras is partly related to the countries forecasts for a significantly larger new crop which is presently in harvest, following the problems over the past two years that came with the Roya or Leaf Rust infestation, which is now under control and is encouraging farmers to become active sellers early on during the harvest.   But more influential in the increased volumes of exports early on during this new coffee year has been the practical stance that the farmers in Honduras have taken in their willingness to follow the recent negative track of the reference prices of the New York market and the competition from the willing selling activity out of Colombia.   As against most of their neighbours in Mexico and Central America who have continued to show a degree of price resistance and have to a degree and at expense of market share, partially priced themselves out of the market.

The general trade and industry forecasts within Vietnam are indicating that with forward contract commitments in hand that the countries coffee exports of mostly robusta coffees during the month of January shall be approximately 25% higher than last month, at around 2.5 million bags.   This would in terms of the previous year, be marginally higher than the 2.383 million bags exported in January last year.

The problem for exporters in Vietnam is now thought that with still to cover forward contract export commitments still to cover, that there is internal market price resistance being experienced, as farmers remain unconvinced in the present value of the reference prices of the London market.   This is a factor that is also slowing the volumes of new business, as the consumer market buyers try to resist the corresponding higher differentials being demanded for new business.  But this is no doubt a short term scenario and with roasters back at work post the holidays and the week long Tet New Year holiday season only five and a half weeks to the fore, one would expect that internal market selling and export activity shall pick up steam within the next couple of weeks.

The New York market defied the many bearish statements that have been voiced by a host of commodity investment houses and advisors as it did the charts over the past few days, as the market rather than taking a flat to softer stance, once again seemingly took cognisance of the weather reports out of Brazil that indicated caution over the prospects for January.    This factor more than likely to come to the fore with the predictable official low new crop forecasts that shall shortly start coming to the market, where it is presently Brazil alone out of the main producer blocs, where there is any concern over medium to longer term coffee supply.  

This sudden surge in the reference prices of the New York market that have risen by 4.98% for the year so far and with the London market following with a 1.88% recovery, has been something of a shock for the consumer markets and one might think that it has influenced a degree of precautionary cover being taken by consumer industries.    A factor that might have assisted to buoy the markets, but the question is if it does rain as had been forecasted for the second half of January over the main coffee districts in Brazil, if the recovery can be sustained over the longer term.    

The arbitrage between the markets has broadened yesterday to register this at 86.36 usc/Lb., while this equates to a relatively attractive 49.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 12,730 bags yesterday, to register these stocks at 2,298,694 bags.   There was meanwhile a larger in volume 13,990 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 20,535 bags.

The commodity markets experienced another mixed day yesterday, with the Oil and Coffee markets once again being major movers in either direction and with the Sugar market also taking a sharp positive move.   The Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Coffee and Sugar markets had a strong days trade, while the Natural Gas, Cocoa, Cotton, Copper, Orange Juice, Wheat and Corn markets had a softer days trade and the Oil markets took another sharp dip for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.07% higher; to see this Index registered at 449.50.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.514 to Sterling and 1.188 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 49.25 per barrel.

The London market started the day yesterday on a softer note, but followed by a degree of follow through buoyancy for the New York market.  The London market soon recovered and joined the New York market in positive territory and to see both markets take a positive track into the afternoon’s trade, but with volumes remaining very thin.   This set a positive platform for the markets and volumes picked up as the afternoon progressed and with further buy stops being triggered, to see both markets add to their already impressive gains.  The London market continued to end the day on a firm note and with 93.2% of the gains of the day intact, while the New York market likewise ended the day on a firm note and with 93.2% of the gains of the day intact.    This very positive close could be seen to be supportive for sentiment, but there might be the possibility of a degree of exhaustion setting in and one might expect to see a degree of corrective profit taking and producer fixation coming into play for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1934 + 45                                                         
MAR     1952 + 41                                               MAR     174.90 + 6.80
MAY     1975 + 41                                               MAY     177.55 + 6.80
JUL      1994 + 38                                                JUL      179.90 + 6.75
SEP      2010 + 35                                               SEP      181.95 + 6.55
NOV     2020 + 33                                                DEC     184.85 + 6.25
JAN      2027 + 33                                               MAR     186.70 + 5.80
MAR     2042 + 33                                               MAY     187.50 + 5.65
MAY     2057 + 33                                                JUL      187.55 + 5.30
JUL      2064 + 33                                                SEP      187.50 + 5.20

6th. January, 2015.
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 11.47% in the week of trade leading up to Tuesday 30th. December;  to register a net long position of 24,063 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 0.57%, to register a net long on the day of 40,041 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 23.87%, to register a net long of 13,720 lots on the day.   This net long position that is the equivalent of 3,889,559 bags has most likely been marginally increased over the period of mixed but overall positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 9.42% in the week of trade leading up to Tuesday 30th. December, to see this short sold position turned into a net long that was registered at 11,074 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 1,845,667 bags has most likely been little changed during the period of mixed trade that has since followed.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of December were 11,589 bags or 17.89% lower than the same month in the previous year, at a total of 53,195 bags.   This slow start to the new coffee year has contributed to the countries cumulative exports for the first three months of the present October 2014 to September 2015 coffee year to being 30,542 bags or 21.01% lower than the same period in the previous coffee year, at a total of 114,858 bags.

The preliminary December coffee export figure from Brazil has seen the countries coffee exports for the month to have been 520,000 bags or 17.11% higher than the same month in the previous year, at a total of 3,040,000 bags.   This significant number is despite the many concerns over tightening Brazil arabica coffee supply for this new year and does to a degree in terms of internal market selling to support such volumes, further question the farmers belief in a new crop that shall be a low as many have been forecasting.

Meanwhile the year has started in Brazil with a relatively dry week over the main coffee districts, but with forecasts for the rains to gain in intensity by the coming weekend and therefore, indicating less chance for a repeat of last year’s partial drought conditions during the month of January.   But there are still some forecasts that look to the past week of more modest rains that shall continue this week, with a word of caution that there is still no certainty on the quality of rains for the rest of the month.   These reports assisted to fuel a degree of caution on the part of the speculative sector within the New York market, following the past few weeks of liquidation of their long positions and assisting to buoy the market in yesterday’s trade.

The Vietnam Cocoa and Coffee Association have forecasted that the country shall most probably export 3.3 million bags less coffee during this year; following last year’s impressive export performance of close to 26.67 million bags.    This forecast is based on the associations forecast for the close to completed new crop of mostly robusta coffees having been 20% to 25% lower than the previous 2013/2014 crop.   It is however a new crop forecast that is very much contrary to the general trade and industry forecasts, which only foresee the possibility of a slight dip in production from the new crop and therefore, this market supportive forecast is most likely to be largely ignored.

Meanwhile the sharp drop for the coffee markets on Friday has not been followed within the internal markets of the majority of the producer countries, with price resistance being common to most producers.   This has had the effect of firming the asking differentials for new business, which is shall most probably result in erratic physical trade for this week.  

The arbitrage between the markets has broadened yesterday to register this at 81.42 usc/Lb., while this equates to a relatively attractive 48.43% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,832 bags yesterday, to register these stocks at 2,311,424 bags.   There was meanwhile a larger in volume 2,015 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,545 bags.

The commodity markets experienced a mixed day yesterday, with many markets making sharp moves for the day and particularly so the Oil markets on the negative side and the Coffee and Soybean markets on the positive side of the day.   The Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets had a day of buoyancy and the Coffee and Soybean markets were firm for the day, while the Natural Gas and Copper markets had a softer day and the Oil markets registered sharp losses for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.39% higher; to see this Index registered at 449.18.   The day starts with the U.S. Dollar near to steady and trading at 1.526 to Sterling and 1.196 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 51.65 per barrel.

The London market started the day yesterday showing modest buoyancy and followed by a steady to soft start for the New York market, but with this latter market soon recovering and moving back to join the London market to take a modestly positive track into the early afternoon’s trade.     The New York market with the Americans entering the field of play and volumes picking up and buy stops being triggered to add some more value as the afternoon progressed and with the London market following suit, to add to the earlier gains.   The London market continued to end the day on a positive note and with 88.7% of the gains of the day intact, while the New York market ended the day on a firm note and with 92.8% of the gains of the day intact.   This close is somewhat supportive in nature but was based on somewhat questionable weather related fundamental news and one might expect to see a degree of caution and possibly a lack of follow through and only a steady to soft start for early trade today, against the firm prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1889 + 51                                                         
MAR     1911 + 47                                               MAR     168.10 + 7.05
MAY     1934 + 45                                               MAY     170.75 + 7.00
JUL      1956 + 45                                                JUL      173.15 + 6.80
SEP      1975 + 45                                               SEP      175.40 + 6.70
NOV     1987 + 43                                                DEC     178.60 + 6.60
JAN      1994 + 41                                               MAR     180.90 + 6.55
MAR     2009 + 45                                               MAY     181.85 + 6.45
MAY     2024 + 49                                                JUL     182.25 + 6.30
JUL      2031 + 49                                                SEP     182.30 + 6.30

5th. January, 2015.
It was not such a happy New Year for the coffee producers on Friday, with the markets lacking underlying buying support from the consumer industry players of which many were still on holiday and taking an extended long weekend holiday, being very much left in the hands of negative fund activity and the speculative chartists within the markets who pressured both markets lower.    One might however think that with the consumer market industries coming back to work today that there might be some advantageous corrective price fixation buying coming into play, to bring a degree of buoyancy for the markets that have suffered from fund and speculative liquidation.  But this might not be enough to counter the negative effects of the rising value of the U.S. dollar, which is hanging over the markets.

In terms of the producers there has been little news of late and despite the steady slide in the value of the international coffee markets over the past few weeks, which is a clear indication that there actually is nothing in the way of supportive fundamental news that the producers can presently bring to the markets, to try to manipulate some degree of support.    Thus one can foresee that it is only the prospects for the new Brazil crop that starts coming into play during the second quarter of this year that might have some degree of positive influence upon the markets, but the fact that this new crop has already suffered to some degree from the partial drought within the main arabica coffee districts in Brazil early last year and from a delayed start to the now normal rain season has already been much reported and been somewhat exhausted in terms of its influence upon market sentiment.

Therefore the Brazil factor is now more related to the quality of the rains within the country’s main arabica coffee districts for the first quarter of this year, as if they prove to be fair to good and even though one can anticipate some low official new crop forecasts to be reported, the prospects for a relatively modest new Brazil crop is unlikely to provide much of a boost the value of the markets.   However should there be some hiccups in these rains and with the memories of last year’s weather problems still very fresh, there would most certainly be a degree of speculative support coming back to the markets.    This is however in terms of the weather forecasts so far, not foreseen to be likely to occur and for the present market sentiment remains flat.

The producers are gaining some degree of relief from the softening nature of the coffee markets at present, from the renewed muscle of the U.S. dollar that has taken some of the bite out of the lower prices in terms of the value of sales in domestic currency terms.   However the fall in prices has been far more dramatic than the rising value of the U.S. dollar and for some producers and with the steady inflation in production costs, the prices are starting to become a critical factor and one of justifiable concern.   This is very much the case for Mexico and the Central Americans who have their new crops presently being harvested and with these new crops overall larger than last and therefore not threatening tight supply for the medium to longer term, there will be no relief from the softer reference prices of the New York market, in terms of hardening positive differentials and rather, one might expect the competition to sell to result in the differentials more likely to soften in the coming months.     

The arbitrage between the markets has narrowed on Friday to register this at 76.50 usc/Lb., while this equates to a relatively attractive 47.50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 675 bags on Friday, to register these stocks at 2,313,256 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,530 bags.

The commodity markets experienced a mixed day on Friday but one that was somewhat erratic in terms of thin partial holiday atmosphere trade within many markets, while the overall sentiment within the markets in general is under some pressure from poor economic figures coming out of Europe and the slowing of growth from China.   While with the U.S. dollar where there is speculation for rising interest rates in the second half of the year gaining in strength, the firmer dollar is bringing further negative pressure within many markets.  The Natural Gas, Cocoa, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Cotton, Copper, Wheat, Corn and Soybean markets had a softer day and the Sugar and Coffee markets had a very soft day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% higher; to see this Index registered at 447.44.   The day starts with the U.S. Dollar showing further muscle and buoyancy and trading at 1.528 to Sterling and 1.193 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 54.10 per barrel.

The London market started the day on Friday taking a marginally softer start in thin and lacklustre trade, while the New York market had a delayed start and opened the day on thinly traded steady note.    This was however short lived and the New York market almost immediately moved back to join the London market in negative territory and with both markets extending their losses, as the afternoon progressed.    This decline triggered stop loss sell stop and accentuated the losses, to see the markets lose more weight late in the day and to see the higher profile and more volatile New York market set new five and half month lows.   The London market continued to end the day on a soft note and with 89.7% of the earlier losses of the day intact, while the New York market ended the day on a likewise soft note and with 86.7% of the earlier losses of the day intact.   This soft close might well attract some supportive price fixation and a degree of buoyancy for early trade today, but with the strong dollar in play one might not expect too much of a correction against soft prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1838 – 55                                                         
MAR     1864 – 52                                               MAR     161.05 – 5.55
MAY     1889 – 50                                               MAY     163.75 – 5.55
JUL      1911 – 50                                                JUL      166.35 – 5.55
SEP      1930 – 50                                               SEP      168.70 – 5.50
NOV     1944 – 44                                                DEC     172.00 – 5.25
JAN      1953 – 43                                               MAR     174.35 – 4.55
MAR     1964 – 43                                               MAY     175.40 – 3.70
MAY     1975 – 43                                                JUL     175.95 – 2.90
JUL      1982 – 43                                                SEP     176.00 – 2.45

2nd. January, 2015.
With the month of December over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported that the islands robusta coffee exports for the month of December were 108,148 bags or 28.93% lower than the same month last year, at a total of 265,614 bags.   This follows a relatively dismal performance in October and November and therefore the cumulative robusta exports from Sumatra for the first three months of the present new October 2014 to September 2015 coffee year are 1,123,071 bags or 56.96% lower than the same period in the previous coffee year, at a total of 848,614 bags.

This relatively poor performance on the part of robusta coffee supply from Sumatra is of course related to a relatively poor weather related crop last year and one can expect that for the short term and ahead of the new crop that starts to come into play during the second quarter of this year, that the figures shall continue to be relatively modest for the next four to five months.   However the weather conditions have been much improved and the prospects are for a much improved new crop, which should see the Sumatran robusta coffee exports start to pick up and become more aggressive by the third quarter this year and therefore, the last quarter of the present coffee year.

The green coffee exports from India for 2014 have been reported to have been a modest 28,017 bags or 0.69% lower than the previous year, at a total of 4,053,733 bags.   This dip in exports for last year is significantly lower than the 5% drop that had been forecasted by the Coffee Exporters Association and with a larger new crop now starting, one might expect that the exports for 2015 shall be somewhat larger.

This forecasted increase in the new Indian crop comes to the market along with forecasts for larger new crops from Mexico, Central America, Peru, Colombia and Indonesia and therefore with the new Vietnam crop forecasted to be only marginally lower, the only factor of concern in terms of longer term coffee supply, remains with the question over the prospects for the next Brazil arabica coffee crop.  However with the fair to good rains that have been experienced over November and December last year in the main arabica coffee districts in Brazil and with more rain expected for the second half of this month, the prospects for the new Brazil arabica coffee crop is presently having a reduced influence upon the speculative sector of the New York market.

There shall however be a close watch upon the Brazil weather reports and forecasts as this month progresses and there can be no doubt after the experiences of the partial drought early last year, that should these rains not be forthcoming, that the market would experiences a sharp rally.   In this respect, one might expect to see some precautionary roaster cover being taken in the coming weeks, which could prove to be a supportive factor for the markets and thus despite the negative nature of the charts upon the markets, limit the short term downside potential for the markets.

The Reuters Equal Weight Continuous Commodity index which peaked at 556.80 in June 2014 having started at 508.06 at the end of 2013, has ended 2014 11.98% lower for the year, at a relatively dismal 447.21, with the Oil markets having had a strong influence upon this dip.  Meanwhile bucking to a degree this negative performance for the macro commodity index, the coffee markets while coming off their Brazil drought inspired highs earlier in 2014, did nevertheless end the year with the London market 13.84% higher and the New York market 58.6% higher.   Thus in terms of weighted value within many fund portfolios the share held by coffee has increased and one might think that there shall be some funds that might look to correct this share, which could be a factor that might blunt the positive influence of the funds within the coffee markets for the short term.

The arbitrage between the markets has broadened on Wednesday to register this at 79.69 usc/Lb., while this equates to a relatively attractive 47.83% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,306 bags on Wednesday, to register these stocks at 2,313,931 bags.   There was meanwhile a similar in volume 4,750 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,530 bags.

These stocks, which have been negatively affected through the year by the tighter supply of Mexican, Central American and Peru coffees which suffered from the previous year’s devastating Roya or Leaf Rust infestation, with the stocks ending the year 14.59% lower for the year.    The dominance of these fine washed arabica coffee producers upon the levels of these stocks clearly illustrated, as they still account for 1,779,405 bags or 76.9% of the stocks at present.

The commodity markets experienced a dismal end to the year on Wednesday and with the exception of the Coffee markets, it was very much a minus day.   The Coffee markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a soft day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.52% lower; to see this Index registered at 447.41.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.554 to Sterling and 1.206 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 56.15 per barrel.

The London market started the day on Wednesday taking a softer track, while the New York market, while the New York market had a hesitantly steady start.    However later in the day and within an environment of thin pre-holiday trade, both markets bucked the negative influences of the negative macro commodity index and posted a recovery, with the thin trade assisting for the New York market to trigger stop loss buy stops and experience something of a short term rally.   The London market continued to end the day on a positive note and with 76.9% of the gains of the day intact, while the New York market likewise ended the day on a positive note and with 27.7% of the gains of the day intact.   This close while modestly supportive for sentiment is unlikely to do much for direction today, as many players have taken a long weekend and one might expect to see a thinly traded near to steady start for the markets for early trade today, against the yearend prices set on Wednesday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1893 + 22                                                         
MAR     1916 + 10                                               MAR     166.60 + 1.80
MAY     1939 + 9                                                 MAY     169.30 + 1.80
JUL      1961 + 11                                                JUL      171.90 + 1.80
SEP      1980 + 11                                               SEP      174.20 + 1.80
NOV     1988 + 9                                                  DEC     177.25 + 1.80
JAN      1996 + 9                                                 MAR     178.90 + 1.60
MAR     2007 + 9                                                 MAY     179.10 + 1.60
MAY     2018 + 9                                                  JUL     178.85 + 1.55
JUL      2025 + 9                                                  SEP     178.45 + 1.55

31st. December, 2014.
Firstly we apologise for an error in the report yesterday in terms of the Commitment of Traders report for the London market which referred to a non-existent long position, as the report should read:  The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 23.4% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position registered at 12,226 Lots, on the day.  This speculative net short position within the London market which is the equivalent of a relatively modest 2,037,667 bags has most likely been marginally decreased during the period of overall negative trade that has since followed.

The Latest Commitment of Traders report for the New York arabica coffee market has seen the speculative sector of this market decrease their net short sold position within this market by 17.77% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position registered at 18,021 Lots, on the day.   This net short position that is the equivalent of 5,108,874 bags has most likely been further reduced, over the period of negative trade that has since followed.

The physical coffee trade with many players already moving into the New Year holiday remains thin and lacklustre for the present, while with the majority of the industries extending tomorrows New Year Day holiday for the markets into a long weekend, there is unlikely to be much activity until later next week.   Thus the year is ending off on a quiet note and with little in the way of positive fundamental news in play for the markets, to inspire strong industry support.

The arbitrage between the markets has narrowed yesterday to register this at 78.35 usc/Lb., while this equates to a relatively attractive 47.54% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,369 bags yesterday, to register these stocks at 2,309,625 bags.   There was meanwhile a similar in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,280 bags.

The commodity markets were mixed yesterday in mostly thin trade, with most activity more than likely being related to the squaring off positions ahead of the year end.    The U.S. Oil, Sugar, Cocoa, London robusta Coffee, Copper, Soybean, Gold, Silver and Platinum markets showed buoyancy for the day and the Cotton market was steady, while the Brent Oil, Natural Gas, New York arabica coffee, Orange Juice, Wheat and Corn markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.07% higher; to see this Index registered at 454.30.   The day starts with the U.S. Dollar steady and trading at 1.556 to Sterling and 1.216 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 55.70 per barrel.

The London market started the day yesterday with a degree of buoyancy, while the New York market kicked off on a near to steady note, which remained the track into early afternoon trade.  However as the afternoon continued and within an environment of thin trade the New York market recovered and moved back into modest positive territory, while the London market extended its gains of the day.   This positive nature of the New York market was however short term and the market drifted back to marginally below par, while the London market lost some of its earlier gains.  This decline in the markets was however reversed as the afternoon progressed, with the New York market moving into positive territory and the London market extending its gains of the day.  The London market continued on a positive note and with a late in the day further spike in value and to end the day on a positive note with 79.5% of the gains of the day intact, while the New York market following a further dip and recovery dipped again late in the day of thin trade, to end the day on a modestly softer note and with 53.8% of the losses of the day intact.  This mixed close but with the relatively good and positive activity in London being mostly related to switch trading does not provide much inspiration and one might expect to see little better than a cautiously steady start for the New York market and a steady to soft start for the London market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1871 + 36                                                         
MAR     1906 + 31                                               MAR    164.80 – 0.35
MAY     1930 + 31                                               MAY    167.50 – 0.30
JUL      1950 + 31                                                JUL     170.10 – 0.25
SEP      1969 + 31                                               SEP     172.40 – 0.25
NOV     1979 + 29                                                DEC    175.45 – 0.20
JAN      1987 + 29                                               MAR    177.30 – 0.35
MAR     1998 + 30                                               MAY    177.50 – 0.65
MAY     2009 + 32                                                JUL    177.30 – 0.85
JUL      2016 + 32                                                SEP    176.90 – 1.35
The Directors and Staff of I & M Smith (Pty) Ltd., take this opportunity to wish you an exciting New Year’s Eve Celebration and Health and Prosperity for the coming year.  While making note that we take some special pleasure in entering our Centenary Year, which is related to the 15th. October 1915, that was the day that the brothers Smith started the company and its trading activities.


30th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 23.4% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position turned into a net long that was registered at 12,226 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,037,667 bags has most likely been marginally decreased during the period of overall negative trade that has since followed.

The National Coffee Association of Peru with the coffee cherries presently developing towards their new harvest that shall start in the second quarter of next year, have announced that the countries coffee production of fine washed arabica coffees in 2015 shall be approximately 40% higher than this year’s crop, at a total of 4.5 million bags.   This recovery from their Roya or Leaf Rust damaged 2014 crop is seen to be due to the investment that the countries farmers have put in over the year, in terms of improved farm fertiliser inputs and disease controls.

This report from Peru comes in on top of the forecasts for a significantly overall larger new crop from Mexico and Central America and likewise, steadily rising coffee supply from Colombia, to remove any concerns that the consumer markets might have, over medium to longer term fine washed arabica coffee supply.    The prospects of this taking some of the wind out of the sails of the speculative bulls within the New York market, who remain with only the questions over the prospects for the new 2015 Brazil natural arabica crop, as any form of support factor.

In terms of this Brazil issue and following a few weeks delayed by since then a normal rain season over November and December, the latest forecasts are for hot and dry conditions to return to the arabica coffee districts for the first two weeks of January.    This is however not a matter of concern as with the recent two months of rains having assisted to build up ground water retention levels within the farms, a spell of hot and dry weather will assist towards the development of the new crop.   

However one might suggest that with the memories of the partial drought over the first two months of this year that was experienced within the main arabica coffee districts, that should more and good rain coverage not occur for the second half of January, that is will more quickly than this year, fuel further speculative concerns over the prospects for the new 2015 crop.  Thus one can expect that by the second week of January, the short to medium term weather forecasts in Brazil shall provide a degree of volatility within the presently softening New York market.   In the meantime, the memories of this year and the uncertainty of the Brazil weather for the coming two to three months, might assist to limit the further downside for the presently softer coffee markets.

The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of November were 43,785 bags or 16.6% lower than the same month last year, at a total of 219,948 bags.   This follows a better performance during the previous month and therefore, the cumulative exports for the first two months of the present October 2014 to September 2015 coffee year are only 24,899 bags or 5.25% lower than the same period in the previous coffee year, at a total of 449,386 bags.     In terms of value however the value of the country’s coffee exports for the first two months of the present October 2014 to September 2015 coffee year is US$ 10,774,956 or 21.82% higher than the same period in the previous coffee year, to total US$ 60,162,826.

The arbitrage between the markets has narrowed yesterday to register this at 80.10 usc/Lb., while this equates to a relatively attractive 48.50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,885 bags yesterday, to register these stocks at 2,310,994 bags.   There was meanwhile a larger in volume 7,040 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 8,000 bags.

The commodity markets remained under pressure yesterday and with many markets not assisted by the news that many hedge funds have not fared well this year, which follows the closing of many funds during the course of the year.  Likewise many of the markets came under pressure, from some renewed muscle for the U.S. dollar.  The Cocoa market did however have a positive day and the Orange Juice, Wheat, Corn and Soybean markets were relatively steady, while the Oil, Natural Gas, Sugar, Coffee, Copper, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.27% lower; to see this Index registered at 453.99.   The day starts with the U.S. Dollar steady and trading at 1.551 to Sterling and 1.213 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 56.25 per barrel.

The London market started the day yesterday on a steady note, while the New York market lost a little weight and within an environment of thin and lacklustre trade for both markets.   This was the track into early afternoon’s trade, but with the New York market recovering to trade around par and London slipping back to likewise trade within a narrow band around par.   The markets did however both come under further pressure as the afternoon progressed and in continued thin trade, to move into more significant negative territory.  The markets maintained their downside track for the rest of the day and with the London market ending on a soft note and with 90.3% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 87.3% of the earlier losses of the day intact.   This soft close once again does little to inspire confidence but one might expect some degree of cautious corrective buoyancy in thin trade for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1835 – 29                                                         
MAR     1875 – 28                                               MAR    165.15 – 3.45
MAY     1899 – 25                                               MAY    167.80 – 3.45
JUL      1919 – 25                                                JUL     170.35 – 3.40
SEP      1938 – 26                                               SEP     172.65 – 3.35
NOV     1950 – 25                                                DEC    175.65 – 3.20
JAN      1958 – 24                                               MAR    177.65 – 2.80
MAR     1968 – 23                                               MAY    178.15 – 2.50
MAY     1977 – 23                                                JUL     178.15 – 2.45
JUL      1984 – 23                                                SEP     178.25 – 2.30

29th. December, 2014.
The General Statistics Office in Vietnam and with the evidence of export registrations in hand, have estimated that the countries coffee exports for the mostly robusta coffees for December shall be in the region of 2 million bags, which is at the lower end of the private domestic trade estimates for exports of between 2 million and 2.5 million bags.   Should this figure of 2 million bags prove to be correct, the General Statistics Office say that this would see the Vietnam coffee exports for the 2014 to be 29.7% higher than the previous year, to end this year with a very impressive total of 28.17 million bags.  

This rise in Vietnam coffee exports which is related to mostly robusta coffees has not however resulted in a corresponding 6.4 million bags rise increase in the levels of the certified robusta coffee stocks held against the London market, which have only increased by approximately 1.5 million bags during this year.   With the increase in volumes of exports partially related to the slower export performance of robusta coffees out of Indonesia this year, but also an indication of the rising share that robusta coffees are taking within the consumer markets.

On might comment that while there is no doubt that with the growth in world coffee consumption weighted towards the more price sensitive new market consumption that is very much instant coffee and robusta in nature, that there is also a steady growth in market share within the higher value traditional consumer markets in Western Europe, North America, Japan and Australasia.   These latter markets and especially the former two and the latter Australasia experiencing a significant increase in the market share being taken up by the portion control new capsule machines and with the extraction process of these machines and therefore the blends within many of the capsules, being more robusta coffee friendly.

The Coffee Association of Yunnan China have reported that their arabica coffee production has reached levels of 2 million bags per annum and from approximately 120,000 hectares of coffee farms, which is considerably more than some of the private trade and industry reports that talk in terms of approximately 1.3 million bags per annum.   They have also voiced their intent to increase the provinces land under coffee and by doing so, to target an annual coffee crop of in the region of in excess of 4 million bags per annum, over the next five to six years.

Presently much of the Chinese arabica coffees are being exported to the consumer markets but there are signs of slow but steadily growing consumption, in line with the rising popularity of the coffee shop culture and one might presume that these developments shall further assist to develop interest in coffee farming.    Thus while the worlds coffee producers have for many years been looking to China to one day step in with rising demand and to assist to buoy prices, the signs are rather that the Chinese are likely to follow demand with domestic production.   Albeit that China, is already an importer of rising volumes of robusta coffees in the form of soluble coffees, but is likewise an exporter of rising volumes of arabica coffees.

The arbitrage between the markets has narrowed on Friday to register this at 82.28 usc/Lb., while this equates to a relatively attractive 48.80% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 300 bags on Wednesday, to register these stocks at 2,305,809 bags.   There was meanwhile a larger in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,040 bags.

The commodity markets on Wednesday were overall quiet and lacklustre in nature, with most of the main players already starting on their Christmas holiday break, while with the U.S.A. trading solo on Friday the North American markets were quiet at best, for the day.   The Oil, Natural Gas, Cocoa, Sugar, Coffee, Copper and Orange Juice markets are tending softer and the Cotton, Wheat, Corn and Soybean markets steady, while the Gold, Silver and Platinum markets showed some buoyancy.    It is however the season for year-end book squaring and trade for these last days of the year is already and is likely to remain more focused on this activity, than fundamental direction for the markets.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.22% lower; to see this Index registered at 455.21.   The day starts with the U.S. Dollar showing steady and trading at 1.557 to Sterling and 1.219 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.65 per barrel.

The London market started the day on Wednesday tending softer, while the New York markets started the day hesitantly near to steady, in thin and lacklustre holiday trade.    The markets in pre-holiday trade and with trade thin were erratic and hesitant through the day and while the London market continued to remain most of the day near to par and end the day on a marginally softer note, the New York market closed off for their relatively short Christmas day holiday on a soft note.    Friday was a holiday for the majority of the market players and with the U.S.A. markets trading solo for a short day and while the New York market experienced a corrective positive modest rally and with the prompt March contract showing gains of 2.85 usc/Lb. over the Wednesday close, it once again faltered and the market ended the day on a soft note and with 64.6% of the losses of the day intact.   The soft close on Wednesday for both markets and the follow through softer close for New York on Friday does little to inspire, but one might expect to see a cautiously steady to soft start for the London market and a steady start for the New York market in thin early trade today, against the prices set in London on Wednesday and New York on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb. 24th. and 26th. December:
                                                
JAN      1864 – 8                                               
MAR     1903 – 8                                                 MAR    170.15 – 0.85 168.60 – 1.55
MAY     1924 – 6                                                 MAY    172.80 – 0.80 171.25 – 1.55
JUL      1944 – 6                                                  JUL     175.30 – 0.80 173.75 – 1.55
SEP      1964 – 5                                                 SEP     177.60 – 0.80 176.00 – 1.60
NOV     1975 – 6                                                  DEC    180.25 – 0.75 178.85 – 1.40
JAN      1982 – 6                                                 MAR    181.65 – 0.75 180.45 – 1.20
MAR     1991 – 6                                                 MAY    181.70 – 0.80 180.65 – 1.05
MAY     2000 – 6                                                  JUL     181.40 – 0.85 180.60 – 0.80
JUL      2007 – 6                                                  SEP     181.20 – 0.80 180.55 – 0.65

24th. December, 2014.
The Community Development Centre in the important coffee province of Daklak in Vietnam have voiced their fears that due to an early end to this year’s rain season and fewer than normal rain storms during the May to September rain season, that the countries ground water retention levels are lower than normal for this time of the year and therefore, could have a negative impact upon the counties next coffee crop.   One might however suggest that there might be some degree of market manipulation related to the statement, as recent weather reports had not indicated an early end to the rain season but rather, reports of rains interrupting the new crop harvest from time to time, over the past six weeks.   Albeit that it would seem that this year’s rain season did indeed experience less in the way of dramatic tropical storms than the previous year, which provides some basis for the report.

Nevertheless in the meantime and following the past few day’s dip in the value of the reference prices of the London robusta coffee market, the internal market in Vietnam has almost stalled and with farmers showing price resistance and holding out for higher value, for their new crop coffee stocks.   This is however not having much impact upon short term export activity from Vietnam, as most exporters still hold good cover for their forward contract commitments, but it has slowed the volumes of new business out of Vietnam.

There is likewise a degree of price resistance in play within the Latin American producer countries, but with the consumer market industries well covered for their short term requirements and patiently awaiting the lows of the market, it is proving to be rather an early Christmas holiday for physical trade out of the region, than a situation of concern.    This scenario is likely to continue into the New Year, as there is much speculation on the fact that the Index Funds might well look to balance their individual commodity investments and reduce their exposure to the New York market post the end of the year, in reaction to the presently 54.47% higher value of this arabica coffee market as against the near to 10% lower value of the macro commodity index.  Therefore there is presently a generally cautious view towards the market, in reaction to the potential for lower reference prices for the New York arabica coffee market and likewise in sympathy, the less volatile London robusta coffee market.

Thus with no striking fundamental news coming to the fore to provide any excitement for the coffee markets and such news that is in play tending to be bearish in terms of guarantees of more than sufficient supply for the short to medium term, one can foresee a dull and less than lacklustre coffee market for the rest of the year.  In this respect, the majority of the market players already on holiday and preferring to concentrate on the forthcoming celebrations, than on the trade in coffee and with large volumes of new crop coffees still due to come to the market from Central America, Vietnam and India, it has become a buyers rather than a sellers’ market, for the present.

The arbitrage between the markets narrowed yesterday to register this at 84.32 usc/Lb., while this equates to a relatively attractive 49.31% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 6,700 bags yesterday, to register these stocks at 2,306,109 bags.   There was meanwhile a larger in volume 9,400 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,760 bags.

The commodity markets were partially buoyed yesterday by the news of improved economic growth figures from the world’s largest economy the U.S.A., which is supportive of longer term demand.   The Oil, London robusta Coffee, Wheat, Corn and Silver markets showed buoyancy, while the Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.44% higher; to see this Index registered at 458.41.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.552 to Sterling and 1.218 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.00 per barrel.

The London and New York markets are due to close early today for Christmas Eve and with both markets closed tomorrow, but while the London market shall remain closed on Friday; the New York market shall be open again on Friday for a short day’s trade.    It is however expected to be a day of limited activity and one can expect little to come of it.

The London and New York markets both started the day yesterday in thin and lacklustre trade, with a degree of hesitant buoyancy and maintained a steady positive track into the afternoon’s trade.   However as the afternoon progressed and with volumes remaining thin, the New York market lost its way and headed back into negative territory, while he London market retained its buoyancy.   This remained the track for the rest of the day, of thin and lacklustre trade.  The London market continued to end the day with a degree of buoyancy and with 62.1% of the gains of the day intact, while the New York market ended the day on a soft note and with 71.9% of the earlier losses of the day intact.   This dull end to the day is likely to see the markets due 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.
                                                
JAN      1872 + 18                                                         
MAR     1911 + 18                                               MAR    171.00 – 1.15
MAY     1930 + 19                                               MAY    173.60 – 1.15
JUL      1950 + 21                                                JUL     176.10 – 1.10
SEP      1969 + 25                                               SEP     178.40 – 1.05
NOV     1981 + 29                                                DEC    181.00 – 0.95
JAN      1988 + 29                                               MAR    182.40 – 0.90
MAR     1997 + 29                                               MAY    182.50 – 0.80
MAY     2006 + 29                                                JUL    182.25 – 0.60
JUL      2013 + 29                                                SEP    182.00 – 0.45

23rd. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 24.58% in the week of trade leading up to Tuesday 16th. December;  to register a net long position of 15,961 Lots on the day.   This net long position that is the equivalent of 2,660,167 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed.

The Brazil Crop Supply Agency CONAB has raised marginally their new 2014 new crop assessment, which they have now pegged at 45.3 million bags.   What is very noticeable within this assessment is the fact that out of these 45.3 million bags, they have included a new arabica coffee crop of 32.33 million bags and new conilon robusta crop of only 13.03 million bags.

The general consensus from the private trade and industry however and while the various reports do provide mixed numbers for the arabica coffee crop this year, is that the conilon robusta crop exceeded 17 million bags and with many talking the number of close to 17.5 million bags.  Nevertheless even adding the lower 17 million bags to the new official and traditionally conservative CONAB figure, the total would be raised to 49.33 million bags and therefore an overall deficit crop of only 3 million to 5 million bags, depending on the volumes of exports that are due for the present October 2014 to September 2015 coffee year.  

This report did not after all include any indication of the CONAB forecast for the next 2015 crop which they have said they shall delay until the 13th. January and therefore, they shall keep the market waiting for a further three weeks.    Albeit that with the CONAB report traditionally being relatively conservative, one cannot expect any striking numbers to come from this early in the New Year forecast which shall most likely indicate a relatively modest new crop potential.

Following the relatively high October 2014 to September 2015 coffee supply forecast from the United States Department of Agriculture who have assessed this to be 149.8 million bags, they have also highlighted the fact that the world’s largest market Europe, has been suffering from a declining overall consumption.   They do however foresee that this decline is short term and that they forecast a recovery for the present coffee year, to around 45.7 million bags and with the U.S.A. to continue show a modest increase in consumption and total 25.44 million bags.   This they forecast to result in the combination of world producer and consumer consumption for the present 2014/2015 coffee year, rising to 147.63 million bags.   

Thus this USDA report does tend to contradict the many other reports that indicate that the 2014/2015 world coffee supply shall produce a deficit supply, but it is early days as of yet and one might expect that most players shall be cautious and still consider the many respected trade and industry reports and forecasts who work on a lower production figure and in some instances, a higher consumption figure.   The report does not however do much to inspire confidence for the funds and the speculative sectors of the market, which have been the supportive factor for the price trading range through the year.

There was a report yesterday from the East Java branch of the Indonesian Coffee Producers Association that has indicated that while production levels in Sumatra the leading coffee producing island of Indonesia have suffered from climatic problems, that production in East Java for the first eleven months of this year was 40% to 50% higher than last year.   In this respect they have quoted a number for the first eleven months of this year of a very impressive 3.66 million bags, but also note that traditionally 70% of the East Java production is absorbed by the countries domestic coffee industry.    It is however if true a very impressive increase and while the domestic coffee industry in Indonesia is showing vibrant year on year growth, must if true and indicating an approximate 1 million to 1.2 million bags of additional supply, fuel higher volumes of Java coffees for export to the consumer markets.

The arbitrage between the markets narrowed yesterday to register this at 86.28 usc/Lb., while this equates to a relatively attractive 50.11% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,379 bags yesterday, to register these stocks at 2,299,409 bags.   There was meanwhile a similar in volume 1,280 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,160 bags.

The commodity markets were mostly on a softer track yesterday and with many experiencing relatively thin pre-holiday trade, to see the macro commodity index taking a softer track for the day.  The Cocoa, Cotton, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Coffee, Copper, Orange Juice, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.08% lower; to see this Index registered at 456.39.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.559 to Sterling and 1.223 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.95 per barrel.

The London market started the day yesterday on a relatively steady note, while the thinly traded New York market started with a degree of buoyancy.   The London market took a marginally softer track into the afternoon’s trade, while the New York market retained its buoyant stance.  However once the American came onto the field of play as the afternoon progressed the New York market came under pressure and in extremely thin trade and with the negative nature of the macro commodity index having some influence, to lose its way and head back into negative territory, while the London market lost a little more weight.   The London market continued to end the day on a soft note and with 92.3% of the earlier losses of the day intact, while the New York market likewise ended the day on a soft note and with 70.4% of the earlier losses of the day intact.   
 
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1854 – 42                                                         
MAR     1893 – 36                                               MAR    172.15 – 2.55
MAY     1911 – 35                                               MAY    174.75 – 2.50
JUL      1929 – 34                                                JUL     177.20 – 2.50
SEP      1944 – 35                                               SEP     179.45 – 2.50
NOV     1952 – 37                                                DEC    181.95 – 2.50
JAN      1959 – 37                                               MAR     183.30 – 2.45
MAR     1968 – 38                                               MAY     183.30 – 2.50
MAY     1977 – 39                                                JUL     182.85 – 2.65
JUL      1984 – 39                                                SEP     182.45 – 2.70

22nd. December, 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 2.83% in the week of trade leading up to Tuesday 16th. December;  to register a net long position of 32,577 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 0.93%, to register a net long on the day of 39,997 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 7.55%, to register a net long of 21,916 lots on the day.   This net long position that is the equivalent of 6,213,089 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The well respected U.S. Department of Agriculture have reported on Friday that based on a new Brazil coffee crop that they have pegged at a relatively high 51.2 million bags and a new Vietnam crop that is still in progress that they have forecasted at 29.4 million bags, that they forecast world coffee supply for the October 2014 to September 2015 coffee year at149.8 million bags.   This forecast is in terms of many of the other official and private trade and industry forecasts that have been recently voiced, is very much at the high end of the forecasts and has to be seen to be a relatively bearish for the market forecast.

Especially so as the general consensus is for a world coffee demand of approximately 150 million bags, this USDA forecast indicates only a very modest deficit coffee supply for this new coffee year, as against relatively high carry over coffee stocks into the new coffee year and therefore, no risk of tight coffee supply for the short to medium term and depending on the still questionable prospects for the next 2015 Brazil crop, for the longer term as well.    There shall however be many who will question the figures that the USDA have applied for this forecast and with many of the other forecasts talking in terms of a world production figure that is between 5 million to as much as 9 million bags lower than this forecast, one can expect some counter and more bullish for the market forecasts to soon be repeated.

Meanwhile in terms of the critical next 2015 Brazil crop, the main arabica coffee growing districts have been in receipt of fair to good November and December rains and for the present, there are no threatening dry weather forecasts coming to the market for the coming month.   Thus the debate for the present remains with the degree of damage that was caused by the partial drought early this year and the percentages of flower loss in September and October, which came with the erratic rain showers and the delayed start to the new spring and summer rain season for the main arabica coffee districts.   With many expecting that the first official new crop forecast that is due out later today from Brazil, shall be a market supportive modest figure.

The Vietnam Coffee and Cocoa Association have reported that with the year nearly over that they estimate coffee exports for 2014 of mostly robusta coffees, shall earn the country 3.6 billion U.S. dollars.  This impressive figure they report is 32% higher than the countries coffee export income for the previous year.   But contrary to the many private trade and industry forecast for the new Vietnam crop that is approximately 75% completed and presently coming off its peak, the Association is still talking the crop to be potentially in excess of 20% lower than the past crop.    It has however to be noted that the Association traditionally takes such a conservative stance towards the countries new coffee crop at this time of the year and therefore, this market supportive forecast can be expected to be largely ignored.

The arbitrage between the markets broadened on Friday to register this at 87.20 usc/Lb., while this equates to a relatively attractive 49.91% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,630 bags on Friday, to register these stocks at 2,300,788 bags.   There was meanwhile a larger in volume 3,270 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,440 bags.

The commodity markets were mixed on Friday, with many markets tending to slow down ahead of the shortened two weeks of holidays.   The Oil, Cocoa, New York arabica Coffee, Copper, Gold, Silver and Platinum markets had a day of buoyancy, while the Natural Gas, Sugar, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower; to see this Index registered at 461.37.   The day starts with the U.S. Dollar relatively steady and trading at 1.565 to Sterling and 1.225 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 60.85 per barrel.

The London and New York markets started the day on Friday with hesitant buoyancy, but with both markets coming under pressure in early afternoon’s trade and the London market moving back into negative territory, while the New York market held its ground.   The New York market once again started to attract support as the afternoon progressed and added significant value which had some influence for a recovery within the London market, but this was short lived and with the New York market coming off its highs in relatively thin trade, the London market headed back into negative territory.   The London market continued to end the day on a soft note and with 76.5% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with only 10.6% of the earlier gains of the day intact.   This relatively dull close and the latest USDA report does little to inspire confidence and the markets are most likely going to struggle to maintain a steady stance for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1896 – 16                                                         
MAR     1929 – 13                                               MAR    174.70 + 0.35
MAY     1946 – 13                                               MAY     177.25 + 0.30
JUL      1963 – 11                                                JUL     179.70 + 0.35
SEP      1979 – 9                                                  SEP    181.95 + 0.40
NOV     1989 – 8                                                  DEC    184.45 + 0.40
JAN      1996 – 6                                                 MAR    185.75 + 0.35
MAR     2006 – 4                                                 MAY     185.80 + 0.35
MAY     2016 – 3                                                  JUL     185.50 + 0.30
JUL      2023 – 3                                                  SEP     185.15 + 0.20

19th. December, 2014.
The Brazilians are forecasting a wet Christmas and New Year for the main coffee districts, with on and off rains forecasted to continue for the rest of the month.  These rains shall continue to support the development of the immature new crop cherries, towards the next 2015 crop and to meanwhile, contribute to the steady increase of the ground water retention levels within the farms.

It has to be noted however that with the delayed start to the new spring and summer rain season in south eastern Brazil this year and with only two months of rains having been in play, that the reservoirs remain relatively low for this time of the year and there shall need to be good follow on rains for the first quarter of the coming year, if these districts are to but the memory of the early in this year’s partial drought behind them.    Thus there shall remain a close focus upon the rainfall reports out of south eastern Brazil for the coming three months and with this year’s weather problems still relatively fresh on the mind significant market volatility, should there be any extended periods of dry weather.

Meanwhile with the reference prices of the international coffee markets having softened and the Brazil real having recovered a little against the U.S. dollar to the present level of 2.66 to the dollar and with farmers relatively well sold, the internal market in Brazil is seen to be slow for the present.   Thus presenting the farmers something in the way of an early start for the Christmas and New Year season, which shall unless some unforeseen dramatic news come forth to buoy the markets, see the selling activity from Brazil become slow and lacklustre for the holiday season and most probably, for the first couple of weeks in January.

It is not only Brazil that is seemingly closing down early for the festive season, as the physical trade in coffee remains slow and lacklustre in general, with producers reluctant to follow the international markets lower and consumer industry buyers looking to their relatively good stocks and short term cover and stepping back, to await further news and new lows to the market.   The latter and in anticipation of rising volumes of new crop coffees due to come to the market, playing something of a waiting game and looking to see where shall be the lows for the market.

One might think however that these lows cannot be too far away, as there is the potential that with the new crop now developing in Brazil and therefore providing some degree of substance to support new crop forecasts, that there shall be some relatively low forecasts to soon start coming to the market and to inspire the funds and the speculative sector of the market.  Thus while many of these forecasts might be related to some degree of market manipulation, one would expect them to nevertheless inspire cautious market support from the funds and many within the speculative sector of the market.

The Agriculture, Livestock and Fisheries Ministry in Kenya has announced that they are actively promoting coffee growing in western Kenya and with the intent to bring thousands of new farmers to the industry, in their bid to rebuild the Kenya coffee industry.   This being an industry that has seen production of their relatively special fine washed arabica coffees dip from levels in excess of 2 million bags twenty five years ago, to the present modest levels of approximately 800,000 bags per annum.   Thus it shall be a timely event that Kenya shall host the African Fine Coffees Association www.africanfinestcoffee.com 12th. Annual conference in Nairobi, which shall be held between the 12th. and he 14th. February 2015.  

The arbitrage between the markets broadened yesterday to register this at 86.26 usc/Lb., while this equates to a relatively attractive 49.48% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 757 yesterday, to register these stocks at 2,298,158 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,710 bags.

The commodity markets were mixed yesterday and with the overall commodity index taking something of a sideways track for most the day, but with a degree of buoyancy being experienced within many markets and with the markets quietly heading towards the nearby year end book squaring activities.   The Sugar, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, London robusta Coffee, Copper and Orange Juice markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.03% lower; to see this Index registered at 461.41.   The day starts with the U.S. Dollar relatively steady and trading at 1.566 to Sterling and 1.228 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.85 per barrel.

The London and New York markets both opened the day showing buoyancy in thin trade and carried this steady positive track into the early afternoon trade, when both markets slipped back to par, but with the New York market recovering to once again experience modest buoyancy.  It was a quiet and hesitant thinly traded day however for the New York market which assisted to maintain its buoyancy, while the less volatile London market continued to attract modest selling pressure.  The London market continued to end the day on a modestly soft note and with 44.4% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 92.6% of the earlier gains of the day intact.   This close and with the New York market having ended near to its highs of the day, is perhaps due to influence a degree of buoyancy for thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1912 – 3                                                 DEC     173.65 + 2.80
MAR     1942 – 4                                                 MAR     174.35 + 2.50
MAY     1959 – 6                                                 MAY     176.95 + 2.50
JUL      1974 – 6                                                  JUL      179.35 + 2.50
SEP      1988 – 6                                                  SEP     181.55 + 2.50
NOV     1997 – 4                                                  DEC     184.05 + 2.40
JAN      2002 – 4                                                  MAR     185.40 + 2.35
MAR     2010 – 4                                                  MAY     185.45 + 2.30
MAY     2019 – 4                                                   JUL     185.20 + 2.55
JUL      2026 – 4                                                   SEP     184.95 + 2.85

18th. December, 2014.
The National Coffee Organisation of Guatemala has reported that the country’s coffee exports for the month of November were 23,794 bags or 26.94% lower than the same month last year, at a total of 64,523 bags.   This lower performance and following a slow October has seen the countries cumulative coffee exports for the first two months of this new October 2014 to September 2015 coffee year to be 45,077 bags or 29.14% lower than the same period in the previous coffee year, at a total of 109,595 bags.

The National Export Centre of Nicaragua has reported that the countries coffee exports for the month of November were 2,151 bags or 6.36% lower than the same month last year, at a total of 31,668 bags.   This marginally lower performance follows a month of good carryover past crop exports and therefore, the countries cumulative coffee exports for the first two months of this new October 2014 to September 2015 coffee year to be 56,870 bags or 77.28% higher than the same period in the previous coffee year, at a total of 130,464 bags.

It is however early days for the new Central American crops, which have been mostly slow to start coming to the market, due to regional spells of cold and wet weather that have retarded cherry maturity.  This factor is however a positive one, as the slower the cherry takes to mature, the harder the bean and the more intense the taste profile of the coffee and therefore, one would expect to see good quality coming forth from this new crop from the region.    While in terms of volume from the Central American producers and including Mexico, the indications are that the regional crop might prove to be approximately 1.3 million bags or 8% larger than the previous crop.   Thus ensuring along with the rising production from Colombia, a good supply of fine washed arabica coffees for the coming year.

The Coffee Markets and particularly so the more volatile New York market, encountered an unforeseen hurdle yesterday, with the public news of the latest E D & F Man Volcafe report.  This report that was based on farm visits between the 6th. November and 9th. December has estimated that with the good rains that the next Brazil arabica coffee crop shall increase by 12% over this year’s relatively dismal drought affected harvest and to total 33 million bags, while the smaller Brazil conilon robusta coffee harvest shall not match this year’s bumper harvest an shall register a 6% decline, to register 16.5 million bags.    These forecasts in terms of overall coffee supply and with the improvement weighted towards the arabica coffees indicate a 5% larger new overall Brazil crop in 2015, which was quoted at 49.5 million bags.

Such a crop and if there is reality to these early days forecasts, would in terms of present export volumes and domestic consumption still result in and over 4 million bags deficit.  However with Brazil having carried over in excess of 12 million bags of past crop arabica coffees into this year’s 6 million bags deficit crop, it is a report counters the threat of tightening world coffee supply for the next October 2015 to September 2016 coffee year.   Therefore by nature, and with no other threatening reports or forecasts from Brazil or any of the other main coffee producing blocs, it is a report that takes some of the wind out of the sails of the speculative bulls within the New York arabica coffee market.

But one can expect that shortly there shall be some lower forecasts coming forth from Brazil, to counter the negative aspects of this latest forecast.   With the traditionally conservative Brazil Government Commodity Bureau CONAB due to present its latest forecast on Monday and with this in mind, it might inspire the some degree of hesitancy within the speculative sector, to further liquidate their now reduced long positions within the New York arabica coffee market.  

The arbitrage between the markets narrowed yesterday to register this at 83.58 usc/Lb., while this equates to a relatively attractive 48.64% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 17,565 yesterday, to register these stocks at 2,298,933 bags.   There was meanwhile a smaller in volume 16,440 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,710 bags.

The commodity markets experienced a day of stability within many markets, but with the continued muscle of the U.S. dollar tending to cap such markets that are not party to supportive fundamental news.   The Oil, Natural Gas, Sugar, Cocoa, Copper, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets had a day of buoyancy, while the Coffee, Cotton and Gold markets had an easier day and with the New York arabica Coffee market the biggest loser for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.42% higher; to see this Index registered at 461.53.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.559 to Sterling and 1.234 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.60 per barrel.

The London market opened the day yesterday with early buoyancy, but with the New York market opening on a marginally softer note and with both markets maintaining a sideways track and respectively either side of par, into the early afternoon trade.   As the afternoon progressed the New York market recovered and joined the London market in positive territory but this was a short lived recovery and with the higher 2015 crop forecast coming into play, the New York market suffered from a sharp reversal and with Sell Stops being triggered to accentuate the losses, fell sharply lower and followed by a softening within the London market, which likewise moved south into negative territory.   This remained the stance to be taken for the rest of the day’s trade and the London market continued to end the day on a soft note and with 54.5% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 89.3% of the earlier losses of the day intact.    This overall soft close and with the charts tending negative provides little support for speculative sentiment, but one might think that there shall nevertheless be a hesitant and 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.
                                                
JAN      1915 – 22                                               DEC     170.85 – 5.85
MAR     1946 – 18                                               MAR    171.85 – 5.85
MAY     1965 – 16                                               MAY     174.45 – 5.75
JUL      1980 – 15                                                JUL     176.85 – 5.60
SEP      1994 – 12                                                SEP    179.05 – 5.30
NOV     2001 – 9                                                  DEC    181.65 – 5.20
JAN      2006 – 7                                                 MAR    183.05 – 5.20
MAR     2014 – 7                                                 MAY     183.15 – 5.20
MAY     2023 – 7                                                  JUL     182.65 – 5.25
JUL      2030 – 7                                                  SEP     182.10 – 5.25

17th. December, 2014.
The Coffee Markets are so far heading into the two weeks of Christmas and New Year’s holidays on a dull and lacklustre trading track, with the negative influences of the soft macro commodity index supressing speculative support and with the well-stocked consumer industries looking for the potential lows and therefore,  slow to buy into new crop coffee stocks.   Meanwhile with renewed muscle of the U.S. dollar over the past few weeks the negative nature of the markets has not yet had its full influence upon the producer prices, as is illustrated by the Brazil real that has fallen to 2.74 to the dollar and continues to inspire slow but steady selling of past and new crop Brazil coffees.

The main question is where is the low for the coffee markets as while the steady rains in Brazil have had their additional influence over and above the influence of the macro commodity index upon sentiment upon the markets, there can be no doubt that the presently silent new crop forecasters out of Brazil shall shortly come to the fore.  In this respect, one can expect that the first of the official forecasts shall very shortly come to the market with some relatively low predictions and that perhaps the thought of this, shall slow the present speculative liquidation within the markets and that perhaps the downside for the markets is now limited.

Aside from the prospects of nearby low volume new crop forecasts from Brazil, the markets are seemingly devoid of any supportive fundamental news due from any of the other main producer blocs.   Rather the news is all mostly related to rising coffee supply from Mexico, Central America, Colombia, India, and Africa and on the longer term, from Indonesia.  While despite the traditional lower crop official forecasts that come at this time of the year from Vietnam, the overall and more reliable trade and industry forecasts are indicating a new crop that shall be little different from the last large crop.    

Thus for the present and Brazil aside and with consumer stock while marginally lower post slow export volumes over the past couple of months, the markets lack any prospects of market supportive excitement and remain within the doldrums of slow and featureless thin trade.   Thus allowing the trade and industry to look to closing their books a little early for this year and to concentrate more upon the festive season, than to the short term cover of coffee requirements and sales.

On the European front the European Commission has started its in depth investigation to assess the influence that the proposed merger between Mondelez and D E Master Blenders, the second and third market players in this leading coffee consumer market.   This merger that is proposed to form the new Jacobs Douwe Egberts company would include a host of major consumer brands that include Carte Noir, Jacobs, Gevalia, Tassimo, Douwe Egberts, L’Or, Senseo and Merrild, amongst some other smaller brands, shall have an impact upon competition or the lack of it, within many of the European markets.    Thus the commission has been given quite some time to look into the matter and with a cut-off date for a decision having been set, for the 6th. May 2015.

Thus in terms of this rather high profile merger within the consumer markets there is still quite some time before there shall be clarity on the situation and meanwhile the individual brands shall continue to battle for market share, within a highly price sensitive consumer market.   This competition being accentuated for the present, but the poor to sometimes desperate economic circumstances that prevail within Europe, which is putting pressure upon grocery spend potential of the average consumer.   

The arbitrage between the markets narrowed yesterday to register this at 88.61 usc/Lb., while this equates to a relatively attractive 49.86% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,812 yesterday, to register these stocks at 2,316,498 bags.   There was meanwhile a smaller in volume 1,240 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,270 bags.

The commodity markets continued to come under pressure in yesterday’s trade, with nothing in the way of supportive news forthcoming, to inspire confidence within most of the markets.   The Cocoa, Orange Juice and Wheat markets nevertheless showed some degree of buoyancy and the London robusta Coffee was steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Corn, Soybean, Gold, Silver and Platinum markets had a softer days trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.17% lower; to see this Index registered at 459.59.   The day starts with the U.S. Dollar steady and trading at 1.572 to Sterling and 1.249 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.50 per barrel.

The London market predictably opened the day yesterday with early buoyancy, following the soft close on Monday that was contradictory to the positive stance for the New York market.    This was followed however by corrective softer start for the New York market, in thin trade.    The afternoon saw the New York market coming under further pressure and with the London market that had posted gains of $ 20.00 per metric ton drifting lower and into modest negative territory, but with the markets bouncing back from their lows of the day, as the afternoon progressed.  The London market continued to end the day little changed and having recovered 85.7% of the earlier losses of the day, while the New York market ended the day on a soft note, but having recovered 75.9% of the earlier losses of the day.   This soft close but with a significant recovery of much of the earlier losses of the day is perhaps supportive for a cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1937 + 1                                                 DEC     176.70 – 0.95
MAR     1964 – 1                                                 MAR     177.70 – 0.95
MAY     1981 – 1                                                 MAY     180.20 – 1.00
JUL      1995 unch                                              JUL      182.45 – 1.10
SEP      2006 unch                                             SEP      183.35 – 1.20
NOV     2010 unch                                              DEC     186.85 – 1.30
JAN      2013 unch                                              MAR    188.25 – 1.25
MAR     2021 unch                                              MAY    188.35 – 1.05
MAY     2030 unch                                               JUL     187.90 – 0.95
JUL      2037 unch                                               SEP     187.35 – 0.90

16th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 4.88% in the week of trade leading up to Tuesday 9th. December;  to register a net long position of 21,163 Lots on the day.   This net long position that is the equivalent of 3,527,167 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed.

The National Coffee Council of El Salvador has reported that the countries coffee exports for the month of November were 14,752 bags or 78.5% lower than the same month last year, at a total of 4,040 bags.   This low performance has equated to the countries coffee exports for the first two months of the present October 2014 to September 2015 coffee year being 51,246 bags or 89.38% lower than the same period in the previous coffee year, at a total of only 6,087 bags.

These soft export figures for the coffee year so far from El Salvador are no reflection on the size of the present new crop, which has just started to be harvested.  This new crop has been forecasted by the National Coffee Council and with the combination of improved Roya or Leaf Rust controls and the recovery of the high percentage of coffee trees that were pruned back to assist in countering Rust, to be 65% larger than the previous crop.   Thus one can expect that in the coming months the countries coffee export volumes shall start to accelerate and that they shall soon start to overtake the previous coffee year’s performance.

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 307,289 bags or 5.12% during the month of November, to register these stocks at 5,694,154 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.
 
Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6,694,145 bags, it would have equated to at least a very safe 13.6 weeks of roasting activity and still a safe reserve, ahead of the pending delivery of increasing volumes of new crop coffees from Mexico, Central America, Colombia and Vietnam.  These new crop coffees and however not expected to surge in supply, as the North American roasters alike the consumer industries worldwide, remain slow and steady buyers against what many predict to be a market that might still lose some more weight.    However the relatively sharp drop in the stocks for the past month, does provide some degree of support for speculative sentiment within the New York market, which has recently been taking a downside bearish track.

The Vietnam customs have reported that the countries coffee exports of mostly robusta coffees were much lower than the 2 million to 2.5 million bags that the trade had earlier forecasted and even lower than the official government forecast for exports for the month of 1,583,333 bags, to see these official coffee exports for the month now pegged at 1,400,983 bags.   This figure is likewise according to the Vietnamese customs authorities; significantly 12.3% lower than the previous month’s exports, but is nevertheless a volume of exports that is 4.55% higher than the same month last year.

Thus one might not read much into this dip in coffee exports from Vietnam for the month, as they remain somewhat seasonally in order and perhaps are more of a reflection of the hand to mouth nature of exports into the flat consumer markets, than any degree of hiccup in robusta coffee supply.   With little excitement expected from the physical coffee market, until at least post the Xmas and New Year holidays.

The arbitrage between the markets broadened yesterday to register this at 89.52 usc/Lb., while this equates to a relatively attractive 50.11% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,700 yesterday, to register these stocks at 2,319,310 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,030 bags.

The commodity markets came under further pressure yesterday, with the news of softer economic figures out of China, which comes to the table on top of dismal growth potential for Europe.   The Cocoa and New York arabica Coffee markets did however have a day of buoyancy, while the Oil, Sugar, London robusta Coffee, Gold and Platinum markets had a softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.66% lower; to see this Index registered at 465.03.   The day starts with the U.S. Dollar steady and trading at 1.566 to Sterling and 1.246 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.60 per barrel.

The London and New York markets opened the day yesterday with a degree of buoyancy, but within an environment of thin and lacklustre trade.   However by the afternoon while the New York market retained its early buoyancy, the London market had drifted back into negative territory.   The afternoon progressed quietly with the New York market maintaining its buoyancy, while the London market recovered to take a thin sideways track at the levels set on Friday.   The late afternoon was however a more eventful time, albeit that the volumes were not extraordinary, with the London market once again turning south and the New York market building upon its gains and with value being enhanced by the triggering of Buy stops.  The London market continued to end the day on a soft note and with 69.2% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 90.3% of the gains of the day intact.    This mixed close makes it difficult to read the markets but one might think that with the positive nature of the recovery within the more volatile New York market, that it might well inspire a degree of buoyancy for the London market and a hesitantly steady start for the New York market for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1936 – 8                                                 DEC     177.65 + 4.65
MAR     1965 – 9                                                 MAR     178.65 + 4.65
MAY     1982 – 10                                               MAY     181.20 + 4.65
JUL      1995 – 12                                                JUL     183.55 + 4.60
SEP      2006 – 14                                               SEP     185.55 + 4.50
NOV     2010 – 14                                                DEC    188.15 + 4.55
JAN      2013 – 14                                               MAR     189.50 + 4.60
MAR     2021 – 14                                               MAY     189.40 + 4.50
MAY     2030 – 14                                                JUL     188.85 + 4.70
JUL      2037 – 14                                                SEP     188.25 + 4.90

15th. December, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 24.06% in the week of trade leading up to Tuesday 9th. December;  to register a net long position of 23,707 Lots on the day.   This net long position that is the equivalent of 6,720,829 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed, while perhaps the news of this  relatively sharp reduction that has likely to have been further reduced, due to inspire some corrective buying for this sector of the market.

This prevailing negative stance being taken within the New York market and so well illustrated by the speculative selling activity has been inspired by the day by day reports of rains in Brazil, however while the rains have been very beneficial for the support and carry of the new crop flowering and thereon the development into 2015 crop cherries, there remains a good degree of uncertainty as to the volume of cherry that shall be forthcoming from the early in the year partial drought affected farms.    The forecasts vary so far from 43 million to 50 million bags and more defining clarity only due to come to the markets in February next year, by which time there shall be an ability to more accurately cherry count the trees and make a more reliable assessment.

So far the longer range and weather forecasts are already pointing to fair rains due for the main coffee districts in Brazil for the rest of the month and to continue in the coming month, which is a factor that continues to dampen speculative spirits for the New York market.    However there can be no doubt that these reports shall encounter some poor crop forecasts from within Brazil and albeit that they may well be partially market manipulative in nature, they shall have some influence upon speculative sentiment.  While any dry spells that might occur during the next two months and with the memories of this year’s partial drought for the first two months of the year still recent, that these factors shall bring a degree of erratic volatility to the presently softening New York market.

Further influencing the markets softer stance last week has been the lacklustre nature of the physical coffee trade, where the relatively well stocked consumer market industries have been able to step back and await for new lows to buy into the market.   Thus with new crop coffees from Vietnam, Colombia, Mexico, Central America and India now hanging over the market and with the speculative sector of the markets showing a degree of exhaustion, there is little in the way of underlying support.   The consumer industries having the confidence for the present in the fact that Brazil forecasts aside, there is in reality surplus coffee supply for the short to medium future and with the renewed muscle of the relatively firm U.S. dollar adding value to the domestic prices for the majority of the producers and including all of the leading producers, little indication of any degree of effective price resistance due from the producers.     

The arbitrage between the markets narrowed on Friday to register this at 84.46 usc/Lb., while this equates to a relatively attractive 48.54% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,930 on Friday, to register these stocks at 2,323,010 bags.   There was meanwhile a larger in volume 5,120 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,390 bags.

The commodity markets remained with a cloud of negativity on Friday, as slowing growth in China and poor economic figures from Europe and Japan continue to impact upon longer term market sentiment.   The Oil markets were in particular on a back foot, with energy growth forecasts for 2015 pointing to soft demand and likewise soft longer term prices.    The Natural Gas, Cocoa, London robusta Coffee, cotton, Copper, Orange Juice, Wheat, Corn and Soybean nevertheless ended the week with some degree of buoyancy, while the Oil, Sugar, New York arabica Coffee, Gold, Silver and Platinum markets had a softer days trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.13% lower; to see this Index registered at 468.12.   The day starts with the U.S. Dollar steady and trading at 1.573 to Sterling and 1.245 to the Euro, while North Sea Oil is showing some degree of buoyancy in early trade and is selling at $ 61.80 per barrel.

The London market somewhat surprisingly started the day on Friday with a relatively sharp corrective rally, with the New York market showing some more modest and hesitant buoyancy, within an environment of thin and lacklustre trade.    The London market soon came off its early highs of the day but nevertheless retained its buoyancy, while the New York market slid back to par and with both markets taking a sideways track into the early afternoon trade.    The New York market continued to steadily drift lower as the afternoon progressed and eventually had some influence upon the London market that briefly dipped back into negative territory later in the afternoon, but to post a late in the day recovery.   The London market ended the day on a hesitantly positive note and with 40.9% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 84.2% of the losses of the day intact.    This mixed but overall soft close might nevertheless with the news of the much reduced speculative long within the New York market in play, result in some degree of cautious buoyancy for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1944 + 6                                                 DEC     173.00 – 2.40
MAR     1974 + 9                                                 MAR    174.00 – 2.40
MAY     1992 + 10                                               MAY    176.55 – 2.40
JUL      2007 + 10                                                JUL     178.95 – 2.35
SEP      2020 + 10                                               SEP     181.05 – 2.50
NOV     2024 + 8                                                  DEC    183.60 – 2.45
JAN      2027 + 6                                                 MAR    184.90 – 2.60
MAR     2035 + 6                                                 MAY    184.90 – 2.75
MAY     2044 + 6                                                  JUL     184.15 – 2.85
JUL      2051 + 6                                                  SEP     183.35 – 2.90

12th. December, 2014.
The International Coffee Organisation have forwarded their latest forecast for global coffee supply for the October 2014 to September 2015 coffee year, which they say shall be 141 million bags, which is 4.2 million bags lower than their assessment of the coffee supply for the previous year of 145.2 million bags.   These figures on the part of the International Coffee Organisation are by nature of this official body that is obliged to base its calculations upon the often conservative official figures from the individual members, likewise tend to be conservative.

In this respect their figure for the previous 2013 to 2014 coffee year is approximately 6.5 million to 7 million bags shy of many of the private trade and industry reports for this previous coffee year and therefore, one might presume that the figure of 141 million bags for the present coffee year is most likely a conservative figure and most probably at least 2 million bags shy of what shall finally by the end of this present coffee year and with the evidence of exports and estimated domestic consumption, prove to be the correct figure.

This said, one has to now compare the potential coffee supply for the present coffee year against what is a complicated to assess global coffee consumption figure, which is being forecasted at figures that vary between 145 million and 150 million bags for the present coffee year.   However with the clear evidence of flat to lower consumption within many of the traditional coffee markets in Europe and with economic issues more than likely to slow the growth within the growing Asian markets, one might guess that the demand figure is more than likely not going to exceed 148 million bags.   Therefore a guess at a global deficit coffee supply for the present coffee year that shall be closer to a more modest 5 million to 7 million bags, rather than some of the more dramatic figures that have been voiced.

This deficit in terms of the global coffee stocks that were in excess of 23 million bags within consumer market hands at the start of the coffee year and with the two major producers having jointly entered their new crops with carryover stocks of approximately 16 million bags, most certainly does not indicate any potential problems for coffee supply for the present coffee year.  Thus one has to look rather to the critical issue of the next 2015 Brazil crop, which shall fuel the coffee supply for the follow on October 2015 to September 2016 coffee year and while there is no doubt that the combination of the early this year drought and a late start to the rain season shall not fuel a bumper crop, one has to question how much of a deficit new crop it shall be.

Some of the more dramatic forecasts have pointed to a deficit Brazil crop for 2015 of close to 10 million bags, while many and perhaps more reliable in nature forecasts, have been talking a more modest figure of around 5 million bags.   These deficit figures for Brazil for the coming year have however to be seen against rising coffee supply from Central America and parts of Asia that shall assist to lessen the influence of a deficit in Brazil, in terms of overall global coffee supply and therefore unless there are no further climatic problems for Brazil to further damage their 2015 crop potential and likewise for any of the other main producer blocs, the longer term global coffee supply through to the 2016 to 2017 coffee year looks to be only a little tighter, rather than a problem.

Meanwhile the rains continue to fall over the main coffee districts in Brazil and thus dampening the spirits of the bulls within the New York market, while side-lining the consumer market industry buyers, who look for new lows to inspire more aggressive buying activity.  While the much respected Brazilian analysts Safras and Mercado who have assessed this year’s new Brazil crop at a relatively in terms of many other reports high level of 48.9 million bags, have estimated that farmers have already sold to the trade and local industries approximately 65% of the new crop coffees.  These sales that are above average in terms of percentage terms but perhaps a little below average in terms of actual volume from a smaller crop for this time of the year, have been very much inspired by the weaker Brazil Real to the dollar that adds value in terms of internal prices.  The very nature of this aggressive selling activity might however also be seen to be an indication of the farmers belief and post the flowerings for the new crop, that a potential modest deficit is not enough reason to justify holding back stocks to gain additional value out of a dramatically tight supply post the next crop.
 
The arbitrage between the markets narrowed yesterday to register this at 87.27 usc/Lb., while this equates to a relatively attractive 49.47% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,960 bags yesterday, to register these stocks at 2,319,080 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,510 bags.

The commodity markets remained overall lacklustre in trade yesterday, but with a degree of stability within many of the markets.  The Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets showed buoyancy and the Brent Oil market was steady, while the U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.14% lower; to see this Index registered at 468.72.   The day starts with the U.S. Dollar steady and trading at 1.572 to Sterling and 1.239 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 62.55 per barrel.

The London and New York markets started the day yesterday on a hesitant steady to soft note and with both markets taking a slow soft track into the afternoon’s trade, with trade thin and lacklustre for the more volatile New York market, while the London market was a little more active.    The afternoon progressed with producer selling weighing down on a thinly traded New York market, which lacked anything in the way of volume from the industry to provide support and with both markets losing some more weight.  The London market continued to end the day on a soft note and with 94.1% of the losses of the day intact, while the New York market that experienced late in day partial recovery nevertheless ended the day on a soft note and with 58.9% of the losses of the day intact.   This overall soft close does little to inspire and one might expect to see at best only a 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.
                                                
JAN      1938 – 37                                               DEC     175.40 – 2.15
MAR     1965 – 32                                               MAR    176.40 – 2.15
MAY     1982 – 32                                               MAY    178.95 – 2.05
JUL      1997 – 30                                                JUL    181.30 – 1.90
SEP      2010 – 29                                               SEP     183.55 – 1.85
NOV     2016 – 28                                                DEC    186.05 – 1.75
JAN      2021 – 27                                               MAR    187.50 – 1.65
MAR     2029 – 27                                               MAY    187.65 – 1.60
MAY     2038 – 27                                                JUL    187.00 – 1.75
JUL      2045 – 27                                                SEP    186.25 – 1.75

11th. December, 2014.
The Colombian Coffee Growers Federation celebrated its 80th. National Congress last week and with representatives from all of their coffee districts who represent the countries approximately 553,000 coffee farmers and representatives from the countries trade and industry players contributing to the event, which debated towards a program and policy for their industry for the next five years.   The Federation firstly celebrated the success of their farm rejuvenation program over the past five years, which has seen the replanting of farms with 3.2 billion new disease resistant and higher yielding trees and with the results already evident from the rising levels of production, which with many of the trees still to come to maturity, is likely to inspire further increases over the next couple of years.   Thus supporting the relatively short term target for an annual crop of fine washed arabica coffees of in excess of 14 million bags per annum, within the next two to three years.   

However with the farm rejuvenation program now well on track and well past the half way mark, the focus of the Federation is now leaning more towards the matters of agronomy and social, with programs planned to further improve the farm extension services to assist their farmers to improve their agricultural practices, along with social programs to assist in the improvement of the living conditions within their coffee industry.   These latter programs not only related to health and welfare, but also towards education for the rural communities and with the view to further strengthen the stability of the Colombian coffee farming industry and to maintain its dominant market share within the top end fine washed arabica coffee sector of the consumer markets.

The Association of Coffee Exporters and Industries in Indonesia have reiterated their confidence in the steady growth of the countries domestic market, with and ambitious forecast that domestic consumption within Indonesia which they say registered and impressive 15.4% growth this year, shall register a further 16.7% growth next year, to see domestic consumption rise to in excess of 5.8 million bags per annum.   These figures are very impressive and there is no doubt that domestic coffee consumption within Indonesia is indeed showing steady year by year growth, but one might think that there is some degree of market manipulation coming into play to inflate the numbers.   Mostly so as the growth is being reported within the context of what influence it shall have upon the coffee export potential for Indonesia who have a larger new crop to the fore, but are with the rise of domestic consumption unlikely to significantly increase export volumes.  Albeit that despite this recovery in Indonesia’s production, the Association of Coffee Exporters and Industries have forecasted that domestic consumption shall nevertheless dictate a 10% decline in exports.

In the meantime with the recovery in production levels in Colombia, they have stepped back up into third place in terms of world coffee production, behind the giants Brazil and Vietnam and with Indonesia having slipped back into fort position.  These four presently accounting for approximately 70% of world coffee production and consumer market supply, while the first three continue to dominate the raw material inputs for the larger roasting companies within the consumer markets, who require stable volume coffee supply to maintain their blend profiles and dominant share of the consumer markets.

The arbitrage between the markets narrowed yesterday to register this at 87.97 usc/Lb., while this equates to a relatively attractive 49.27% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,300 bags yesterday, to register these stocks at 2,321,040 bags.   There was meanwhile a similar in volume 3,375 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,510 bags.

The commodity markets were mixed yesterday, but with the macro commodity index tending negative with the influence of the soft Oil markets.  The Natural Gas, Sugar, Cotton, Orange Juice, and Silver markets showed buoyancy, while the Cocoa, Coffee, Copper, Wheat, Corn, Soybean, Gold and Platinum markets were softer and the Oil markets registered sharp losses for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.68% lower; to see this Index registered at 469.37.   The day starts with the U.S. Dollar marginally softer and trading at 1.571 to Sterling and 1.244 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 63.95 per barrel.

The London and New York markets started the day yesterday with the London market taking a steady stance and the New York market showing some degree of early buoyancy, but with the London market soon coming under a degree of pressure and taking a modestly softer track into the afternoon’s trade.    The New York market came under pressure during the afternoon and with sell stops coming into play, to reverse its positive trend that had peaked with gains of 1.75 usc/Lb., and head back into negative territory and with the London market adding to its losses.    There was however some degree of support at the lows and the markets both showed a degree of buoyancy within negative territory, to limit the losses for the day.  The London market ended the day on a soft note and with 48.3% of the losses of the day intact, while the New York market ended the day on a soft note and with 55.9% of the losses of the day intact.    This soft close and with a lack of supportive fundamental news coming to the markets is not very constructive and with the industry players stepping back to look for new lows as against producers chasing a thin and lacklustre market, one might expect to sell little better than a hesitantly steady to marginally softer start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1975 – 19                                               DEC     177.55 – 1.90
MAR     1997 – 14                                               MAR     178.55 – 1.90
MAY     2014 – 14                                               MAY     181.00 – 1.95
JUL      2027 – 16                                                JUL     183.20 – 2.10
SEP      2039 – 15                                               SEP     185.40 – 2.15
NOV     2044 – 12                                               DEC     187.80 – 2.20
JAN      2048 – 12                                               MAR     189.15 – 2.25
MAR     2056 – 12                                               MAY     189.25 – 2.20
MAY     2065 – 12                                                JUL     188.75 – 2.30
JUL      2072 – 12                                                SEP     188.00 – 2.50

10th. December, 2014.
The new Vietnam crop is in full swing and while there have been some rain interruptions to the harvest it is peaking and estimated are that well in excess of 65% of the crop harvested so far, to see a steady flow of new crop coffees now coming to the mills and export houses in Ho Chi Minh City.   There is however so far no aggression on the part of the farmers in terms of selling activity and the Vietnam trade remains only a slow and steady buyer, as they play the time game to see if the post-harvest selling activity might prove to inspire some more aggressive discounting of new crop coffees.

The forecast by the traditionally excessively conservative Vietnam Coffee and Cocoa Association for a 20% lower new crop remains largely ignored by the local and international coffee trade and for the present the perspective is still for a new crop of approximately 27.5 million bags, of which close to 96% shall be made up by robusta coffees.   There is however a growing domestic consumption and with some ambitious internal market forecasts indicating that this could rise in the coming year or two to something in the region of 2.7 million bags, but with Vietnam having a taken a large carryover stock into this new crop, it is unlikely to be a factor to impact negatively upon export volumes for the coming year.

With the New Mexican and Central American crops now picking up in volume and this regional harvest with some delays in cherry maturity having been experienced which would indicate improved quality, there has so far been no market supportive negative news coming forth from this leading fine washed arabica producer bloc and one can presume that with no news is good news, that the forecasts for increased regional coffee supply for the coming year are a matter of reality.    This is however having some impact upon the export differentials for the coffees from this region, but with the exception of the brand name origins of Guatemala, Costa Rica and Panama, where dedicated consumer market support from the North American and Japanese markets and with branding of these countries upon retail packets, continues to support significant premium differentials for their coffees.    Thus in terms of these select few, the negative nature of the softening prices of the reference prices of the New York market is not having so far the effect upon internal market prices, as it is for their neighbours.

The arbitrage between the markets broadened yesterday to register this at 89.23 usc/Lb., while this equates to a relatively attractive 49.45% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,051 bags yesterday, to register these stocks at 2,317,740 bags.   There was meanwhile a smaller in volume 570 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,885 bags.

These stocks remain dominated as is traditional for the stock by the Central and South American producers, who account for 83.65% of the stocks.  The Mexico, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua bloc accounting for 1,327,036 bags or 57.26% of the stocks, Peru accounting for 463,382 or 19.99% of the stocks, Colombia accounting for 140,474 bags or 6.06% of the stocks and Brazil accounting for a modest 7,980 bags or 0.34% of the stocks.

The balance are related to India and the African bloc and with coffees from Burundi, Rwanda, Tanzania and Uganda accounting for 319,403 bags or 13.78% of the stocks, while India accounts for a relatively modest 59,465 bags or 2.57% of the stocks.   One might however assume that with a larger new crop harvest now coming in for Mexico and Central America that by the second quarter of this year that their share of the stocks shall start to increase and that by the second half of 2015 and with the new Peru crop also in play, that there shall be a modest increase in the overall Central and South American share of these stocks.

The U.S. dollar tended to come of its recent highs yesterday with some corrective trade in the dollar in play, which was a supportive factor with most of the commodity markets.   But with the U.S.A. aside the consumer markets that are dominated by Europe, China and Japan presently forwarding relatively soft longer term demand forecasts, the renewed buoyancy for the macro commodity index remained modest.   The U.S. Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and Brent Oil was steady, while the London robusta 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 1.16% lower; to see this Index registered at 472.60.   The day starts with the U.S. Dollar steady and trading at 1.569 to Sterling and 1.240 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 65.35 per barrel.

The London and New York markets started the day yesterday with the London market tending softer and the New York market taking a steady track and with the New York market coming under some short term pressure to join the softer London market in thin early afternoon trade.    The New York market and with the positive influences of the macro commodity index in play did however regain some support and move back into positive territory, while the London market maintained its softer stance.   The London market continued to end the day on a soft note and with 82.1% of the losses of the day intact, while the New York market ended the day on a positive note and with 64.9% of the earlier gains of the day intact.   This mixed close provides little in the way of signal for the markets, but one might with the positive close in New York expect to see some buoyancy coming into play for the London market and a steady start for the New York market for early trade today, against the price set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1994 – 20                                               DEC     179.45 + 2.40
MAR     2011 – 23                                               MAR    180.45 + 2.40
MAY     2028 – 23                                               MAY    182.95 + 2.35
JUL      2043 – 24                                                JUL     185.30 + 2.30
SEP      2054 – 24                                               SEP     187.55 + 2.25
NOV     2056 – 22                                                DEC    190.00 + 2.25
JAN      2060 – 18                                               MAR    191.40 + 2.50
MAR     2068 – 17                                               MAY     191.45 + 2.80
MAY     2077 – 15                                                JUL     191.05 + 2.70
JUL      2084 – 15                                                SEP     190.50 + 2.55

9th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decrease their net long position within this market by 5.35% in the week of trade leading up to Tuesday 2nd. December;  to register a net long position of 22,248 Lots on the day.   This net long position that is the equivalent of 3,708,000 bags has most likely been marginally reduced over the period of mixed but overall more negative trade that has since followed.

The Brazilian Coffee Exporters Association have come forth with their more detailed coffee export figures for the month of November, to report that the green coffee exports for the month were 367,036 bags or 14.99% higher than the same month last year, at a total of 2,816,264 bags.   Added to this were the value added exports of soluble coffee calculated in terms of their green coffee equivalent which resulted in the overall coffee exports for the month of November being a slightly more modest 313,238 bags or 11.62% higher than the same month last year, at a total of 3,009,118 bags.

In terms of value however and with much of this export performance for the month of November having been related to relatively good value price fixed coffees, the November exports were 211.2 million U.S. dollars or 55.09% higher than the same month last year, at a total of 594.6 million U.S. dollars.   This relatively good value and with the firming U.S. dollar which assists to increase the internal market prices for the coffees, does much to continue to inspire the farmers to remain relatively aggressive and easy sellers of the combination of past crop arabica coffee stocks and new crop arabica and conilon robusta coffee stocks.

The question still remains why with even relatively good currency inspired value aside, are the Brazilian farmers remaining active sellers, as by the very nature of this activity they the farmers, are tending to indicate that they do not foresee as much of a disastrous next 2015 arabica coffee crop as many have indicated.   Thus having no reason to show selling and price restraint so as to hold back arabica coffee stocks to join a significant deficit new 2015 crop, which would need to carry consumer market supply through to the third quarter of 2016.  Thus supporting the view of many less concerned forecasts, who have been talking about a follow on 2015 arabica coffee crop that might in fact match to perhaps even marginally exceed this year’s deficit arabica coffee crop.   A crop that with significant carryover arabica coffee stocks, has not resulted in an overall deficit arabica coffee supply through to the next crop and with arabica coffee stocks to carry over into the next crop, which might be as high as 6 million bags.

This factor along with the firmer nature of the U.S. dollar and the relatively good prevailing rains in Brazil and with the consumer markets lacklustre in nature, is assisting to dampen speculative spirits within the volatile and influential New York market.   The question remains however and with the early in this year’s crop damaging partial drought over the main arabica coffee districts in Brazil, what shall be the rainfall for the first quarter of 2015, as any hiccups in this summer rain season and with the experiences of what happened this year still fresh in mind, would undoubtedly bring forth a host of market supportive scare stories.    Thus while the New York market and with the London market following in a less aggressive manner is tending to develop a speculatively bearish stance, one would expect a degree of caution to come to the fore on the part of the speculative sector of the market, until there is some more defining rainfall and new crop forecast data on the table, over the first two months of the coming year.  This factor might tend to limit the present downside track that the charts are indicating, for at least the short term.   

The arbitrage between the markets narrowed yesterday to register this at 85.79 usc/Lb., while this equates to a relatively attractive 48.18% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 840 bags yesterday, to register these stocks at 2,318,791 bags.   There was meanwhile a larger in volume 1,235 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,315 bags.

The U.S. dollar retained its muscle yesterday, to continue to dampen spirits within many markets and with the strong dollar accompanied by poor economic numbers from Japan that is suffering through a recession and indicators of slowing demand from the internal market in China.  The Sugar, Cocoa, Cotton, Orange Juice and Wheat markets nevertheless showed some buoyancy, while the Oil, Natural Gas, Coffee, Corn, Soybean, Gold, 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 0.79% lower; to see this Index registered at 467.20.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.231 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 64.80 per barrel.

The London and New York markets started the day yesterday on a relatively steady sideways track, but with the London market soon turning south, while the New York market tended to show some modest buoyancy in thin trade.   The markets continued with this stance into the afternoon’s trade and with the New York market maintaining a positive stance and London market just below par.  As the afternoon progressed however and with a lack of industry support under the markets, the New York market lost its stability and headed back into negative territory and with the London market losing a little more weight.  The London market continued to end the day on a soft note and with 90.5% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 66.1% of the earlier losses of the day intact.   This overall soft close and with little in the way of supportive fundamental news in play, is likely to set the markets for little better than 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.
                                                
JAN      2014 – 24                                               DEC     177.05 – 2.05
MAR     2034 – 19                                               MAR     178.05 – 2.05
MAY     2051 – 15                                               MAY     180.60 – 2.05
JUL      2067 – 14                                                JUL     183.00 – 2.00
SEP      2078 – 16                                               SEP     185.30 – 1.95
NOV     2078 – 16                                                DEC    187.75 – 1.90
JAN      2078 – 16                                               MAR     188.90 – 1.80
MAR     2085 – 16                                               MAY     188.65 – 1.65
MAY     2092 – 16                                                JUL     188.35 – 1.55
JUL      2099 – 16                                                SEP     187.95 – 1.45

8th. December, 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 5.42% in the week of trade leading up to Tuesday 2nd. December;  to register a net long position of 35,783 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 1.09%, to register a net long on the day of 40,090 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 11.90%, to register a net long of 31,217 lots on the day.   This net long position that is the equivalent of 8,849,881 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The Ethiopian Coffee Exporters Association have voiced their confidence in their countries coffee export prospects for the present July 2014 to June 2015 financial year, following a 5.88% increase in exports for the first four months of this financial year compared to the same period in the previous year, with exports for the period registered at approximately 900,000 bags.   This improved performance they say is even more impressive, in terms of the value of the exports having been 34.43% higher than the same period in the previous financial year, at a total of 231.9 million U.S. dollars.

Following this good start for their coffee industry for this present financial year, the Ethiopian Coffee Exporters Association have forecasted that their exports for the financial year might well prove to be 23.68% higher than the previous financial year, to total 3,916,667 bags.   These exports they estimate shall generate coffee export income for the country that shall be 2.5% higher than the previous financial year, at approximately 862 million U.S. dollars.   This relatively ambitious export target in terms of rising volumes of exports are not matched by a similar ambitious forecast in terms of value, which might make one comment that the association has objectively addressed the declining value of the international coffee prices that have hit a four and half month low for the New York market, on Friday.  

This softening of the coffee markets being related to the day by day rainfall reports from Brazil, which are accompanied by forecast for more rains to come over the next couple of weeks.   While in the meantime with the rains falling in Brazil and with most of the main producer bloc’s looking forward to either steady to increased new crop production levels, there are no further fundamental supportive reports coming to the coffee markets.  While the with the relatively well stocked consumer markets relatively complacent in their buying activity, there is little underlying support coming from the industry and leaving market support very much in the hands of the unpredictable fund sector of the markets.

This decline in the value of the markets albeit partially countered by the prevailing stronger value of the U.S. dollar, is becoming something of a concern for the arabica coffee producers and particularly so for the Mexicans and Central Americans, who have larger overall volumes of new crop coffees to sell in the coming months.   These farmers mostly having experienced significant increases in production costs, as they come out of two years of increased inputs that have been related to the battle against Roya or Leaf rust and with reference prices of the New York market starting to drift back to levels that do not offer much in the way of profitability for many farmers.

The arbitrage between the markets narrowed on Friday to register this at 86.98 usc/Lb., while this equates to a relatively attractive 48.30% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,919 bags on Friday, to register these stocks at 2,317,951 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,550 bags.

The U.S. dollar was buoyed on Friday by the news of better than expected rising employment figures and this impacted within many of the commodity markets, with the macro commodity index taking a softer track to end off the week on a soft note.   The Brent Oil, Natural Gas, Cocoa, Wheat, Corn and Soybean markets nevertheless showed buoyancy and the Orange Juice market was steady, while the U.S. Oil, Sugar, Coffee, Cotton, Copper, Gold, 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 0.28% lower; to see this Index registered at 470.93.   The day starts with the U.S. Dollar steady and trading at 1.556 to Sterling and 1.229 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 67.65 per barrel.

The London and New York markets started the day on Friday on a relatively steady note and with some hesitant buoyancy in thin trade, but this was short lived and the markets started to lose their way and they took a softer track into the afternoon’s trade.   The negative influences of the firmer dollar and the softening nature of the macro commodity index saw both markets extend their losses as the afternoon progressed, but with underlying support coming into play later in the day to bring forth a degree of corrective buoyancy for both markets.    The London market continued to end the day on marginally softer note and with 43.7% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 67.1% of the losses of the day intact.   This overall soft close does little to inspire, but one might expect to see some degree of hesitancy and perhaps a cautiously steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2038 – 10                                               DEC     179.10 – 2.45
MAR     2053 – 7                                                 MAR    180.10 – 2.35
MAY     2066 – 7                                                 MAY    182.65 – 2.35
JUL      2081 – 4                                                  JUL     185.00 – 2.35
SEP      2094 – 1                                                 SEP     187.25 – 2.30
NOV     2094 – 1                                                  DEC    189.65 – 2.10
JAN      2094 – 1                                                 MAR     190.70 – 2.10
MAR     2101 – 1                                                 MAY     190.30 – 2.25
MAY     2108 – 1                                                  JUL     189.90 – 2.20
JUL      2115 – 1                                                  SEP     189.40 – 2.30

5th. December, 2014.
The rains continue in Brazil and with many positive reports coming forth to the market, in terms of the condition of the trees and likewise, the development of the new crop cherries.  These reports and with very little in the way of qualified reports to counter the evidence of positive steps now being taken towards the development of the next 2015 Brazil crop, continue to dampen speculative spirits within the New York market.

Meanwhile despite the softening of the reference prices of the New York market against which the Brazil arabica coffees are sold and mostly at discounted differentials, the farmers remain active sellers of the combination of past crop and new crop arabica coffees.   These sales are of course assisted by the presently weak nature of the Brazil Real that is presently trading at 2.59 to the U.S. dollar, which is taking some of the bite out of the negative nature of the international dollar prices for coffee at present.    

One has to question however in terms of this continued selling activity on the part of the farmers, their belief in the prospects for a dramatically low new 2015 crop as has been predicted by a number of analysts as surely if the farmers who would know best do have the same perspective, they would be showing a greater degree of price resistance and holding back stocks to sell over the next eighteen months.   This is however so far not the case and one might think from this continued easy selling policy on the part of the Brazilian arabica coffee farmers that they are presently looking towards only a modest deficit crop for the coming year, rather than a sharp dip in production.

The new Central American crop is now in harvest but with many districts having experienced relatively cold weather, which has been slowing the maturity of the cherries.   This is however seen to be a more positive than negative factor, as the slower the development to maturity for the cherries, the better shall be the overall cup quality.   While with more than sufficient fine washed arabica coffee supply within the markets at present and assisted by the good levels of Colombian new crop coffees coming to the market, there is no panic over the delay in the delivery of the new Central American and Mexican crops.

Adding to the lack of concern over the small delay in new crop deliveries from Central America, is prevailing the lacklustre nature of the consumer markets, where stocks remain good and cautious roasters look towards the possibility of softening price levels, to maintain a slow and steady rather than an aggressive longer term buying policy.   Thus with large volumes of new crop fully washed arabica coffees from Mexico, Central America and Colombia hanging over the market and likewise, new crop Vietnam, Indian and Ugandan coffees now coming to the market, while Brazilian natural arabica coffee sales are active, it remains for the present more a buyers rather than a sellers’ market.     

Following the recent forecasts from Australasia that foresee the strong possibility for the development of a new El Nino phenomenon within the Pacific Ocean, the U.S.A. based Climate Protection Agency have forecasted a 65% chance for an El Nino to come into play for the first quarter of 2015 and to continue into the second quarter.   These forecasts are all so far in agreement that if it does materialise that it would be only a modest El Nino and therefore not threatening to the prospects for the Colombian, Peru and Indonesian coffee crops, while it would be supportive for fair rains for the Brazil coffee districts.    Therefore the El Nino or the prospects for its development remains a side-line factor, in terms of coffee market sentiment.      

The arbitrage between the markets narrowed yesterday to register this at 89.01 usc/Lb., while this equates to a relatively attractive 48.79% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 13,610 bags yesterday, to register these stocks at 2,322,870 bags.   There was meanwhile a larger in volume 15,025 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,550 bags.

The commodity markets tended to take a sideways track within many markets yesterday, but with little in the way of supportive economic news coming to the markets for the present, the overall commodity index struggled to maintain its modest buoyancy for the day.   The Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat, Silver and Platinum markets had a day of buoyancy, while the Oil, Coffee, Orange Juice, Corn, Soybean 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 0.14% higher; to see this Index registered at 472.27.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.238 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 68.50 per barrel.

The London market predictably started the day yesterday on a softer track, but followed by a steady start for the New York market.  This seemed to have its influence and the London market soon recovered to join the New York market on a thinly traded steady track into the afternoon.  This did not last however and as the afternoon progressed and with trade remaining relatively thin and lacklustre, the New York market started to drift lower and with the London market likewise losing some weight.    The London market continued to end the day on a modestly softer note but with only 30% of the earlier losses of the day intact and followed by the New York market that registered a partial recovery late in the day to nevertheless end the day on a soft note and with 47.1% of the earlier losses of the day intact.   This overall soft and lacklustre close for the markets and with little in the way of striking fundamental news to provide direction, is likely to see the markets set for slow and steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2048 – 3                                                 DEC     181.55 – 1.00
MAR     2060 – 3                                                 MAR    182.45 – 1.20
MAY     2073 – 4                                                 MAY     185.00 – 1.15
JUL      2085 – 5                                                  JUL     187.35 – 1.15
SEP      2095 – 6                                                 SEP     189.55 – 1.15
NOV     2095 – 4                                                  DEC    191.75 – 1.10
JAN      2095 – 2                                                 MAR    192.80 – 1.05
MAR     2102 – 1                                                 MAY    192.55 – 1.05
MAY     2109 – 1                                                  JUL     192.10 – 1.05
JUL      2116 – 1                                                  SEP     191.70 – 1.00

4th. December, 2014.
The National Coffee Council in El Salvador and with the new crop having started to be harvested, have forecasted that they expect this new crop to be 65% larger than the previous crop, at a total of 889,333 bags.  This increase they appropriate to the fact that the country had taken strong measures to counter the devastating effects of Roya or Leaf Rust over the past two years, which has resulted in approximately 92% of the coffee farms to have Roya completely under control.

One might comment that with the El Salvador coffee industry dominated by commercial farms and with many having pruned back their coffee trees during 2012 in a radical bid to control Roya, that these trees shall start coming back towards full production during next year.   Therefore unless there are no further unforeseen climatic or disease issues coming forth in the coming year, the country shall potentially return to crop levels of in excess of 1 million bags by the follow on 2015/2016 crop.

The Colombian President Juan Manuel Santos gave a speech at a Colombian National Coffee Federation and presumably voicing the views of the Federation, to announce his confidence in the prospects for the Colombian coffee industry to have a good year and to register earnings of 2.4 billion U.S. dollars.    But furthermore and in terms of the short term future, he has confirmed the Federations confidence that with a large percentage of the country’s coffee farms still covered by young and yet to fully mature trees, that their annual crop that dipped to 7.8 million bags in 2009 and topped 12 million bags for the October 2013 to September 2014 coffee year, shall soon achieve levels in excess of 14 million bags per annum.    This forecast in terms of private trade and industry opinions is seen to be realistic and with many already forecasting an October 2014 to September 2015 crop of fine washed arabica coffees that shall already exceed 13 million bags.

The leading Brazil coffee cooperative Cooxupe with the new 2015 crop cherries starting to develop has forecasted that due to the early in the year drought damage to the trees, that they foresee the next 2015 crop to potentially be marginally close to 1% lower than the just completed 2014 crop.   This report is not nearly as dramatic as some of the reports that have come to the market and if it were to be correct, would indicate a 2015 crop of around 47 million bags and therefore, a not too difficult to live with in terms of world stocks deficit of around 6 million bags.   One might suggest however as forecasts from the cooperative tend to be relatively conservative, that this Cooxupe forecast might already indicate an even smaller forthcoming 2015 deficit crop and therefore is a forecast that is more neutral rather than supportive for the market.

The subject of El Nino has once again come to the fore, with further indications for the probability of a weak El Nino phenomenon to soon develop within the Pacific Ocean.    This by nature of being foreseen to be a weak event is however not threatening for the Pacific rim coffee producers and most importantly Colombia, Indonesia and Peru, while traditionally an El Nino is supportive for improved rains for the coffee districts in Brazil and thus somewhat reducing any threat of a repeat dry spell for the first quarter of the coming year.

Meanwhile following reasonable rains for the majority of the Brazil coffee districts during the past month, the forecasts are indicating that fair rains shall be forthcoming for the next two weeks and therefore, to further support the development of the next 2015 Brazil crop.   Thus for the present there are no further weather concerns forthcoming from Brazil and the debate remains rather, over how much damage the early in the year partial drought and the late start to the present rain season might have done, to the potential of this next crop.

The arbitrage between the markets narrowed yesterday to register this at 90.07 usc/Lb., while this equates to a relatively attractive 49.04% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,875 bags yesterday, to register these stocks at 2,336,480 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,525 bags.

The commodity markets tended to take a sideways track within many markets yesterday, but with the overall commodity index nevertheless tending softer for the day.   The U.S. Oil, Coffee, Cotton, Orange Juice, Gold and Platinum markets showed buoyancy, while the Brent Oil, Sugar, Cocoa, Copper, Wheat, Corn, Soybean and Silver markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% lower; to see this Index registered at 471.60.   The day starts with the U.S. Dollar steady and trading at 1.567 to Sterling and 1.230 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 69.75 per barrel.

The London market started the day yesterday on a softer track, but followed by some modest buoyancy for the New York market.  This seemed to have its influence and the London market recovered to set a steady track into the afternoon, while the New York market retained its modestly positive stance.    Trade remained thin but with the New York market adding some further value and the London market starting to show some renewed confidence and buoyancy, as the afternoon progressed.   The upside track for the New York market was however not sustained and while the London market held on to its gains, the New York market started to falter later in the day.  The London market ended the day on a positive note and with 76% of the earlier gains of the day intact, while the New York market ended the day showing only modest buoyancy and with only 9.4% of the gains of the day intact.   This close does little to inspire and one might expect to see a marginally softer start for the London market and a close to steady start for the New York market for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2051 + 17                                               DEC     182.55 + 0.25
MAR     2063 + 19                                               MAR     183.65 + 0.25
MAY     2077 + 20                                               MAY     186.15 + 0.25
JUL      2090 + 20                                                JUL     188.50 + 0.20
SEP      2101 + 21                                               SEP     190.70 + 0.20
NOV     2099 + 21                                                DEC    192.85 + 0.35
JAN      2097 + 21                                               MAR    193.85 + 0.40
MAR     2103 + 21                                               MAY    193.60 + 0.40
MAY     2110 + 21                                                JUL    193.15 + 0.35
JUL      2117 + 21                                                SEP    192.70 + 0.35

3rd. December, 2014.
The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of November were 13,024 bags or 28.27% lower than the same month last year, at a total of 33,048 bags.   This slow start to the new coffee year has contributed to the countries cumulative exports for the first two months of the present October 2014 to September 2015 coffee year to being 18,953 bags or 23.51% lower than the same period in the previous coffee year, at a total of 61,663 bags.

The Coffee Growers Federation in Colombia have reported that the countries coffee production for the month of November was 2,000 bags or 0.18% higher than the same month last year, at a total of 1,115,000 bags.   This contributes to the countries cumulative production for the first two months of the present October 2014 to September 2015 coffee year to be 45,000 bags or 2.07% higher than the same period in the previous coffee year.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of November were 78,000 bags or 7.1% lower than the same month last year, at a total of 1,022,000 bags.    This dip nevertheless follows a more active month of exports in October and therefore the cumulative exports for the first two months of the present October 2014 to September 2015 coffee year are still 5,000 bags or 0.25% higher than the same period in the previous coffee year, at a total of 1,988,000 bags.     

The new Vietnam harvest has experienced some light rain interruptions, which has slowed the delivery of the new crop robusta coffees to the exporters, but with good carryover stocks in hand this has not really disrupted a steady flow of robusta coffees to the consumer markets.  While approximately 40% of the new crop harvest now completed, one can expect that the flow of new crop coffees shall start to build and for the present it is very much business as usual from this leading robusta producer.

Meanwhile the traditional seasonal scare stories are coming forth from the Vietnam Coffee and Cocoa Association, who talk about the new crop to potentially be up to 20% lower than the last crop.  Followed by the Vietnam governments Coordinating Board forecasting a new crop of only 21.67 million bags, which is a rather dramatically modest figure.  But this differs little from the official forecasts and reports in previous years that come to the market during and shortly post the harvest and for the present and thus, such market manipulative reports are not taken seriously.   While albeit early in the month, the trade is talking of December exports of mostly robusta coffee from Vietnam of between 2 million and 2.5 million bags.  

With the new arabica coffee crop well into its new crop harvest in India and the new robusta coffee crop soon to follow, the farmers are disputing the official new crop forecasts and indicate that they foresee the new arabica coffee crop to be 20% lower than the past crop.   This unofficial forecast does not however detract from many other private trade and industry forecasts who foresee that while there has been the usual problems of white stem borer for the arabica coffee farmers, that the new crop shall potentially match the previous arabica crop of approximately 1.6 million bags.   While the general view is that the new Indian robusta crop shall be at least 20%larger than the past crop, at approximately 4 million bags.    Thus the unofficial trade forecasts presently are close to the official Coffee Board of India forecast, which has forecasted a combined new Indian crop of approximately 5.74 million bags.  

The arbitrage between the markets narrowed yesterday to register this at 90.69 usc/Lb., while this equates to a relatively attractive 49.45% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,800 bags yesterday, to register these stocks at 2,338,355 bags.   There was meanwhile a larger in volume 4,920 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,525 bags.

The commodity markets had a day of reversal yesterday, with the renewed muscle of the U.S. dollar coming forth to dampen spirits within many markets and to once again pressure the macro commodity index lower.  The Cotton market held steady, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, 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 1.55% lower; to see this Index registered at 473.22.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.237 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 70.40 per barrel.

The London market started the day with a degree of buoyancy, while New York market started the day modestly softer, with London market maintaining its positive track into the afternoon and the New York market maintaining its negative track.   The New York market continued to take a downside track for the rest of the day and finally had its influence upon the London market, which shed its gains and moved down into negative territory.   The London market continued to end the day on a soft note and with 95.7% of its losses of the day intact, while the New York market shed 3.68% in value for the day and ended the day on a very soft note and with 97.2% of the losses of the day intact.    This very soft overall close does little to inspire and one might expect to see 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.
                                                
JAN      2034 – 29                                               DEC     182.30 – 7.05
MAR     2044 – 22                                               MAR     182.40 – 7.00
MAY     2057 – 22                                               MAY     185.90 – 7.00
JUL      2070 – 20                                                JUL     188.30 – 6.95
SEP      2080 – 19                                               SEP     190.50 – 6.90
NOV     2078 – 19                                                DEC    192.50 – 6.90
JAN      2076 – 19                                               MAR     193.45 – 6.90
MAR     2082 – 19                                               MAY     193.20 – 6.90
MAY     2089 – 19                                                JUL     192.80 – 6.85
JUL      2096 – 19                                                SEP     192.35 – 6.85

2nd. December, 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 4,16% in the week of trade leading up to Tuesday 25th. November;  to register a net long position of 37,835 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 6.77%, to register a net long on the day of 39,656 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 15.95%, to register a net long of 35,433 lots on the day.   This net long position that is the equivalent of 10,045,098 bags has most likely been reduced over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market increase their net long position within this market by 2.49% in the week of trade leading up to Tuesday 25th. November;  to register a net long position of 23,505 Lots on the day.   This net long position that is the equivalent of 3,917,500 bags has most likely been marginally reduced over the period of mixed but overall more negative trade that has since followed.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of November were 5,889 bags or 5.97% higher than the same month last year, at a total of 104,611 bags.    However in terms of a corrected lower figure for November last year, this increase was a more impressive 116.47% factor.   If one is to go with the corrected figure for November last year, the cumulative exports from Honduras for the first two months of this new October 2014 to September 2015 coffee year are 33,102 bags or 34.51% higher than the same period in the previous coffee year, at a total of 129,024 bags.

The preliminary coffee exports from Brazil for the month of November indicate that the country exported 152,300 bags or 5.62% more bags during this last month than the same month last year, to total 2,864,100 bags for the month.   Thus for the present and despite the lower new crop that has been largely pegged at marginally below 48 million bags, the significant carryover stocks of in excess of 12 million bags of arabica coffees into this new harvest, allow for Brazil to maintain its significant market share within the consumer markets.

The Colombian National Coffee Federation remain confident that the country shall produce at least 12.5 million bags of fine washed arabica coffees during the present October 2014 to September 2015 coffee year, due to the positive effects of a return to normal weather conditions and the increased yields from the high percentage of farms that have replaced aged trees over the past five years.   This figure is very much in agreement with most private trade and industry forecasts and with many already talking the figure higher and it is not impossible that by the end of this new coffee year, that the production might even exceed 13 million bags.

While the fundamental news from most of the producer bloc is related to higher production and is somewhat bearish in nature, the issue of Brazil remains on the board and particularly so the longer term world coffee supply that shall be related to the next 2015 Brazil crop.    With the market in receipt of the Rabobank forecast for an approximate 6 million to 11 million bags deficit 2015 Brazil crop of between 42 million to 47 million bags and followed by the Citi Bank forecast for an approximate 8.3 million bags deficit crop of 44.7 million bags.   While the Citi Bank forecast is that there shall be an approximate 10 million bags deficit in world coffee supply, by 2016.   These reports came to the fore during trade yesterday in time to buoy some speculative spirits within the New York market, where the charts were taking something of a negative track.  

The arbitrage between the markets broadened yesterday to register this at 96.69 usc/Lb., while this equates to a relatively attractive 50.78% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 625 bags yesterday, to register these stocks at 2,335,555 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 8,445 bags.

The commodity markets had an overall hesitant soft start yesterday, following the rather dramatic sell off within many markets on Friday.   There was however as the day progressed and with the U.S. dollar losing some weight something of a return to confidence and with the volatile Oil markets taking the lead, to influence a positive stance for the macro commodity index.   The Oil, Cocoa, New York arabica Coffee, Copper, Wheat, Gold, Silver and Platinum markets had a day of buoyancy and the Sugar and Corn markets ended the day on a steady note, while the Natural Gas, London robusta Coffee, Cotton, Orange Juice and Soybean markets had a softer days trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.63% higher; to see this Index registered at 480.66.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.572 to Sterling and 1.247 to the Euro, while North Sea Oil is relatively steady in early trade and is selling at $ 71.35 per barrel.

The London and New York markets started on the back foot in thin and hesitant trade, but with both markets posting a modest recovery for a brief period, prior to heading back below par and taking a negative track for early afternoon trade and with sell stops extending the losses within the markets, as the afternoon progressed.   There was however a late in the day reversal in sentiment and with the New York market taking a sudden positive turn to trigger stops and to shoot back up into unexpected positive territory, while the London market posted a partial recovery.  The London market continued to end the day on a marginally softer note but with 33.3% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 88.1% of the gains of the day intact.   This late in the day recovery in New York might well set the markets for a cautiously steady start, as players await some further direction from the markets and against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2063 – 11                                               DEC     189.35 + 2.70
MAR     2066 – 4                                                 MAR     190.40 + 2.95
MAY     2079 – 3                                                 MAY     192.90 + 3.00
JUL      2090 – 2                                                  JUL     195.25 + 3.10
SEP      2099 – 1                                                 SEP      197.40 + 3.25
NOV     2097 – 2                                                  DEC     199.40 + 3.40
JAN      2095 + 1                                                 MAR     200.35 + 3.50
MAR     2101 + 1                                                 MAY     200.10 + 3.70
MAY     2108 + 1                                                  JUL      199.65 + 4.00
JUL      2115 + 8                                                  SEP      199.20 + 4.30

1st. December, 2014.
With the month of November over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported that the islands robusta coffee exports for the month of November were 643,432 bags or 74.80% lower than the same month last year, at a total of 216,789 bags.   This follows a relatively dismal performance in October and therefore the cumulative robusta exports from Sumatra for the first two months of the present new October 2014 to September 2015 coffee year are 1,014,923 bags or 63.52% lower than the same period in the previous coffee year, at a total of 583,000 bags.

This relatively poor performance on the part of robusta coffee supply from Sumatra is of course related to a relatively poor weather related crop this year and one can expect that for the short term and ahead of the new crop that starts to come into play during the second quarter of next year, that the figures shall continue to be relatively modest for the next four to five months.   However the weather conditions have been much improved and the prospects are for a much improved new crop, which should see the Sumatran robusta coffee exports start to pick up and become more aggressive by the third quarter next year and therefore, the last quarter of the present coffee year.

Meanwhile there is another large new Vietnam robusta coffee crop now starting to come to the market and this over and above a good carryover stock of past crop coffees, which shall ensure that there should be no foreseeable hiccups in terms of consumer market robusta coffee supply, albeit that with limited short term competition from Indonesia, the Vietnamese can afford to be restrained and relatively price supportive, in their approach to the market.   Even though with the prospects for improved Indian, Ugandan and West African robusta supply, there shall be some improved volumes of robusta coffee coming from these producers during the first quarter of the coming year.

These additional volumes of Indian and African robusta coffees are however compared to the volumes that are related to Vietnam and Indonesian production, relatively negligible and have little impact upon the overall market prices for robusta coffees.    Likewise the steadily improving volumes of conilon robusta coffee supply within Brazil that is in reality the world’s second largest robusta coffee producer, as these Brazilian robusta coffees by nature of the competitive price to arabica coffees, are mostly absorbed within the countries domestic market and do not have a marked impact upon consumer market robusta coffee supply.  They rather by nature of filling the gap within Brazilian domestic coffee demand, more of an influence upon the supply of export arabica coffees from Brazil and provide some degree of insurance against the recent weather related dip in Brazils arabica coffee crop.

Meanwhile the main arabica coffee districts have experienced good overall November rains and they are due to continue into this month, with the short to medium term weather forecasts so far providing no threat to the prospects for the development of the next 2015 Brazil arabica coffee crop.   Albeit that due to some degree of irreversible damage from the early in 2014 partial drought and the late start to the rains, this next arabica coffee crop can be expected to be nothing better than relatively modest in nature.   They do however in line with the generally soft nature of the macro commodity index, assist to dampen some speculative spirits within the related and still reasonably positive in value, New York arabica coffee market.    

The arbitrage between the markets narrowed on Friday to register this at 93.56 usc/Lb., while this equates to a relatively attractive 49.91% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,977 bags on Friday, to register these stocks at 2,336,180 bags.   There was meanwhile a smaller in volume 2,565 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 8,445 bags.

The commodity markets returned to a full team on Friday, following Thursday’s Thanksgiving Holiday for the U.S.A., but with many players taking a long weekend and trade somewhat dulled.   The direction for the overall macro commodity index was however with the Oil markets heading to new five year lows not so lacklustre in nature, with this index coming under severe pressure.   The Orange Juice and Cotton markets did however have a relatively steady day, but with the Oil, Natural Gas, Cocoa, Sugar, Coffee, Copper, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets experiencing a soft end to the shortened week.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 2.53% lower; to see this Index registered at 475.26.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.562 to Sterling and 1.245 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 67.20 per barrel.

The London market started the day on Friday on a hesitantly steady note in thin and lacklustre trade, with the New York market tending softer from the start of the days likewise lacklustre trade.   The negative nature of the New York market which was coming under pressure from the speculative sector that was reacting to both the Brazilian weather news and to the demise of the macro commodity index, did however soon have its influence and the London market likewise headed back into negative territory and a downside track.   The London market continued to end the day on a soft note and with 91.7% of the losses of the day intact, while the New York market ended the day on a very soft note and with 88.9% of its significant losses of the day intact.   This overall weak close does little to inspire and one might expect to see buyers stepping back to wait and see and thus, 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.
                                                
JAN      2074 – 22                                               DEC     186.65 – 6.85
MAR     2070 – 26                                               MAR     187.45 – 6.80
MAY     2082 – 23                                               MAY     189.90 – 6.70
JUL      2092 – 21                                                JUL      192.15 – 6.75
SEP      2100 – 20                                                SEP     194.15 – 6.55
NOV     2099 – 20                                                DEC     196.00 – 6.50
JAN      2094 – 25                                               MAR     196.85 – 6.40
MAR     2100 – 25                                               MAY     196.40 – 6.30
MAY     2107 – 24                                                JUL     195.65 – 6.35
JUL      2107 – 24                                                SEP     194.90 – 6.55

28th. November, 2014.
It was a very quiet day for the industry yesterday; with the dominant New York arabica coffee market closed for the Thanksgiving Holiday and with most industry players within the rest of the world side-lined by matters of administration, rather than trade.   Leaving the London market to wallow in the doldrums of thin and disinterested trade, as the trade and industry await the return to work of the Americans today, albeit that many shall be taking today as an extended long weekend pre-Christmas shopping holiday.

Meanwhile on the weather front in Brazil the forecasters are looking to the presently overall wet week for the country’s main coffee districts to be concluded with a wet and weekend, with the rains due to weaken for the coming week, but to nevertheless see widespread scattered showers occurring for the coming week.   Likewise into the middle of the following week, to contribute to building ground water retention levels for the coffee farmers and to the steady development of the immature new crop cherries for the coming year.

The question is in terms of the now very normal weather conditions is what shall be the prospects for the forthcoming Brazil crop in 2015, with so many earlier reports speculating that it has been irreversibly damaged and shall in terms of the present 20 million bags plus per annum domestic consumption and export volumes that are expected to be between 31 million and 34 million bags for the coming year, which shall result in a deficit production factor through to the second quarter of 2016.   These deficit forecasts have however somewhat dried up of late and those few that come to the market seemingly now fall upon deaf ears, as players await more reliable data that shall come early in the New Year and based upon new crop developing cherry counts, which shall better define the prospects for this new crop.  

Thus with the rain issues in Brazil for the present not proving to be a matter of concern and the forecasts for the coming month not indicating any reason to fear any further short term weather threat, one can expect to see the Brazil new crop factor to be less influential upon the markets for the coming weeks.   But one might expect following this year’s rather dramatic partial drought over the main arabica coffee districts, expect to see some degree of caution on the part of the speculative sector of the market, until they see how the weather shall perform for the start of the first quarter of 2015.

Meanwhile the larger new Central American crops are starting to be harvested and with a large new Colombian main crop already in play, to see fine washed arabica supply at levels more than sufficient to satisfy consumer market demand.   This is likewise the case with robusta coffee supply where despite the usual scare stories that emanate at this time of the year in terms of the new Vietnam crop, most industry players are still banking on the presently in harvest new Vietnam crop to be another good one and to be supported next year by improved levels of robusta coffee production from India, Uganda and Indonesia.

There remains however in terms of new crop supply a deficit supply from Brazil of natural arabica coffees, but with this deficit being countered by the large volumes of Brazil carryover 2013 stocks, there remains for the present no threat to short to medium term supply.  Thus while for the present the longer term in nature speculative sector of the coffee markets remain cautiously bullish, the physical trade is less confident and is overall cautions and short term in nature.  This contributing to somewhat unseasonal lacklustre physical coffee trade, with good volumes of new coffees on offer and chasing a market, which lacks aggressive buying demand.

The arbitrage between the markets albeit against a closed previous days value in New York narrowed yesterday to register this at 99.27 usc/Lb., while this equates to a relatively attractive 51.10% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 116 bags on Wednesday, to register these stocks at 2,340,157 bags.   There was meanwhile a larger in volume 3,160 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 5,880 bags.

The commodity markets which are dominated by the U.S.A. based markets were mostly closed yesterday, but with the London markets operating in thin trade.    The London Cocoa market showed some buoyancy in thin trade with the perspective of tight longer term supply providing some degree of support, while the prospects for good rains in Brazil dampened spirits within the London Sugar market and the London robusta Coffee market remained relatively steady.  The London Brent Oil market was however an item, as this market collapsed against the news that there will not be any cutting of supply from the OPEC producers, while the Gold, Silver and Copper markets also had a softer day.  There was of course no change to the Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets (with many closed); to see this Index registered at 485.26.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.571 to Sterling and 1.245 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 71.55 per barrel.

The London market started the day yesterday with early buoyancy in thin trade, to take a marginally positive sideways track into the afternoon.   There was however with thin trade accentuating any moves a short dip below par in the afternoon but with the market soon recovering and finally ending the day on a hesitantly steady note.  This provides little indication for direction for today but one might expect that with the firmer nature of the U.S. dollar and the lack of supportive weather related fundamental news from Brazil, that the markets shall tend towards a negative track for early trade today against the close yesterday in London and on Wednesday in New York, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2096 + 1                                                 DEC     193.50 – 0.75
JAN      2096 unch                                             MAR     194.25 – 0.80
MAR     2094 – 3                                                 MAY     196.60 – 0.75
MAY     2105 – 4                                                  JUL     198.90 – 0.75
JUL      2113 – 4                                                  SEP     200.70 – 0.75
SEP      2120 – 4                                                 DEC     202.50 – 0.65
NOV     2119 – 5                                                 MAR     203.25 – 0.50
JAN      2119 – 5                                                 MAY     202.70 – 0.50
MAR     2125 – 5                                                  JUL     202.00 – 0.45
MAY     2131 – 5                                                  SEP     201.45 – 0.40

27th. November, 2014.
The well respected United States Department of Agriculture have dampened some new found bullish spirits that came with some forecasts for a smaller new crop of mostly robusta coffees from Vietnam that is presently heading into its peak harvest, with their assessment that this new crop shall only be marginally lower at a total of a still impressive 29.3 million bags.   This forecast is close to 2 million bags higher than some of the recent trade forecasts that have come to the market and is a report that indicates business as usual from Vietnam, for this new October 2014 to September 2015 coffee year and with the report forecasting exports for the coffee year to potentially be in the region of a steady 26.6 million bags.

The Indonesian Coffee Exporters and Industries Association have increased their earlier assessment of this year’s coffee crop and have reported that nevertheless due to the poor weather conditions late last year and earlier this year, that the country’s coffee crop for 2014 was 9.46% to 12.16% lower than the previous year’s crop, at a total of between 10.83 million to 11.17 million bags.  This figure is 833,330 bags to 1,166,667 bags higher than their earlier in the year forecast, while it is a figure that is significantly better than some of the earlier trade and industry reports that had indicated this year’s Indonesian crop to be approximately 9 million bags and with some even talking it a bit lower.   The same AEKI report has also reconfirmed that due to much improved weather conditions for the second half of this year that the crop for the forthcoming year shall most probably exceed 11.6 million bags, but still lower than the broadly accepted 2013 crop of 12.33 million bags.

As against this more positive production forecast from Indonesia the report has forecasted that domestic coffee consumption shall continue to rise and shall potentially be in the region of 5.83 million bags of the coming year, which would indicate that despite the potential for improved production, it shall not impact in any dramatic manner upon the countries coffee export potential for 2015.  Albeit that within the countries impressive domestic consumption, they estimate that Indonesia shall import approximately 1.67 million bags of low value robusta coffees to supplement the internal market demand and to allow for additional volumes of higher value Indonesian robusta coffees to be exported.

What remains a matter of concern in Indonesia is that with and indicated 1.3 million hectares of coffee farms and under normal weather conditions a production of approximately 12.33 million bags or 740,000 metric tons per annum that average coffee yields are still at a very modest 569 Kgs. per hectare, while this year the weather affected crop produced even lower average yields.   The question is how soon the wide range of state and private industry farm extension and support services shall start to impact upon improved farm husbandry and inputs and finally yields, so as to see Indonesia even from its existing coffee farms to look to raise production levels of in excess of 18 million bags per annum.    It shall take time, but with the additional support of a vibrant domestic consumption, one might expect to see the country start to get closer to such a target in the coming 7 to 10 years.   

The Uganda Coffee Development Authority have reported that year on year coffee exports for the month of October were 18,886 bags or 8.97% higher than the same month last year, at a total of 229,438 bags.   Further to this they have reported that the value of these October 2014 coffee exports was US$ 7,930,885.00 or 34.88% higher than the same month last year, at a total of US$ 30,669,004.00.   This latter value factor and with the free market nature of the Ugandan coffee industry that provides for fast cash flow for the farmers, continues to inspire the countries farming community and is evident by the significant numbers of new coffee trees that are being planted out throughout the main coffee districts of the country.  Thus indicating that the country potentially shall be looking to increase it coffee exports that are presently and approximate 78 to 22 mix of robusta and arabica coffees and are around 3.5 million bags per annum, to levels that should exceed 4 million bags per annum within the next three to five years.   

The arbitrage between the markets narrowed yesterday to register this at 99.13 usc/Lb., while this equates to a relatively attractive 51.03% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 116 bags yesterday, to register these stocks at 2,340,157 bags.   There was meanwhile a larger in volume 3,160 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 5,880 bags.

The commodity markets were generally lacklustre and mixed yesterday, as players started to look to today’s Thanksgiving Holiday in the U.S.A., which shall be extended into a long weekend for many players.   The Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets showed buoyancy and the London robusta Coffee market was steady for the day, while the Oil, Natural Gas, New York arabica Coffee, Copper and Soybean markets had a softer days trade.    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 485.26.   The day starts with the U.S. Dollar steady and trading at 1.579 to Sterling and 1.251 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 75.90 per barrel.

The London market started the day yesterday with early buoyancy and likewise the New York market, but this latter New York market very quickly lost its way and headed back into negative territory, while the London market retained its buoyancy.     This remained the track into the afternoon’s trade with London remaining above par and New York below par and within an environment of thin and lacklustre pre-holiday trade.   The London market did however lose its way late in the day and shed its gains to end close to par, while the New York market posted a partial recovery and ended the day on as soft note but with only 23.9% of the earlier losses of the day intact.    The New York market is closed for the day and one might expect that this shall side-line the majority of the players within the London market, which can be expected to encounter thin and lacklustre erratic trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2095 unch                                              DEC     193.50 – 0.75
JAN      2096 + 1                                                 MAR     194.25 – 0.80
MAR     2097 unch                                              MAY     196.60 – 0.75
MAY     2109 unch                                               JUL     198.90 – 0.75
JUL      2117 – 1                                                  SEP      200.70 – 0.75
SEP      2124 – 1                                                  DEC     202.50 – 0.65
NOV     2124 – 1                                                  MAR     203.25 – 0.50
JAN      2124 – 1                                                  MAY     202.70 – 0.50
MAR     2130 – 1                                                   JUL     202.00 – 0.45
MAY     2136 – 1                                                   SEP     201.45 – 0.40

26th. November, 2014.
With export registrations in hand for the month, the General Statistics Office in Vietnam have forecasted that the country’s exports of mostly robusta coffees during the month of November shall be 18% higher than the same month last year, at a total of approximately 1.58 million bags.   This figure they report would result in the countries cumulative exports for the first two months of this new October 2014 to September 2015 coffee year being 34.8% higher than the same period in the previous coffee year, at a total of 3.18 million bags.

This official November export figure is however somewhat lower than the private trade and industry forecasts from within the country, who had been looking a s sharply higher export performance for the month of between 2 million and 2.5 million bags.    Thus one might suggest that with the trade and industry who hold the export contracts being somewhat higher in their perspective of the months exports, that one might expect to see the official figure amended a little higher post the close of the month.

The debate over the deficit coffee supply for the present October 2014 to September 2015 coffee year continues and with the world demand factor being questioned as much as the figure for this year’s Brazil crop, which fuels supply for the period.    Presently the usually more reliable trade and industry perspective is for a Brazil crop that has been between 47 million and 48 million bags and thus fuelling a coffee year crop and supply of approximately 144 million bags, but with some still talking a Brazil 2014 crop number as low as 43 million bags and some of over 50 million bags.   Thus contributing to a degree of confusion and therefore, to a broad range of coffee supply figures for this new coffee year.

It is likewise the world demand that is proving really very difficult to estimate and with forecast estimates that vary between 147 million bags and 154 million bags and with around 150 million bags being seen to be realistic for many within the market, but with questions to be asked over the prospects for both stability of consumption within the leading European and North American markets and the prospects of consumption within some of the leading producer internal markets, where economic pressure might dent potential.   In this respect one would suggest that from the evidence of consumption levels from some of the leading Western European markets this year and with economic issues dampening purchasing power within some Eastern European markets that Europe might struggle to maintain its demand of approximately 51 million bags per annum, while the North American market might not expect to see much in the way of growth and likewise the leading producer consumer Brazil, where economic problems continue to suppress purchasing power.

Meanwhile there are a wide range of deficit forecasts coming forth within the market that vary between 4 million and 13 million bags and a range one would say, that leaves a good degree of confusion within the market.  Albeit that with Brazil alone having brought a carryover stock of past crop coffees of approximately 12 million bags into their new crop, there is presently no reason to be concerned over short to medium term coffee supply.   There remains however good reason to be concerned over the prospects for the 2015 Brazil crop and the speculation over this crop continues to have its influence, with the prevailing fair to good rains in Brazil being ignored by many forecasters, who look to the negative influences of irreversible damage caused by the early in the year partial drought and the late start to the new Brazil rain season to result in a relatively low 2015 Brazil crop.   This speculation that presently indicates a good chance for tightening coffee supply for the follow on 2015 to 2016 coffee year is assisting to support the sentiment of the speculative bulls within the market and likewise, to see the New York market remain within its present relatively firm trading range.

The arbitrage between the markets broadened yesterday to register this at 99.93 usc/Lb., while this equates to a relatively attractive 51.23% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 11,005 bags yesterday, to register these stocks at 2,340,273 bags.   There was meanwhile a smaller in volume 1,920 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 9,040 bags.

The commodity markets were mixed yesterday, with the stalled rise in the value of the dollar assisting many markets to show a degree of stability, but with the Oil markets remaining with their negative sentiment.  The Natural Gas, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Sugar and London robusta Coffee markets were near to steady, while the Oil, Cocoa, Copper and Orange Juice markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.40% higher; to see this Index registered at 485.36.   The day starts with the U.S. Dollar steady and trading at 1.571 to Sterling and 1.248 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 77.30 per barrel.

The London market started the day on a soft note, but with the New York market showing early buoyancy following the previous day’s late dip in confidence.   The New York market came under some pressure to dip back into negative territory during the afternoon but soon recovered and with technical support and thin producer price fixation selling volumes assisting the market to return to a steady upside track, while the London market retained its softer stance.   The London market did however recover most of its losses as the afternoon progressed and ended the day near to steady and having recovered 78.9% of the earlier losses of the day, while the New York market ended the day on a firm note and with 77.1% of the gains of the day intact.   This overall steady to positive close is perhaps supportive for sentiment, but one can expect little excitement for trade today ahead of tomorrow’s Thanksgiving Holiday for the New York market, with many players likely to extend this into a long weekend, but one might expect to see a thinly traded near to steady start of the markets for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2095 – 2                                                  DEC     194.25 + 4.60
JAN      2095 – 4                                                 MAR     195.05 + 4.55
MAR     2097 – 3                                                 MAY     197.35 + 4.45
MAY     2109 – 3                                                  JUL      199.65 + 4.50
JUL      2118 – 3                                                  SEP      201.45 + 4.50
SEP      2125 – 3                                                  DEC     203.15 + 4.50
NOV     2125 – 4                                                  MAR     203.75 + 4.45
JAN      2125 – 3                                                  MAY     203.20 + 4.40
MAR     2131 – 3                                                   JUL     202.45 + 4.35
MAY     2137 – 3                                                   SEP     201.85 + 4.30

25th. November, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market reduce their net long position within this market reduce their net long position within this market by 10.02% in the week of trade leading up to Tuesday 18th. November;  to register a net long position of 22,933 Lots on the day.   This net long position that is the equivalent of 3,822,167 bags has most likely been little changed to perhaps marginally higher over the period of mixed but overall more positive trade that has since followed.

The United States Department of Agriculture has forecasted that with rising domestic coffee demand within Indonesia and based on this year’s more modest weather affected crop, that the countries prospects for coffee exports over the October 2014 to September 2015 coffee year shall be 4.35% lower than the previous coffee year, at a total of 6.9 million bags.   One might comment however that with the prospects so far for more normal weather conditions for the foreseeable future, that one might expect that the country shall see export volumes start to pick up during the last few months of this coffee year and potentially with unforeseen weather problems aside, to recover for the follow on 2015 to 2016 coffee year.

In this respect to see Indonesia bring in a 2 million to perhaps as much as 3.5 million bags larger new crop, which shall add significantly to its export potential, with these larger new crop starting to impact upon exports from as early as June 2015.   Thus based on the export potential indicated by the United States Department of Agriculture, one might expect to see Indonesian coffee exports for the follow on October 2015 to September 2015 coffee year potentially being in the region of 7.5 to 9 million bags.   These exports heavily weighted towards an approximate 77% share of robusta coffees, with robusta coffee still dominating the countries production.

The question still remains however in terms of Indonesia, as to when their farmers shall upgrade their farm husbandry and farm inputs, as they presently operate with a great degree of inefficiency.    Many in this respect foresee a potential for the country to very easily look to increase overall yields and with the potential to add 4 to 6 million bags per annum to their present production levels that with normal weather conditions are around 12 to 13 million bags per annum, but the inspiration for such improvements are likely to still take a few years to come to fruition.  Albeit that there are many state and private industry programs now in play within Indonesia that are designed to increase the countries coffee farm yields, which must ultimately prove to be successful and especially so, as the farmers shall be further inspired by the support of a growing domestic consumption.

The new Vietnam crop is presently in full swing and with approximately 30% already harvested, but with these new crop coffees still to impact in significant volume within the mills and export houses in Ho Chi Minh City.  There is no doubt however that these coffees shall start to come into play by the end of the year and despite some reports that this new crop of mostly robusta coffees might be a little lower than the last crop, there are still forecasts in play, for another large new crop.

Overall for the present and with good steady rains in Brazil in play, larger new Colombian and Central American crops having started and still some questions over modestly negative figures from Asia, the markets are lacking strong supportive news to fuel the speculative bulls.   While with the majority of the consumer market industries relatively well stocked and mostly only looking to cover small volumes of fill in stocks, the physical coffee traded remains lacklustre in nature.   This scenario one would think with the large U.S.A. market due its annual thanksgiving holiday on Thursday 27th. November and with many to extend this into a long weekend, shall see the markets remain slow into the coming week.

The arbitrage between the markets narrowed yesterday to register this at 95.25 usc/Lb., while this equates to a relatively attractive 50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,700 bags yesterday, to register these stocks at 2,351,278 bags.   There was meanwhile a larger in volume 9,600 bags decline in the number of bags pending grading for this exchange; to register these pending grading stocks at 7,120 bags.

The commodity markets tended to shrug off their positive stance that came into play at the end of last week, to see the macro commodity index start to wane later in the day yesterday.   The Cocoa, London robusta Coffee, Orange Juice, Wheat and Platinum markets had a day of buoyancy and the New York arabica Coffee and Gold markets fell back to barely hold steady, while the Oil, Natural Gas, Sugar, Copper, Wheat, Corn, Soybean and Silver markets had a softer day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.44% lower; to see this Index registered at 483.44.   The day starts with the U.S. Dollar steady and trading at 1.569 to Sterling and 1.243 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 78.80 per barrel.

The London and New York markets started the day yesterday showing early buoyancy and with both markets building on their gains into the afternoon, albeit within and environment of thin trade.  The London market added and impressive $ 34.00 per Mt. or 1.64% in value and the New York market with buy stops being triggered an even more impressive 7.10 usc/Lb. or 3.72% in value, but with trade remaining thin the markets hit a ceiling and took a sideways positive track as the afternoon progressed.  The London market continued to end the day on a positive note and with 61.8% of the earlier in the day gains intact, but the New York market faltered and came under late in the day pressure and shed all its gains to end the day marginally below par.    This rather dismal close for the influential New York market does little to inspire confidence and one might expect to see a follow through steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2097 + 21                                               DEC     189.65 + unch
JAN      2099 + 21                                              MAR     190.50 – 0.20
MAR     2100 + 20                                              MAY     192.90 – 0.20
MAY     2112 + 19                                               JUL     195.15 – 0.20
JUL      2121 + 18                                               SEP     196.95 – 0.15
SEP      2128 + 18                                               DEC    198.65 – 0.05
NOV     2129 + 18                                               MAR    199.30 – 0.20
JAN      2128 + 18                                               MAY    198.80 – 0.20
MAR     2134 + 18                                                JUL    198.10 – 0.25
MAY     2140 + 18                                                SEP    197.55 – 0.15

24th. November, 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 3.39% in the week of trade leading up to Tuesday 18th. November;  to register a net long position of 36,324 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 2.12%, to register a net long on the day of 44,536 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 9.12%, to register a net long of 30,560 lots on the day.   This net long position that is the equivalent of 8,663,625 bags has most likely been little changed to perhaps marginally lower over the period of mixed but overall marginally negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Centre in Nicaragua have reported that the countries coffee exports for the month of October were 59,021 bags or 148.39% higher than the same month last year, at a total of 98,796 bags.  They have at the same time forecasted that they can expect that with the new crop harvest already starting, that they can expect that this new crop shall be approximately 7% higher and therefore, to fuel increased export volumes for this new October 2014 to September 2015 coffee year.

The National Cocoa and Coffee Board of the Cameroun who work on a December to November robusta coffee year have reported that robusta coffee exports for the first eleven months of the present 2013 to 2014 coffee year were 64,500 bags or 26.37% higher than the same period in the previous coffee year, at a total of 309,050 bags.  Meanwhile with the countries smaller arabica coffee crop being reported on the basis of a more conventional October to September coffee year and following a 13.76% lower export performance of a modest 36,250 bags for the 2013 to 2014 coffee year, that the exports in October this year were 1,883 bags or 1,127.54% higher than the same month last year, at a total of 2,050 bags.  

Weather forecasts from Brazil indicate that the country’s main arabica coffee districts shall be in receipt of fair to good overall rains for this week, to assist to end off the month with more than sufficient rainfall to support the development of the new 2015 crop.    This does not however change the general perspective that due to the partial drought over many of the arabica coffee districts for the first two months of this year and followed by a two to three week delay to the start of the new spring and rain season in Brazil, that the next 2015 Brazil crop is likely to be relatively modest.    However the forecasts for this new crop remain mixed, with some having indicated next year’s crop to possibly be as low as 43 to 45 million bags, while others have forecasted that it might well exceed 50 million bags and with many private trade and industry players indicating that it is still too early to provide and accurate forecast for this next Brazil crop.

The coffee trade house Volcafe and E D & F Man have reported that they have reduced their forecast for the new Vietnam crop that they had previously assessed to be close to 30 million bags to a more modest figure of 27.4 million bags, while they have assessed the just completed new Brazil crop to have been 47 million bags.  These factors they foresee shall result in a global deficit coffee supply for the present October 2014 to September 2015 coffee year of approximately 10 million bags.   They do however note within the report that this deficit shall be countered by their assessment that there was an overall 11 million bags surplus in global coffee supply over the previous two coffee years, which shall counter this deficit.  Therefore one might comment that the face value market supportive nature of this report that came to the table on Friday and despite the possibility that while a smaller Vietnam crop of mostly robusta coffees might tighten up medium term robusta coffee supply, that the report indicates that there is unlikely to be any reason for concern until post the next and still questionable 2015 Brazil crop.  

The March to March 2015 arbitrage between the markets broadened on Friday to register this at 96.35 usc/Lb., while this equates to a relatively attractive 50.52% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 750 bags on Friday, to register these stocks at 2,348,578 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,720 bags.

The commodity markets gained some degree of support on Friday from the news that China is lowering interest rates to assist to buoy their economic growth and likewise that the European Central Bank is planning to take steps to provide finance, so as to stimulate the presently flat Euro zone economy.   The Brent Oil, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and the London robusta Coffee market was steady, while the U.S. Oil, Natural Gas, Sugar and Cocoa markets tended softer for the day.   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 485.57.   The day starts with the U.S. Dollar tending easier and trading at 1.567 to Sterling and 1.240 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 79.85 per barrel.

The London market started the day on Friday on a softer track, while the New York market started with a degree of buoyancy, but to move back to join the London market below par in the afternoon’s trade.   The New York market did however attract support at the lows and recover to move back into positive territory as the afternoon progressed and with the London market finally following suit, to recover its losses of the day by the close.  The London market ended the day on a steady note, while the New York market retained its positive stance to end the day with 77.1% of the earlier gains of the day intact.   This overall positive close to the week and with a marginally softer U.S. dollar in play is likely to be supportive for a steady to buoyant start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV      2076 + 1                                                 DEC     189.65 + 1.95
JAN      2078 unch                                              MAR     190.70 + 1.85
MAR     2080 + 1                                                  MAY     193.10 + 1.90
MAY     2093 + 2                                                   JUL     195.35 + 1.95
JUL      2103 + 2                                                   SEP     197.10 + 2.00
SEP      2110 + 2                                                  DEC     198.70 + 2.05
NOV     2111 unch                                               MAR     199.50 + 2.05
JAN      2110 unch                                               MAY     199.00 + 2.10
MAR     2116 unch                                               JUL      198.35 + 2.15
MAY     2122 unch                                               SEP      197.70 + 2.15

21st November, 2014.

The arbitrage between the markets narrowed yesterday to register 94.60 usc/Lb., while this equates to a relatively attractive 50.09% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 525 bags yesterday, to register these stocks at 2,349,328 bags. The number of bags pending grading for the exchange registered was unchanged on the day, at a total of 16,720 bags pending grading for exchange. 

The commodity markets tended to steady yesterday, with the influential Oil markets halting their slide and tending to bring some buoyancy to the markets, ahead of the OPEC meetings set to take place next week. There was a round of lower than expected economic growth data from China however which weighed in on sentiment, while the US Dollar slipped back against other major currencies on the day.  It was a positive day for Oil, Gold, Silver, Platinum and Palladium markets, Corn, Soybean, Wheat, Sugar, Orange Juice were firmer.  It was however a softer day for Sugar, Cocoa, Coffee, Cotton and Copper.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.42% higher; to see this Index registered at 483.51.  The day starts with the U.S. Dollar steady and trading at 1.5682 to Sterling and 1.249 to the Euro, while North Sea Oil is steady in early trade and selling at US$ 76.97 per barrel.  

The London market started the day on a softer note and followed by a lower opening in New York, although London found some underlying support in very thin trade to see this market move into positive territory in the early part of the day.  The tone in New York was mildly negative with some underlying fixation activity propping up the floor, both markets moved in the afternoons trade with volumes relatively modest with an absence of sturdy speculative buying support the market quickly gapped lower to set a new floor for the afternoon trade which once touched attracted speculative buyer support back into the fray and a steady rise back to the middle of the days trading range.  The London Robusta market took some time to respond although finally succumbed to the lower sentiment on this much more muted market.  The latter half of the day however found New York once more lacking in impetus and fundamental news, with positive production reports dampening speculative sentiment and the earlier partial recovery in New York was once more met with speculative liquidation, to see this market end the day on the lows of the session.  The London robusta market managed a modest recovery from the lows in this market, close to the end of the session and an overall softer day for the markets yesterday, to set the close as follows:  

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

NOV 2075 – 13 DEC 187.70 – 10.15
JAN 2078 – 13 MAR 188.85 – 10.25 
MAR 2079 – 13 MAY 191.20 – 10.25
MAY 2091 – 11 JUL 193.40 – 10.10 
JUL 2101 – 8 SEP 195.10 – 10.00
SEP 2108 – 8 DEC 196.65 –   9.95 
NOV 2111 – 8 MAR 197.45 –   9.85 
JAN 2110 – 7 MAY 196.90 –   9.75 
MAR 2116 – 7 JUL 196.20 –   9.50 
MAY 2122 – 7 SEP 195.55 –   9.45

20th. November, 2014.

The respected U.S. Department of Agriculture attaché have come forth with their revised forecast of the Brazil current crop which is now a couple of months past the harvest completed in September, revised and raised and their coffee production estimate for the seasonal year July 2014 to June 2015 at 51.20 million bags and an increase of 3% on that of their previous estimate.  The increase has been due to improved yields in areas of Minas Gerais, Sao Paulo and Espirito Santo. The forecast is for Arabica production at 34.20 million bags and Brazil Conilon robusta production steady at 17 million bags.  From this crop they assess that with the carry over past crop stocks in hand and the internal market due to absorb 20.1 million bags and the export market 33.53 million bags, that Brazil shall enter the next coffee year with carryover stocks of 6.98 million bags into July 2015. 

This report so long as there are no additional unforeseen climatic issues coming to the fore to affect the potential of the next biennially bearing lower 2015 crop, may be viewed as mildly positive to the longer term market.  There are meanwhile a variation and range of forecasts in play for the next crop to come, subsequent to the start of the delayed start to the rain season this year and while it is early days, if one is to go with a more conservative average 45 million bags, it would indicate coffee supply from Brazil for the twelve months July 2015 to June 2016 seasonal coffee year of 52 million bags. This would in terms of the internal and export market demand for Brazil coffees, with other privately held stocks that are not accounted for in these figures, indicate a fairly tight historically low 1 to 2 million bags carryover stock into the follow on biennially bearing larger 2016 crop, thus much attention to be drawn to the development of the 2015 new crop to come which is in flowering stage and currently being supported by widespread rains over the coffee growing belt in Brazil.   

The U.S. Department of Agriculture attaché have similarly issued their latest forecast for leading fine washed arabica coffee producer Colombia, which their latest estimate of the new crop October 2014 to September 2015 to be marginally up from their previous estimate, at an upwardly reviewed 12.34 million bags.  The aggressive replanting programs put into place with leaf rust resistant varieties and refurbished plantations supported by their national Federation of Colombian Coffee Growers has seen this largest individual fine washed arabica coffee exporter to consumer markets, register a successful recovery back to production levels achieved prior to the double disastrous El Nino and then La Nina affected coffee crops at the end of the last decade.

Some positive news for the coffee consumer markets in that the International Coffee Organization have put forward their forecast that global coffee demand is likely to climb 2.50% per year until the end of the decade.  This is seen to be driven by increased growth in developing markets and estimated to reach 175 million bags in 2020, from the current calendar year expectation of 149.45 million bags.  This would be encouraged by growth in consumption in markets such as China, Russia, South Korea, Indonesia and other similar producer countries who have growth potential of around 4% to 4.5% per annum, together with the developed coffee drinking consumer markets that are anticipated to follow through with 1% to 1.5% growth potential per annum.  

The arbitrage between the markets widened yesterday to register at 104.25 usc/Lb., while this equates to a relatively attractive 52.36% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,509 bags yesterday, to register these stocks at 2,349,853 bags. The number of bags pending grading for the exchange registered a decrease of 3,155 bags to total of 16,720 bags pending grading for exchange on the day.

It was mostly positive day in the commodity markets yesterday, on the release and analysis of the latest round of Federal Reserve meeting minutes were seen to raise mild concerns over the longer term prospects of the recent positive outlook in the leading U.S.A. economy.  It was a softer day for Oil, Gold, Silver, Platinum and Palladium, a softer day for Corn, Soybeans, Wheat and Cotton, while a more positive day for Sugar, Cocoa, Coffee, Orange Juice and Copper.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.16% higher; to see this Index registered at 481.48.  The day starts with the U.S. Dollar steady and trading at 1.5644 to Sterling and 1.253 to the Euro, while North Sea Oil is steady in early trade and selling at US$ 76.87 per barrel. 

The markets opened on a buoyant note and in positive territory to seemingly set the tone for the day although thin trade in the morning, the morning maintained a positive stance and in New York, edged higher.  The markets took some heart from the positive news of longer term coffee consumption growth and in speculative trade, while the Brazil Real returned some of the gains made of late, to the US Dollar to serve to remove selling pressure on the day.  As the day progresses New York held on to gains to contribute toward the positive tone with fresh activity triggering stops along the way although selling returned at the days highs later in the session, to see this market close off of the high touched on the day.  The London robusta market followed suit but in another low volume session and producer pressure waiting overhead and set a celiing on the days gains toward the end of the session.  The markets finished the day following fairly good volume in New York and a relatively thin volume day in London in positive territory, to set the close yesterday as follows: 

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

NOV 2088 + 20 DEC 197.85 + 6.75
JAN 2091 + 23 MAR 199.10 + 6.20
MAR 2092 + 19 MAY 201.45 + 6.15 
MAY 2102 + 17 JUL 203.50 + 6.00
JUL 2109 + 15 SEP 205.10 + 6.00
SEP 2116 + 14 DEC 206.60 + 6.00
NOV 2119 + 13 MAR 207.30 + 6.20
JAN 2117 + 17 MAY 206.65 + 6.35
MAR 2123 + 17 JUL 205.85 + 6.40
MAY 2129 + 17 SEP 205.05 + 6.45

19th. November, 2014.

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 25,849 bags or 0.43% during the month of October, to register these stocks at 6,001,443 bags at the end of the month. These stocks include the U.S. Certified arabica stocks which on 31st October stood at a total of 641,198 bags stored within the U.S. warehouses of the exchange.  While the total stocks reported by the Green Coffee Association do not include the in transit bulk container coffees or onsite roaster inventories. 

With the new crop developing in Indonesia and weather conditions presently favourable for the coffee farmers, the latest report from by the US Department of Agriculture attaché in Indonesia, has seen a revision of earlier estimate for this current April 2014 to March 2015 crop year which was affected by unusually wet weather during crop development.  This reduction is within the Arabica sector of production which the attaché has revised down by 100,000 bags to an estimated total 1,45 million bags of arabica coffee, which together with the 7,350 million bags of robusta coffee, has their latest crop estimate for Indonesia at 8,8 million bag and of this total, green bean exports are put at 5,1 million bags with a further estimate of 1,8 million bags of soluble coffee exports for the current coffee year.  

While northern hemisphere consumer markets continue to post generally stable to if not slightly lower consumption figures, in response to factors such as overall tighter economic circumstances and the ever increasing popularity of single serve options as an alternative in lieu of the more traditional and less portion specific systems, there is some heart perhaps to be taken from the reports of continual growth in coffee development within the developing economies and non-traditional coffee drinking consumer markets. Indonesia has kept up the pace which according to the local roasters reports is growing at an average increase of 6 to 8 percent annually, and albeit coming off of a relatively low base, the roast and ground market is estimated to reach 2,150 million bags in this coffee year, with imports of green bean, and other value added coffee products contributing an estimated 985,000 bags of this total domestic consumption.

It is still early days for the new crop to come from Indonesia in the new year, with this new coffee crop year April 2015 to March 2016 thus far unaffected by extraordinary climatic factors and is anticipated to recover from this year’s dismal crop, to something in the order of 11 million bags and while there is no doubt going to be an increase in Indonesian coffee supply for the second half of next year, the volumes shall only become clear by the second quarter of next year. 

The arbitrage between the markets narrowed yesterday to register at 99.10 usc/Lb., while this equates to a relatively attractive 51.14% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,838 bags yesterday, to register these stocks at 2,352,362 bags. The number of bags pending grading for the exchange registered an increase of 293 bags to total of 19,875 bags pending grading for exchange on the day 

It was a mixed day to mildly softer day in the commodity markets yesterday and a softer day on the Oil markets, while reactive measures on the news of Japan slide into economic recession were optimistically received and seen as likely to stimulate growth. There was some positive news to come from latest German economic data to improve sentiment on the day in the Eurozone, while the US Dollar slipped back against other major currencies. It was a positive day for Coffee, Cotton, Orange Juice and a steady day for Gold, Platinum and Silver and Palladium. It was however a generally softer day for the rest of the board with Sugar, Cocoa, Copper, Wheat, Corn and Soybean in negative territory.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.23% lower; to see this Index registered at 480.70.  The day starts with the U.S. Dollar steady and trading at 1.5614 to Sterling and 1.252 to the Euro, while North Sea Oil is steady in early trade and selling at US$ 77.70 per barrel. 

It was a softer opening for London yesterday, following on the lower performance from New York however the initial flurry abated and the market all but stagnated for a while, lacking directional guidance.  This finally came to the fore when New York started the day and both markets showed a degree of buoyancy in thin morning trade.  The latter day session picked up some momentum from continued rolling activity of the prompt month in New York which is first notice day today, resulting in a relative surge for this prompt month’s activity and value with added impetus from the Americas’ once their day opened and further volume brought to the floor. he Brazil Real meanwhile firming through the day against a softer US Dollar and contribute toward a lack of voluminous selling activity as the day progressed in New York.  It was a quiet session for London robusta but mildly positive in the afternoon with measured clips of activity, while New York continued on a positive track well into the afternoon in an overall more modest volume day, to set the close on a positive note in both markets yesterday, as follows: 

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

NOV 2068 + 3 DEC 191.10 + 3.60
JAN 2068 + 3 MAR 192.90 + 1.10
MAR 2073 + 3 MAY 195.30 + 1.05 
MAY 2085 + 3 JUL 197.50 + 1.00 
JUL 2094 + 2 SEP 199.10 + 0.95
SEP 2102 + 2 DEC 200.60 + 0.95
NOV 2106 + 2 MAR 201.10 + 0.85
JAN 2100 + 2 MAY 200.30 + 0.85
MAR 2106 + 2 JUL 199.45 + 1.00
MAY 2112 + 2 SEP 198.60 + 0.95

18th. November, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decrease their net long position within this market by 567 Lots in the week of trade leading up to Tuesday 11th. November;  to register a net long position of 25,488 Lots on the day.  This net long position that is the equivalent of 4,248,000 bags has most likely been reduced slightly over the period of mixed trade that has since followed.  

The Certified Robusta coffee stocks held against the London market posted an increase by 2.39% or the equivalent of 47,800 60 kg., bags over the two weeks of trade leading up to Monday 10th November;   to register these certified Robusta stocks at 2,048,500 bags on the day.

The Vietnam Customs Authority have reported that the countries coffee exports of mostly robusta coffees for the month of October were lower than traders forecasts for exports for the month of 1.67 million bags and are reported at 1.60 million bags, which is 1.6% lower than the previous months performance.  These exports contribute to the first month of the country’s cumulative exports for the October 2014 to September 2015 coffee year. While with the past coffee year exports registered a total of 27.78 million bags over the twelve month period to September 2014, a similar export performance is anticipated from a similar yielding crop this year, which has mostly experienced good growing conditions during crop development and leading up to the harvest which is currently underway. 

The news from India meanwhile, is the latest report by the US Department of Agriculture attaché in India, that the next crop to come is forecast to be overall marginally higher than the previous coffee year, which production was estimated at a total overall 5.07 million bags by the Coffee Board of India.  The estimate for this October 2014 to September 2015 crop in is forecast to come in at a total of 5.1 million bags of which robusta yield is anticipated to rise year on year and forecast at 3.7 million bags, whereas arabica is anticipated to register a slightly lower yield due to the biennial nature and lower bearing year, seen to be an estimated 1.4 million bags 

The arbitrage between the markets narrowed yesterday to register at 98.13 usc/Lb., while this equates to a relatively attractive 51.16% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 525 bags yesterday, to register these stocks at 2,359,200 bags. The number of bags pending grading for the exchange registered an increase on the day by 3,920 bags to a total of 19.582 bags pending grading for exchange, yesterday.

It was a mixed day in the commodity markets yesterday, following the news that Japan had unexpectedly slipped into recession in the third quarter and raising general uncertainty about the outlook for world economic recovery.  The US Dollar regained a some ground during the day against other major currencies.  It was a steady day but softer finish for Oil, as was Gold, Silver and Platinum softer on the day.  It was a similarly softer day for Cotton, Sugar, Coffee, Copper, Wheat, Corn, and a more positive day for the Cocoa, Orange Juice and Soybean and Palladium markets. 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 481.79.  The day starts with the U.S. Dollar steady and trading at 1.565 to Sterling and 1.247 to the Euro, while North Sea Oil is steady in early trade and selling at US$ 77.31 per barrel.

It was a similarly mixed day on the coffee markets yesterday which saw London treading mostly softer in early trade, followed by a lower start in New York.  The roll over in New York out of the prompt month ahead of First Notice Day tomorrow has provided some buoyancy and lifted the morning session back to positive territory, this was followed by a much slower and less enthusiastic London Robusta market which struggled back to positive ground. The early highs in New York attracted sellers back to the floor however and with volume limited, both markets slid back into negative territory and in a narrow range for much of the day, although a mild recovery posted in London in the afternoon met with sellers waiting above the market.  It was a choppy but range bound afternoon session in New York which continued in negative territory but with the assistance of buyer support setting the floor.  This activity failed to follow through to the end of the session however, with volume selling activity pushing into a void and a new low tested and triggered right at the end of the day toward the close. This was a trend which the much quieter London Robusta market managed to react to but in a more limited manner and just before the end of the day, to set the close yesterday in negative territory and marginally above the lows in both markets, as follows; 

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

NOV 2065 – 9 DEC 187.50 – 4.50
JAN 2065 – 9 MAR 191.80 – 4.55
MAR 2070 – 7 MAY 194.25 – 4.55 
MAY 2082 – 6 JUL 196.50 – 4.50 
JUL 2092 – 6 SEP 198.15 – 4.35
SEP 2100 – 7 DEC 199.65 – 3.80
NOV 2104 – 7 MAR 200.25 – 3.55
JAN 2098 – 7 MAY 199.45 – 3.60
MAR 2104 – 7 JUL 198.45 – 3.50
MAY 2110 – 7 SEP 197.65 – 3.60

17th. November, 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 1,327 lots in the week of trade leading up to Tuesday 11th November, to register a net long position of 35,132 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 2,257 Lots to register a net long on the day at 41,652 Lots. 

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within this market nominally in the week of trade leading up to Tuesday 11th November; to register this net long position at 28,007 Lots on the day. This net long position that is the equivalent of 7,939,985 bags has most likely been marginally decreased over the period of overall softer trade that has since followed.  

Subsequent to a delay to the start of the spring and summer rains needed to set the flowering for the next July 2015 to June 2016 crop to come from Brazil, the rains have arrived and would appear that a more regular weather pattern has established.  The local weather forecasters SOMAR have predicted widespread rain for the main coffee areas to intensify from mid this week through to the end of this month.  

The annual Sintercafe conference held in San Jose, Costa Rica, has come to an end, with the foremost topic to hit the newswires, the prospects for the next crop to come from Brazil.  This following on from the current drought affected lower coffee crop year. These discussions are accompanied by forecasts that are filtering to the market and the latest of these has come from the respected Brazilian coffee trade house Comexim.  They have come forth with their forecast that Brazil could produce between 44 million and 47 million bags in 2015. Of this total forecast, their estimate is for an arabica production to reach between 28 million to 31 million bags.  With the wide band of forecasts starting in July this year that have come in as low as 40 million bags, to as high as 53 million bags, this latest forecast is much in line with the median average of private industry and trade expectations from at least the beginning of September and an average forecast thus far at around 47 million bags, thus this latest news is not expected to have any influence upon the prevailing markets.  

The arbitrage between the markets widened on Friday to register at 102.27 usc/Lb., while this equates to a relatively attractive 52.09% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 525 bags yesterday, to register these stocks at 2,365,463 bags. There was no change to the number of bags pending grading for the exchange, which stood at 15,662 bags on Friday. 

The commodity markets took a more positive turn on Friday, the weaker US Dollar provided some impetus as this currency slid back from recent gains during the course of the day, to provide an overall boost within the  US Dollar traded commodity markets which become more attractively priced in other major currencies as the US Dollar softens. It was a positive day for the Oil markets, Gold, Silver and Platinum, likewise a positive day for Cotton, Coffee, Copper, Orange Juice and Wheat. It was however a softer day for the Sugar, Cocoa, Corn, Soybean and Palladium markets.  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 481.37.   The day starts with the U.S. Dollar showing some steady and trading at 1.571 to Sterling and 1.253 to the Euro, while North Sea Oil is mildly buoyant selling at $ 77.96 per barrel. 

It was a hefty volume day in the New York arabica market on Friday, with the overall improvement in the commodities macro contributing toward a buoyant session in New York in combination with technical trade on the day. This along with the approaching first notice day in the prompt month on 19th November assisted New York to set off on a more positive track during the course of the day, to finish near to the highs. The London market was placid in comparison and volume muted on the day, this market initially followed New York on a more positive track but with overhead selling weighing down on gains by midsession, it was a narrow range latter day in London to finish the day mildly negative and in the middle of the day’s trading range.  The markets therefore posted a close in mildly softer territory for London while the Brazil Real touched upon fresh lows against the US Dollar and is currently trading at 2.60 to the US Dollar.  The close in both markets on Friday after an active days trade in New York near to the high on the day and in London mildly negative after a muted session to set the close on Friday, as follows:  

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

NOV 2074 – 1                 DEC 192.00 + 3.25
JAN 2074 – 1                 MAR 196.35 + 3.20
MAR 2077 – 1                 MAY 198.80 + 3.25 
MAY 2088 Unch                 JUL 201.00 + 3.25 
JUL 2098 Unch                 SEP 202.50 + 3.20
SEP 2107 – 1                        DEC 203.45 + 3.10
NOV 2111 – 1                 MAR 203.80 + 3.00
JAN 2105 + 1                 MAY 203.05 + 2.85
MAR 2111 + 1                 JUL 201.95 + 2.75
MAY 2117 + 4                 SEP 201.25 + 2.50

14th. November, 2014.
The Brazilian analyst Safras e Mercado has estimated that by the end of last week that 61% of the new crop Brazil coffee had been sold, which is significantly higher than the 49% factor at the same time last year.  However with 61% sales of what has been estimated by the analysts to have been a more modest 48.9 million bags crop of 29.75 million bags, the increase in volume by the end of last week is less significant than the percentages have indicated.

While it is early days and the rains are presently proving to be beneficial for the prospects of the next 2015 Brazil crop, the internal new crop forecasts remain modest and with figures that vary between 40 million to 48 million bags, there are some more positive numbers being voiced.  These figures are starting to indicate a new crop that might even match demand, but it is early days and for the present the general perspective is for a modest 4 million to 6 million bags deficit crop.   With the higher figures that are starting to come into play being largely ignored by the speculative sector of the markets, who remain long in their investment into coffee.

This positive stance on the part of the speculative sector of the coffee markets was quite apparent in yesterday’s trade, where the negative track of the past few days of trade was somewhat surprisingly halted.  The perspective being that the markets were somewhat oversold and with producer price fixation above the markets muted by slow consumer market buying interest, the markets were able to experience positive buoyancy for the second half of the days trade.

There has so far been no striking news coming forth from the Sintercafe conference in Costa Rica, which one might attribute to the old saying of no news is good news.   Thus one has to for the present remain with the view that the new Mexican and Central American crops that have already started to be harvested within the lower grown regions is on track to be a significantly larger overall crop.   This increased supply of fine washed arabica coffees for the present October 2014 to September 2015 coffee year to be accompanied by a slightly increased supply from Colombia to south, to guarantee good supply of the top end quality of coffees to the consumer markets for the foreseeable future.

It is likewise the case for the bottom end robusta sector of the markets, where a good new crop from Vietnam is on the cards and to be followed by larger new robusta coffee crops from India and Indonesia, while one would expect to see steady supply from Uganda and West Africa.   Thus the focus remains on the middle order natural arabica coffee production, with is dominated by the central and southern coffee districts of Brazil that shall remain in question until early in the New Year.   The further forecasts on this potential production figure to be a pivotal factor for the market early in the coming year.   

The arbitrage between the markets broadened yesterday to register this at 99.03 usc/Lb., while this equates to a relatively attractive 51.27% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1.182 bags yesterday, to register these stocks at 2,366,645 bags.   There was meanwhile a larger in volume 1,545 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 15,662 bags.

The Mexicans and Central Americans continue to dominate these certified stocks with 1,357,246 bags or 57.35% of the stocks, with these being related to mostly aged coffees, while Peru accounts for 465,927 bags or 19.69% of the stocks.   This dominance is followed in terms of South and Central America by 140,349 bags or 5.93% made up by Colombian coffees and 4,887 bags of Brazil washed arabica coffees, with the region dwarfing the relatively modest 336,709 bags of African coffees and 61,527 bags of Indian coffees.  

The commodity markets remained largely lacklustre in trade yesterday, with the overall soft economic figures from most leading markets and the muscle of the U.S. dollar continuing to impact upon sentiment within the majority of the markets.   The Coffee, Cotton, Orange Juice and Corn markets nevertheless had a day of buoyancy and the Copper market was steady, while the Oil, Natural Gas, Cocoa, Sugar, Wheat, Soybean, 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 0.60% lower; to see this Index registered at 476.85.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.566 to Sterling and 1.243 to the Euro, while North Sea Oil is tending softer and is selling at $ 76.40 per barrel.

The London market started the day yesterday on a softer note, while the New York market kicked off with somewhat surprising buoyancy.   The muscle being shown within the New York market and with producer selling activity slow soon had its influence upon the London market, with both markets entering the afternoon on a positive track.  This positive stance contributed to a base for the New York market which attracted follow through support and triggered buy stops to add to the gains and with the London market following suit, to add to the overall positive nature of the day’s trade.    The London market continued to end the day on a positive note and with 87.2% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 76.5% of the gains of the day intact.   This positive close that presently lacks strong fundamental support and with many buy stops liquidated yesterday might well contribute to a cautiously steady to soft start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV      2075 + 37                                              DEC     188.75 + 4.35
JAN      2075 + 34                                              MAR     193.15 + 4.40
MAR     2078 + 31                                              MAY     195.55 + 4.40
MAY     2088 + 29                                               JUL      197.75 + 4.35
JUL      2098 + 28                                               SEP      199.30 + 4.30
SEP      2108 + 28                                               DEC     200.35 + 4.15
NOV     2112 + 30                                               MAR     200.80 + 4.15
JAN      2104 + 30                                               MAY     200.20 + 4.25
MAR     2110 + 30                                                JUL     199.20 + 4.30
MAY     2113 + 30                                                SEP     198.75 + 4.25

13th. November, 2014.
We firstly apologise for the error in not adjusting the March 2015 New York price in yesterday’s report, which likewise misrepresented the arbitrage factor between the markets.

The latest Brazil weather forecasts indicate widespread scattered rainfall for most of the Brazil coffee areas for the rest of the month, but with no indication of particularly heavy rains for any of the main coffee districts.   It is however good news for the farmers, who can largely feel confident that their flowerings for the next 2015 crop shall set and that so far, this new crop is not threatened.    Likewise on the longer term, as for the present there are no indications that the rain season shall not continue to be normal into the New Year, to further sustain the potential of this new crop.

The big question on this next 2015 crop is its size, as presently there remain many forecasts in play that due to the irreversible damage caused by the partial drought in the first quarter of this year within the main central arabica coffee districts and followed by a late start to this new spring and summer rain season that saw some of the early flowerings aborted, that it shall be a low crop.   Some more dramatic forecasts have been talking as low as 40 million bags and many around 44 million to 45 million bags, while there are also many forecasts that indicate a potential for a crop of around 48 million bags.   Thus while there is seemingly no question that it shall not be a deficit crop, it is the question if the deficit shall be 4 million or as high as 12 million bags.

One can however expect that by January that there shall be some more accurate new crop forecasts forthcoming to the market and at a guess so long as the world weather conditions do not bring forth any further problems, that the markets shall be in receipt of forecasts that are at the higher end of the Brazil forecasts that are in play.   Forecasts that shall most likely be supportive for the markets to remain close to the present trading range, which are prices that many would consider in terms of rising costs of production, to be fair to the farmers, rather than significantly profitable.   

With the new crop in India starting there are many farmers who still dispute the official Coffee Board of India new crop forecast for a larger new crop of in excess of 5.74 million bags, made up from a 69.4% to 30.6% ratio of robusta and arabica coffees.  There is presently not much question over the official forecast for the size of the new robusta coffee crop at approximately 3.98 million bags, but many are questioning the forecast for the new arabica coffee crop that they say has suffered from hot weather early in the year and from high incidences of pests and disease and with farmers indicating that this new arabica coffee crop might be 43% lower than the forecasted 1.76 million bags.

The preliminary quarterly report from the prominent North American coffee roaster J. M. Smucker who are best known for their Folgers Coffee brand are a matter of some concern, with their report that year on year from November 2013 to October 2014 their coffee volumes have registered a relatively sharp dip.   This is a rather dramatic report and while one might relate the dip partially to loss in market share, it does indicate that perhaps overall coffee consumption in this second largest consumer market is flat to possibly even negative.   This follows indications of a similar dismal pattern within Europe which is the largest consumer market and lead by dismal figures from Germany, which are reports that would seemingly lessen the negative impact of reduced Brazil coffee supply upon world coffee supply and likewise, take some of the wind out of the sails of the bulls within the markets.  

The full and final detailed J. M. Smucker report is however only due out on the 19th. November and one would think that in terms of the rather dramatic early negative indications, that this report shall attract close scrutiny from the speculative sector of the market.  In the meantime though, the news does contribute towards reason to be cautious over the prospects for the short to medium terms market prospects

The arbitrage between the markets broadened yesterday to register this at 96.17 usc/Lb., while this equates to a relatively attractive 50.95% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 6,450 bags yesterday, to register these stocks at 2,365,463 bags.   There was meanwhile a smaller in volume 4,222 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,117 bags.

The commodity markets once again had a softer day yesterday, with the macro commodity index coming under pressure from the muscle of the dollar and the generally bearish world economic news, to which lower than expected inflation figures from the United Kingdom in reaction to poor Euro zone growth has added to the negative impact.   The Sugar, London robusta Coffee, Wheat and Corn markets had a day of buoyancy, while the New York arabica Coffee market was flat and the Oil, Natural Gas, Cocoa, Cotton, Copper, Orange Juice, Soybean, Gold, Silver and Platinum markets had and easier day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.29% lower; to see this Index registered at 479.74.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.577 to Sterling and 1.244 to the Euro, while North Sea Oil is tending softer and is selling at $ 79.50 per barrel.

The London and New York markets started the day yesterday on a steady to buoyant note and took a positive track into the afternoon, but as the afternoon progressed the New York market started to come under pressure and shed its gains to move into modest negative territory, with the London market heading back to par.   The markets did however recover and while the London market continued to end the day with modest buoyancy and with 55.6% of the gains of the day intact, the New York market once again shed its gains and ended the day on par.   This close does little to inspire 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.
                                                
NOV     2038 + 7                                                 DEC     184.40 – 0.15
JAN      2041 + 10                                              MAR     188.75 unch
MAR     2047 + 9                                                MAY     191.15 – 0.05
MAY     2059 + 9                                                 JUL      193.40 unch
JUL      2070 + 10                                               SEP      195.00 unch
SEP      2080 + 10                                              DEC      196.20 + 0.05
NOV     2082 + 8                                                MAR      196.65 – 0.05
JAN      2074 + 9                                                MAY      195.95 – 0.10
MAR     2080 + 9                                                 JUL      194.90 – 0.10
MAY     2083 + 9                                                 SEP      194.50 unch

12th. November, 2014.
The new Vietnam harvest is well on its way and picking up steam, with estimates that approximately 15% of the new crop has already been harvested, with this harvest expected to start peaking early in December.   In terms of selling of the new crop there would appear to be little in the way of price resistance being shown by the farmers so far and therefore, one might expect to see good volumes of new crop coffee coming to the mills in Ho Chi Minh City over the coming weeks.

In terms of internal sales within Vietnam and with the Tet New Year holidays only due to take place between the 18th. to the 24th. February 2015, there remains a relatively long spell before the country closes down for the holidays, which have traditionally triggers increased selling activity on the part of the farmers prior to the holidays, as they bid to finance their most important celebrations of the year.   This is however with the reference prices of the London market remaining relatively steady and fair in value, unlikely to be a factor that shall encourage significant discounts to encourage sales and one might expect that the coming two months shall see slow and steady selling activity, rather than a flood of coffees coming to the market.

The annual Central American coffee festival Sintercafe in Costa Rica is due to start with the usual cocktail party later today and to carry on through to the field trips on Saturday, with both regional and international trade and industry players flooding into San Jose Costa Rica.   Fortunately while the reference prices of the New York market have lost some of their steam, they remain relatively fair and one might expect that the sentiment within the conference shall be cautiously positive, albeit that with larger new crops now starting for the region and including Colombia to the south, there is unlikely to expectations for a bumper year to come.

The rainfall issues in Brazil continue to headline the market news and with the prevailing daily reports of rain from within the main arabica coffee districts assisting to maintain a degree of complacency on the part of the consumer market industry buyers, who largely are taking a wait and see stance.   This sentiment having been further encouraged by the somewhat unexpected report from the traditionally conservative International Coffee Organisation who had lowered their earlier deficit world coffee supply of 4 million to 5 million bags, to a relatively modest 800,000 bags.    A factor in terms of the prevailing good levels of world coffee stocks, that has removed the fear of severely tightening world coffee supply on the medium term and further focuses speculation towards the next 2015 Brazil crop, which shall only start to impact during the second half of next year.

This scenario is contributing to lacklustre physical trade within the main consumer markets and especially so within the leading European markets that account for approximately 49% of consumer market consumption, where the cautious view towards the longer term market is also seeing spirits being dampened by the lack of consumption growth within these markets.   Some markets are in fact and including the leading German market, experiencing small declines in consumption and most likely being influenced by rapid the growth in market share of the parsimonious single serve coffee market, which is impacting throughout the developed coffee markets.  

The arbitrage between the markets narrowed yesterday to register this at 93.58 usc/Lb., while this equates to a relatively attractive 50.39% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,777 bags yesterday, to register these stocks at 2,371,913 bags.   There was meanwhile a larger in volume 2,560 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 18,339 bags.

The commodity markets had an overall better day yesterday, with the U.S. dollar hitting something of a ceiling, to assist to encourage some more interest within many markets.   The Cocoa, Sugar, Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil, Natural Gas, Wheat 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 0.99% higher; to see this Index registered at 481.14.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.593 to Sterling and 1.249 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 81.10 per barrel.

The London market started the day yesterday tending softer and with the New York market having a steady to soft start to the day’s trade and with both markets taking a relatively erratic but steady track into the afternoon’s trade.  The London market did however come under pressure and head into negative territory, while the New York market remained on a steady track and seemingly inspired some degree of confidence that set the market for a more positive track for later in the day and ahead of today’s option expiry for this market.    This new found stability within the New York market seemingly assisted to buoy some degree of confidence within the London market which recovered later in the afternoon and continued to end the day on a modestly positive note and with 80% of the gains of the day intact, while the New York market continued to end the day on a positive note and with 53.5% of the earlier gains of the day intact.    This overall positive close one would think, shall be conducive to a cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV      2031 + 9                                                DEC     184.55 + 3.15
JAN      2031 + 8                                                 MAR    185.70 + 3.05
MAR     2038 + 9                                                 MAY    191.20 + 2.95
MAY     2050 + 9                                                  JUL     193.40 + 2.95
JUL      2060 + 7                                                  SEP     195.00 + 3.00
SEP      2070 + 6                                                 DEC     196.15 + 2.90
NOV     2074 + 9                                                 MAR     196.70 + 3.00
JAN      2065 + 11                                               MAY     196.05 + 3.00
MAR     2071 + 11                                                JUL     195.00 + 3.00
MAY     2074 + 11                                                SEP     194.50 + 2.95

11th. November, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decrease their net long position within this market by 1.2% in the week of trade leading up to Tuesday 4th. November;  to register a net long position of 26,055 Lots on the day.  This net long position that is the equivalent of 4,342,500 bags has most likely been little changed over the period of mixed but overall flat trade that has since followed.  

The port warehouse coffee stocks held within the main European coffee ports of Antwerp, Bremen, Hamburg, Genova, Savona Vado, Le Havre and Trieste were seen to have increased by a modest 210,000 bags or 1.77% during the month of September, to register these stocks at 12,090,000 bags at the end of the month.  These stocks do not however include the bulk container and bag transit stocks within Europe and likewise the stocks held within roaster inventories and unofficial warehouses and with an overall east and west European consumption of approximately 1 million bags per week, one would think that one could safely add close to 2.5 million bags to these stocks.

Thus one could conservatively estimate overall European coffee stocks are close to 14.5 weeks of consumption requirements as at the end of September, which one would presume to be a relatively safe stock level ahead of the surge of new crop coffee supply that is due from Mexico, Central America, Colombia, Vietnam and India.   This stock factor that is mirrored by relatively good and safe stock levels in North America, is a factor that with Brazil weather concerns aside, is tending to dampen industry demand and speculative sentiment within the markets for the present.

The post weekend rainfall reports from the main south and central Brazil arabica coffee districts have indicated widespread but often modest rains were received, but with scattered showers due in the coming days.  The rainfall that has most certainly triggered widespread flowerings over the past couple of weeks is however often not soaking and while there are more rains forecasted during this month of November, many forecasts still see these to be potentially 15% to as much as 30% below normal.   There are nevertheless rains and while a below par rainfall month might not assist to rapidly build up ground water retention levels for the future within many districts, they are sufficient to set the flowerings and to assist towards the progress of the development of the new crop for next year.

The question remains not so much over the present months rains that are seemingly no longer a matter of concern, but what shall be forthcoming for the coming months and in this respect the longer range weather forecasts are presently indicating no reason for concern, albeit that the experience of the unexpected partial drought that was experienced early this year, will contribute towards a cautious view towards the medium terms Brazil weather prospects.   Thus one might think that while the rains late last month and during this month so far have contributed to dampen some speculative spirits, that they shall not for the rest of the year become a strong negative factor for the market that Brazil rainfall aside, is fundamentally in terms of larger new crops due from all but Brazil, tending to lose some of its bullish lustre.

The arbitrage between the markets narrowed on yesterday to register this at 93.94 usc/Lb., while this equates to a relatively attractive 50.59% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 275 bags yesterday, to register these stocks at 2,370,136 bags.   There was meanwhile a larger in volume 11,774 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,899 bags.

The commodity markets have started the week mixed but mostly on the back foot, with poor economic figures from Europe and flat economic figures from Asia dampening many spirits.  Meanwhile the prevailing muscle of the U.S. dollar is a factor, that further contributes to a softer stance within many markets.  The Sugar, Cocoa, London robusta Coffee, Cotton, Wheat, Corn and Soybean markets did however show some buoyancy, while the Oil, Natural Gas, New York arabica Coffee, Copper, Orange Juice, Gold, Silver and Platinum markets had a flat to softer day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.73% lower; to see this Index registered at 476.41.   The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.584 to Sterling and 1.242 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 81.65 per barrel.

The London market and New York markets started the day yesterday on a steady to buoyant note and with further gains coming forth into the afternoon’s trade, but with the New York market attracting a short bout of negative pressure, prior to returning to join the London market in positive territory.    The New York market did however not manage to sustain its positive stance and once again came under pressure and head back into negative territory later in the day and with the London market following suit, to shed some of its gains.  The London market continued to end the day on a modestly positive note but with only 23.5% of the earlier gains of the day intact, while the New York market ended the day on a modestly negative note and with 77.8% of the earlier losses of the day intact.   This rather dismal close following the earlier in the day’s buoyancy for both markets does little to inspire 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.
                                                
NOV     2022 + 4                                                 DEC     181.40 – 1.00
JAN      2023 + 4                                                MAR     185.70 – 1.05
MAR     2029 + 4                                                MAY     188.25 – 1.00
MAY     2041 + 2                                                 JUL      190.45 – 0.95
JUL      2053 + 3                                                 SEP      192.00 – 0.90
SEP      2064 + 3                                                 DEC     193.25 – 0.65
NOV     2065 + 3                                                 MAR     193.70 – 0.65
JAN      2054 + 3                                                 MAY     193.05 – 0.70
MAR     2060 + 3                                                  JUL     192.00 – 0.80
MAY     2063 + 3                                                  SEP     191.55 – 0.85

10th. November, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the Non Commercial Speculative sector of the market decrease their net long position within this market by 10.72% in the week of trade leading up to Tuesday 4th. November;  to register a net long position of 28,231 Lots on the day.  This net long position that is the equivalent of 8,003,363 bags has most likely been further decreased over the period of overall softer trade that has since followed.  Albeit that in terms of the thin volumes of trade that prevailed, that any decrease is most probably marginal.

The final detailed October coffee exports report from Brazil have been forthcoming with the countries official Coffee Exporters Association Cecafe reporting that the countries green coffee exports for the month were 136,888 bags or 4.72% higher than the same month in the previous year, at a total of 3,035,893 bags.    This increase was however related to the increase in exports of conilon robusta coffees for the month which were 178.67% higher at 275,893 bags, as the arabica coffee exports for the month were in fact marginally 1.43% lower for the month, at 2.76 million bags.

Once one applies the value added Brazil soluble coffee exports for the month of October and calculated in terms of their green coffee equivalent, the overall coffee exports for the month were only a modest 33,484 bags or 1.04% higher than the same month last year, at a total of 3,259,491 bags.  However with the much improved value of the related international market prices the value of Brazil’s coffee exports for the month of October were a very significant 187.6 million U.S. dollars or 38.66% higher than the same month in the previous year, at a total of 672.9 million U.S. dollars.  

The International Coffee Organisation have further confirmed during an interview in Addis Ababa that with the deficit new crop in Brazil this year and despite the improved production performances due from Central America and Colombia, that world coffee supply shall remain in deficit for the present October 2014 to September 2015 coffee year.   They do however concede that in terms of the carry over world coffee stocks that the deficit shall not prove to be a problem and that for the foreseeable future that world coffee supply remains sufficient to satisfy demand, but remain concerned over the prospects for next year’s Brazil arabica coffee crop that shall impact upon the follow on 2015 to 2016 coffee year supply.

With the evidence of much improved rains now coming into play in Brazil and their potential impact upon an improved prospects for the next 2015 Brazil arabica coffee crop albeit that no one expects it to be a large new crop, there is evidence of lessening in the earlier price resistance that has been seen on the part of many farmers within the Central American producers.   This region is already starting to bring in new crop coffees from the lower grown districts and with farmers knowing that they shall have to compete on the longer terms with the steady and free flow of new crop Colombian fine washed arabica coffees, there are many who are now looking to sell against the prevailing and still relatively fair value that is being offered by the reference prices of the New York market.   Fearing that so long as the rains in Brazil continue, that the upside potential for this market on the short term is most likely limited.

The arbitrage between the markets narrowed on Friday to register this at 95.24 usc/Lb., while this equates to a relatively attractive 51.00% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,480 bags on Friday, to register these stocks at 2,370,411 bags.   There was meanwhile a larger in volume 4,159 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 9,125 bags.

The commodity markets were mixed on Friday and with the dollar more of an influence within most markets, than the general world economic forecasts.   The Oil, Natural Gas, Sugar, London robusta Coffee, Copper, Orange Juice, Soybean, Gold, Silver and Platinum markets showed buoyancy and the Cocoa market was steady, while the New York arabica Coffee, Cotton, 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 0.57% higher; to see this Index registered at 479.90.   The day starts with the U.S. Dollar tending softer and trading at 1.590 to Sterling and 1.248 to the Euro, while North Sea Oil is showing some degree of buoyancy in early trade and is selling at $ 83.20 per barrel.

The London market and New York markets started the day on Friday showing little excitement, but tending to soften in thin trade.   Both markets did however stabilise and show a positive stance in early afternoon’s trade but with the New York market starting to falter as the afternoon progressed, to head back onto a negative track for the rest of the day.   The London market continued to end the day on a modestly positive note and with 63.2% of the gains of the day intact, while the New York market ended the day on a softer note and with 86.2% of the earlier losses of the day intact.   This rather mixed close does little in terms of indication of direction, but one might nevertheless expect to see with the dollar having halted its rise to see a cautiously steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV      2018 + 12                                              DEC     182.40 – 1.35
JAN      2019 + 12                                              MAR     186.75 – 1.25
MAR     2025 + 13                                              MAY     189.25 – 1.20
MAY     2039 + 14                                               JUL     191.40 – 1.20
JUL      2050 + 13                                               SEP     192.90 – 1.25
SEP      2061 + 14                                               DEC    193.90 – 1.40
NOV     2062 + 14                                               MAR    194.35 – 1.30
JAN      2051 + 14                                              MAY     193.75 – 1.20
MAR     2057 + 14                                               JUL     192.80 – 1.25
MAY     2060 + 14                                               SEP     192.40 – 1.15

7th. November, 2014.
The recent fair rains over most of the main arabica coffee districts in Brazil have resulted in good flowerings being reported from many districts, with perhaps the stress of the late start to this year’s rain season being a favourable factor for the quality of the flowering.  It is however noted that it is early days and so far not all districts have experienced good rains and the quality of flowering is still somewhat erratic, but with still some days of rains forecasted for south and central Brazil, there is time for many districts to catch up.  The big question remaining however, as to how much damage might have been caused to the ability of the trees to produce a good crop for the coming year and with many having experienced only modest extension growth due to the negative effects of hot and dry weather earlier in the year, this still indicates a relatively modest new arabica coffee crop for 2015.

Meanwhile the U.S.A. based global weather forecaster The Climate Protection Agency has reduced its chances of a new El Nino phenomenon developing within the Pacific Ocean to 58%, while noting that even if it does develop, it would be a modest one.   Thus the El Nino factor which would in fact be favourable for Brazil in terms of its influence upon higher rainfall for the country remains a side-lined factor for market sentiment and for the present has no real influence upon the markets.

The weaker nature of the related New York market upon dollar prices for Brazil arabica coffees has not had much effect upon internal market selling activity within Brazil, as the weakening nature of the Brazil real that is now trading at close to 2.57 to the U.S. dollar has tended to maintain relatively good internal market price levels for the farmers.  Thus while there is some degree of price resistance being shown it has not sufficient to slow the steady supply of coffees to the Brazilian exporters and for the present, Brazil remains an active exporter of both past and new crop arabica coffees.

While one might still question if the farmers really believed in a new arabica coffee crop for 2015 that would be in line with some of the internal market forecasts for around only 25 million to 27 million bags, why they remain such ready sellers of their past and new crop coffee stocks.  Surely if they believed in such modest figures and therefore knowing that they have two years of tight supply into which they shall be selling their stocks, they would be showing more price resistance and holding back for better value relative to the international market prices.    Thus making one rather go with the many private trade and industry forecasts that still talk of a Brazil arabica coffee crop of closer to 30 million to 31 million bags for 2015 for the present, rather than with some of the lower figures that are being voiced.

Meanwhile in terms of coffee demand within the main consumer markets the market share of the parsimonious low volume single portion capsule coffee alternatives continues to show rabid growth and with many of the European countries and likewise North America, reporting growth of market share that varies between 15% and 30% per annum.    This growth with the capsule market offering cups of coffee that require only 60% of the coffee relative to the traditional filter machine usage per cup and perhaps only 50% of the coffee if one is to consider the wastage of surplus coffee that is traditional with filter machines, there would appear to be only limited consumption growth potential for the developed markets.  Leaving consumption growth very much in the hands of the lower volume developing markets and reducing the negative effects of the coming year of deficit supply upon he markets and likewise the price supportive influences of this deficit, but there are still with a modest 2015 Brazil crop on the cards, potentially nineteen months of deficit supply to the fore.   Thus while the markets are presently taking a softer track, one might still think that the downside potential for the markets does have some reason to be limited.     

The arbitrage between the markets narrowed yesterday to register this at 96.96 usc/Lb., while this equates to a relatively attractive 51.57% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,710 bags yesterday, to register these stocks at 2,368,931 bags.   There was meanwhile a smaller in volume 1,435 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 13,284 bags.

The commodity markets generally remain with dampened spirits as despite evidence of continued growth for the U.S.A., the firmer dollar and poor economic forecasts from Europe provide little inspiration and likewise, somewhat flat figures coming out of many Asian markets.  The Natural Gas, Cocoa, Cotton, Copper, Corn, and Soybean markets showed some degree of buoyancy, while the Oil, Sugar, Coffee, Orange Juice, Wheat, 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 0.07% higher; to see this Index registered at 477.19.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.583 to Sterling and 1.238 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 82.25 per barrel.

The London market and New York markets started the day yesterday on a softer note and in thin trade and carried on to maintain a soft track into the early afternoon, where there was a brief positive correction back to par.    This correction was however short lived and both markets once again came under negative pressure and returned to negative territory and a downside track for the rest of the day’s generally thin and lacklustre trade.  The London market continued to end the day on a soft note and with 95% of the earlier losses of the day intact, while the New York market likewise continued to end the day on a soft note and with 83.6% of the earlier losses of the day intact.   This uninspired close and the accompanying firmer nature of the U.S. dollar provides little support for sentiment and one might expect to see another steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2006 – 20                                                DEC     183.75 – 2.50
JAN      2007 – 19                                               MAR     188.00 – 2.55
MAR     2012 – 16                                               MAY     190.45 – 2.55
MAY     2025 – 14                                                JUL      192.60 – 2.55
JUL      2037 – 13                                                SEP      195.15 – 2.40
SEP      2047 – 13                                                DEC     195.30 – 2.35
NOV     2048 – 13                                                MAR     195.65 – 2.15
JAN      2037 – 12                                                MAY     194.95 – 2.05
MAR     2043 – 12                                                 JUL     194.05 – 2.10
MAY     2046 – 12                                                 SEP     193.55 – 2.15

6th. November, 2014.
Following the October export reports from Costa Rica and Guatemala the Coffee Exporters Association of Honduras have reported that the country’s coffee exports for the month of October were 23,182 bags or 48.71% lower than the same month last year, at a total of 24,413 bags.  This relatively modest performance is however only related to the country having with little in the way of carryover stocks as they are forecasting a new crop that is now starting to be harvested within the lower grown districts that shall be 20% or 900,000 bags larger than the past crop, to total something in the region of 5.4 million bags.

The Coffee Growers Federation has reported that the country’s coffee production for the month of October was 43,000 bags or 4.06% higher than the same month last year, at a total of 1,101,000 bags.    This assisted to fuel coffee exports for the month to be 83,000 bags or 9.4% higher than the same month last year, to total 966,000 bags.  This is a not unexpected positive start to the new October 2014 to September 2015 coffee, following the previous coffee year’s recovery that saw the country produce a 22.18% higher crop of 12,128,400 bags during the previous coffee year and with forecasts that the present coffee year might prove to top 12.5 million bags.

With the lower grown new crop coffees coming into maturity within Central America in general, the weather conditions have been mostly near perfect and aside from the much improved performance expected from Honduras, the new crops from El Salvador, Guatemala, Nicaragua and Costa Rica are likewise expected to be improved this year.   This to see the Central Americans and including Panama and Dominican Republic due for an approximate 1.65 million bags or 13.52% overall larger new crop of around 13.85 million bags for this new October 2014 to September 2015 coffee year, which shall be added to a still under question near to steady new crop of around 4.3 million bags from Mexico, in terms of regional mostly fine washed arabica coffee production.

The issue of Brazil weather remained the dominant factor in the markets yesterday and with the well-respected meteorologist Somar having followed on his earlier forecast for a new cold front advancing into Southern Brazil, which shall bring widespread rains to the main southern and central and mainly arabica coffee districts, with Indication that these rains shall continue through to the middle of next week.   These rains to assist to build up ground water retention levels within the main arabica coffee districts of Brazil, which should assist to set a more positive future for the setting of the new crop flowerings within these districts, albeit that there is now doubt that it shall for next year, be a relatively modest marginally deficit crop.

This aside however and despite the steady nature of new crops in Vietnam and larger new crops due from India and Indonesia, the world coffee supply for the October 2014 to September 2015 coffee year is still looking to be at only around 144 million bags.   This in terms of world coffee demand of in excess of 150 million bags, shall see the world stocks being depleted for the coffee year and while world coffee stocks are presently relatively substantial, still makes the size of the next 2013 Brazil crop a rather critical factor, in terms of the longer term world coffee supply for the follow on 2015 to 2016 coffee year and shall presumably, maintain some degree of buoyancy for the markets for the coming year.

The arbitrage between the markets narrowed yesterday to register this at 98.65 usc/Lb., while this equates to a relatively attractive 51.77% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,375 bags yesterday, to register these stocks at 2,371,641 bags.   There was meanwhile a smaller in volume 2,475 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 11,849 bags.

The commodity markets were somewhat steadier yesterday, but with the U.S. dollar retaining its muscle and once again showing a degree of buoyancy the recovery noted within selected markets was generally modest in nature.  The Oil, Natural Gas, Orange Juice, Corn and Soybean markets showed buoyancy, while the Cocoa, Sugar, Coffee, Cotton, Copper, Wheat, 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 0.46% lower; to see this Index registered at 476.87.   The day starts with the U.S. Dollar steady and trading at 1.599 to Sterling and 1.253 to the Euro, while North Sea Oil is likewise steady in early trade and is selling at $ 82.95 per barrel.

The London market and New York markets started the day yesterday on a near to steady note, but coming under pressure in thin trade to take a modestly negative track into the afternoon’s trade.   There was however some degree of support for both markets at the lows and while the overall track was erratically negative and the markets did briefly move back into positive territory, the losses were mostly modest and with the markets having a day of mostly thin and lacklustre trade.   The London market continued to end the day on a softer note and with 82.4% of the losses of the day intact, while the New York market ended the day on a likewise softer note and with 45.9% of the losses of the day intact.    This overall softer close does little to inspire confidence and with likewise little in the way of fundamentally supportive news within the markets at present to buoy speculative sentiment, one might expect to see the day start on steady to perhaps marginally softer note for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2026 – 13                                                DEC     186.25 – 1.95
JAN      2026 – 14                                               MAR     190.55 – 1.95
MAR     2028 – 13                                               MAY     193.00 – 1.90
MAY     2039 – 13                                                JUL      195.15 – 1.95
JUL      2050 – 14                                                SEP      196.55 – 1.85
SEP      2060 – 14                                                DEC      197.65 – 1.80
NOV     2061 – 14                                                MAR      197.80 – 1.75
JAN      2049 – 14                                                MAY      197.00 – 1.70
MAR     2055 – 14                                                 JUL      196.15 – 1.60
MAY     2058 – 9                                                   SEP      195.70 – 1.75

5th. November, 2014.
Mexico has been unforthcoming over the past few months in terms of their production and export figures, unlike their neighbours in Central America who are traditionally very specific in their monthly export figures and overall crop reports.   The International Coffee Organisation has however and presumably on the basis of official figures presented to them, reported that the country’s coffee exports for the just completed October 2013 to September 2014 coffee year were approximately 27% lower than the previous coffee year, at a total of only 2.44 million bags.

What is however uncertain with many private trade and industry estimates having put the last Mexican October 2013 to March 2014 harvest in excess of 4 million bags, what effect the growing domestic coffee market might be having on the country’s export potential.  Albeit in terms of the countries robust soluble coffee industry, there is the question as to how much of this industries production and sales are related to imported coffees.

In the meantime the National Coffee Association of Mexico have voiced concerns that due to unfavourable weather conditions over the past year and a resulting relatively modest flowering and the with the added problems of Roya or Leaf Rust that are still an issue in many districts, that the country cannot expect the new crop to show any improvement over the past crop.    This report is contrary to some of the private industry forecasts that have expectations of a modest 4.8% larger new crop of around 4.3 million bags, but only time shall tell.

The issue of Brazil weather is however still the dominant factor in the market and tended to supress the speculative spirits in early trade yesterday, with the well-respected meteorologist Somar having forecasted a new cold front advancing into Southern Brazil, which shall bring widespread rains to the main southern and central and mainly arabica coffee districts.    This news does not however detract from the many reports of the late start to the Brazil rain season having been negative to the prospects for the early flowerings that came with some rain showers in September, where a relatively dry October has caused a good percentage to abort.  Therefore for the present and despite the now more normal rains in play, one cannot foresee a new 2015 crop that shall exceed 50 million bags and therefore a modest 4 million to 5 million deficit crop and with many still forecasting a dramatically lower figure.    

In terms of Vietnam where the new crop harvest has been interrupted over the past few weeks by rain showers, it is now mostly dry and the new crop is in full swing and is a crop that most within the private trade and industry sector are forecasting to be another big crop.   Thus with the new crop harvest now starting to build up in volume and due to start peaking in four to five weeks’ time, there is little concern over short to medium term robusta coffee supply and on the longer term with larger new robusta crops due to come into play from India and Indonesia, the prospects for steady robusta coffee supply are looking fairly secure for the coming year.   This shall one would presume, assist to maintain the good discounts that prevail for robusta coffees relative to the arabica coffees, for the foreseeable future.   

The arbitrage between the markets broadened yesterday to register this at 99.97 usc/Lb., while this equates to a relatively attractive 51.93% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 117 bags yesterday, to register these stocks at 2,368,266 bags.   There was meanwhile a larger in volume 6,245 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,324 bags.

The commodity markets were once again somewhat on a back foot yesterday, with the negative aspect of forecasted lower than expected overall European economic growth having an impact upon sentiment.  The U.S. dollar was however somewhat shaky for the day, but was not sufficient a factor to provide much in the way of support for the majority of the markets.   The Natural Gas, New York arabica Coffee and Cocoa markets showed buoyancy and the Gold market was steady, while the Oil, London robusta Coffee, Sugar, Cotton, Copper, 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 0.93% lower; to see this Index registered at 479.06.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.601 to Sterling and 1.255 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 82.40 per barrel.

The London market started the day yesterday on a brief steady note and followed by a softer start for the New York market, with the London market soon heading south and joining the New York market in negative territory and with the markets building up on their losses into the afternoon’s trade.   The New York market did however finally attract underlying support as the afternoon progressed and recovered its losses with buy stops being triggered to take the market back into positive territory, which had some influence upon the London market that recovered partially from its earlier lows.   The London market continued to end the day of a softer note and with 56.9% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 66.2% of the gains of the day intact.    This mixed close provides little in the way of direction, but one might think that the unforeseen muscle shown in the New York market might be supportive for some buoyancy for the London market and a steady start for the New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2039 – 34                                                DEC     188.20 + 2.35
JAN      2040 – 33                                               MAR     192.50 + 2.35
MAR     2041 – 27                                               MAY     194.90 + 2.30
MAY     2052 – 24                                                JUL      197.10 + 2.45
JUL      2064 – 24                                                SEP      198.40 + 2.65
SEP      2074 – 23                                                DEC     199.45 + 2.95
NOV     2075 – 22                                                MAR     199.55 + 3.10
JAN      2063 – 21                                                MAY     198.70 + 2.90
MAR     2069 – 21                                                 JUL     197.75 + 2.75
MAY     2067 – 16                                                 SEP     197.45 + 2.65

4th November, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market decrease their net long position within this market by 1,787 Lots during the week of trade leading up to Tuesday 28th October; to register a net long position of 26,372 Lots on the day.  This net long which is the equivalent of 4,395,333 bags has most likely been reduced during the period of mixed trade, which has since followed.

The end of the month has past and the usual round of monthly export figures are now coming to the markets.  he National Coffee Institute of Costa Rica have reported that the countries coffee exports for the first month of the new October 2014 to September 2015 coffee year were 10.50% less than that of the same month last year, at a total of 28,615 bags. The organisation has, since an August survey found that there has been a marked improvement in the treatment and prevention of roya in the fields where the presence of roya on the surveyed farms was noted to be around 2% severely affected by the fungus, and a decline on that of 16% in November 2012.  Having experienced conducive weather for coffee development through the year, Costa Rica are subsequently looking to increase their production on that of 2013 to 2014 coffee season of 1.25 million bags, to a target forecast of 1.51 million bags and exports to reach a total 1.28 million bags, or 3% above that of the previous coffee year. 

The National Coffee Organisation of Guatemala has reported that the country’s coffee exports for the month of October were 32% lower than the same month last year, at a total of 45,072 bags. Whereas this second largest producer in the Central America washed arabica producer bloc is forecast to post a recovery in this coffee year to upward of 3.20 million bags in exports from the new crop harvest which has begun in the lower lying areas in Guatemala and an increase on that of exports from the coffee year just completed at a total of 3,132,243 bags.

The preliminary coffee export figures from Brazil have seen the countries coffee exports for the month of October at 5.82% higher than that of the same month last year, at a total of 3,094,300 bags. This surge in exports assisted by the improved value attained from the New York arabica markets and assisted by the weaker Brazil Real against the US Dollar to provide impetus to these exports that are dominated by the natural arabica coffees from past crop stocks and new crop coffees.  These exports will continue to buoy consumer market stocks of Brazil coffees ahead of the higher volume winter roasting season within the main northern hemisphere consumer markets.

While it is early in the month, the trade in Vietnam are talking of coffee exports of mostly robusta coffees for the month of October to potentially reach between 2 to 2.5 million bags, which if it comes about will be an increase of around 14% on that of last month. These exports will be related to the carryover stocks from the past crop, as well as a degree of new crop coffees which have since begun harvest but not yet close to peak, whereas the recent surge in the London reference price would have assisted new business to be concluded.  The circumstances within the interior have however subsequently tightened, as the decline in London has similarly removed internal interest for sales against the discounted reference prices while producers are generally well financed and focused on the new harvest underway, there is presently little pressure for these producers to actively pursue the lower market. 

The arbitrage between the markets narrowed on Friday to register a difference at 91.82 usc/Lb., while this equates to an attractive 49.41% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices. 

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of 5,511 bags yesterday, to register these certified stocks at 2,368,149 bags.  There was a decrease of 4,350 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,569 bags.

The commodity markets had an overall mixed day yesterday, the US Dollar continued to gain strength during the day, while leading in influence Oil markets had another lower day.  It was a similarly softer day for Gold, while the markets appear to be reading the possibility of an interest rate hike to be announced by the US Federal Reserve Bank at some point in the near future.  It was a softer close for the Oil markets, Gold, Silver, Sugar, Cocoa, Orange Juice, Corn, Coffee and Soybean and a positive close for Wheat, Cotton, Platinum and Palladium on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.11% higher to see this Index registered at 483.53. The day starts with the U.S. Dollar steady and trading at 1.599 to Sterling and 1.252 to the Euro, while North Sea Oil is lower on opening, selling at $ 83.93 per barrel.

The coffee markets started the day yesterday on a buoyant note and in positive territory, with technical support setting the tone for the morning session in both markets. The volume in London remained thin throughout following in line with the more volatile New York arabica market which lead the way and this latter market with some gains posted in the morning, met with a steady increase of sellers waiting on the side-lines, as so too did the external pressure of a firmer US Dollar, weigh in on this market.  The day progressed with the latest news of wet weather in Brazil and Brazil Real softer touching 2.50 to the US Dollar on the day. The afternoon turned lower as the session progressed to see New York loose the gains on the day and move into negative territory, with London managing to remain in positive territory but off the days hish, to close in the middle of the day’s range, and a close near to the low in New York to set the close yesterday, as follows:

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

NOV 2073 + 25 DEC 185.85 – 2.15
JAN 2073 + 25 MAR 190.15 – 2.15
MAR 2068 + 15 MAY 192.60 – 2.20
MAY 2076 + 11 JUL 194.65 – 2.35
JUL 2088 +   9 SEP 195.75 – 2.55
SEP 2097 +   7 DEC 196.50 – 2.70
NOV 2097 +   5 MAR 196.45 – 2.65
JAN 2084 +   5 MAY 195.80 – 2.60
MAR 2090 +   2 JUL 195.00 – 2.55 
MAY 2083 +   2 SEP 194.80 – 2.50

3rd November, 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 11.66% in the week of trade leading up to Tuesday 28th October;  to register a net long position of 39,867 Lots on the day. 

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 14.79% to register a net long of 31,620 lots on the day.  This net long position is the equivalent of  8,964,270 bags has most likely decreased slightly over the period of overall more negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

Government export statistics from Sumatra the main coffee producing island of Indonesia have reported that the islands robusta coffee exports in October were 371,483 bags or 50% lower than the same month last year, at a total of 366,219 bags.  This modest total follows the relatively modest robusta coffee export total for the preceding October 2013 to September 2014 coffee year and is to be anticipated as a result of the weather related overall lower production and export performance from Indonesia. The lower output from the current harvest, along with an increased domestic consumption in Indonesia is impacting upon coffee stocks available for export, while the weather in relation to the new developing crop has thus far been conducive ahead of the harvest of their new mainly robusta crop to come next year. The tighter robusta coffee supply from Indonesia meanwhile is of no real concern for the consumer market coffee buyers however, as these markets continue to look to steady medium to long term supply from Vietnam. 

The Certified Robusta coffee stocks held against the London market were seen to increase by 7,833 bags over the two weeks of trade leading up to Monday 27th. October;   to register these stocks at 2,006,999 bags on the day. 

The arbitrage between the markets widened on Friday to register a difference of 99.40 usc/Lb., while this equates to an attractive 51.69% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.  

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of 7,162 bags yesterday, to register these certified stocks at 2,373,660 bags.  There was meanwhile, an increase of 1,904 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,919 bags.  

The commodity markets had an overall mixed day on Friday, which took a surprise turn on the news of the Bank of Japans announcements of acceleration of the massive economic stimulus program. This news added considerable muscle to the US Dollar against the Yen which latter continued to slide during the day.  It was a softer day for Brent and Light Crude, Copper, Wheat, Sugar, Cocoa, Coffee, Cotton and Orange Juice markets, another softer day for Gold, Silver and Platinum and a mildly positive day for Coffee, Corn, Soybean and Palladium markets.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.34% lower to see this Index registered at 482.99. The day starts with the U.S. Dollar steady and trading at 1.597 to Sterling and 1.249 to the Euro, while North Sea Oil is steady and is selling at $ 85.02 per barrel. 

The coffee markets started the day on Friday in negative territory, with the weather reports from local and international weather forecasters pointing to a week of good rain dispersion in the coffee growing areas in Brazil, and a volatile Brazil Real losing value against the firming US Dollar on the day. The outright volumes were muted with another restrained day in London for the duration of the day in that market.  The afternoon turned buoyant in both markets with some speculative cover taken ahead of the weekend and the month end. This brought in a degree of cautious confidence back to the floor although within the limited volume day, the upward momentum was absorbed by waiting sellers to lead into an afternoon which remained in positive trade in London and a choppy but mostly positive afternoon in New York and the markets finished the day with a degree of buoyancy and in positive territory, to set the close on Friday as follows: 

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

NOV 2048 + 12 DEC 188.00 + 0.40
JAN 2048 + 12 MAR 192.30 + 0.30
MAR 2053 + 10 MAY 194.80 + 0.35
MAY 2065 + 12 JUL 197.00 + 0.40
JUL 2079 + 14 SEP 198.30 + 0.40
SEP 2090 + 15 DEC 199.20 + 0.50
NOV 2092 + 17 MAR 199.10 + 0.60
JAN 2079 + 15 MAY 198.40 + 0.65
MAR 2088 + 15 JUL 197.55 + 0.60 
MAY 2081 + 15 SEP 197.30 + 0.55

 

 

 

 

 

 

 

 

31st October, 2014.

The arbitrage between the markets narrowed yesterday to register this at 95.20 usc/Lb., while this equates to an attractive 50.75% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange posted an increase of 541 bags yesterday, to register these certified stocks at 2,380,822 bags.  There was meanwhile, a decrease of 2,495 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 23,015 bags.

The commodity markets had an overall softer day yesterday, following on from the US Federal policy statements which boosted sentiment within this leading consumer market although similarly adding muscle to the US Dollar, thus pressure on US Dollar priced commodities in other major currencies. It was a softer day in the Oil markets, Gold, Silver, Platinum, and Palladium, Copper, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean markets, with a flat day in Cocoa and Sugar steady on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.03% lower to see this Index registered at 484.62. The day starts with the U.S. Dollar firmer and trading at 1.596 to Sterling and 1.257 to the Euro, while North Sea Oil is softer and is selling at $ 85.38 per barrel.

The London and New York markets started the day yesterday on a steady note and in New York, with some modest gains in the early trade, with higher than usual turnover in New York on opening. Both markets dipped into negative territory however and this reversal in fortunes for the markets met with additional seller pressure in light of the overall softer macro in commodities generally, together with US Dollar strength. Both markets tread around a narrow range in lower territory heading toward the latter day session some recovery was posted, to see London up into positive for a brief moment, before falling back toward the close.  

The Brazil Real firmed during the session yesterday which may have assisted to remove a section of overhead producer seller pressure during the latter half of the session in New York.  The volumes in this market improved once more as the day progressed but lacking much directional guidance other than the weather forecasts in Brazil direction dictated by the speculative sector would appear to be to trim longs, with nearby weather forecasts predicting good rain dispersion in the coffee growing areas, into the second week of November. The Brazil Real is meanwhile trading at recovered rate of 2.40 to the US Dollar today. The end of the month and first notice day in London has arrived, with perhaps some book squaring on the cards today, the close in London was in mildly negative territory around the middle of the day range and a likewise softer close in New York, after a buoyant run toward the end of the session in this market to post some recovery back toward the middle of the days levels, with spreads bolstering the good volume day for New York arabica, to set the close in both markets yesterday, as follows: 

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

NOV 2036 -  6          DEC 187.60 – 2.00
JAN 2037 -  5          MAR 192.00 – 1.95
MAR 2043 -  5          MAY 194.45 – 1.90
MAY 2053 -  7          JUL 196.60 – 1.80
JUL 2065 -  7 SEP 197.90 – 1.70
SEP 2075 -  8 DEC 198.70 – 1.60
NOV 2075 -  8 MAR 198.50 – 1.40
JAN 2064 -  8 MAY 197.75 – 1.50
MAR 2073 -  8 JUL 196.95 – 1.55
MAY 2066 -  8 SEP 196.75 – 1.65

30th October, 2014.

The arbitrage between the markets narrowed yesterday to register this at 96.98 usc/Lb., while this equates to an attractive 51.14% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange posted an increase of 3,957 bags yesterday, to register these certified stocks at 2,380,281 bags.  There was meanwhile, a decrease of 3,957 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 25,510 bags.

The commodity markets had a mixed and overall steady day yesterday, the US Dollar rose on the day, following the much awaited by the markets, US Federal Reserve Bank policy statements yesterday, confirming an end to the economic stimulus program which was implemented in reaction to the economic downturn six years ago. News of an improvement in the US Labour market together with better than expected US Corporate earnings were all factors which assisted to fuel positive sentiment in the markets yesterday.  It was a positive day for the Oil markets, resurgence noted in Soybean, Corn, Wheat and Sugar firm, so too Cocoa, Cotton and Palladium.  IT was however, a softer day for Coffee, Orange Juice, Copper, Gold, Silver and Platinum.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.69% higher to see this Index registered at 489.67. The day starts with the U.S. Dollar firmer and trading at 1.598 to Sterling and 1.259 to the Euro, while North Sea Oil is steady and is selling at $ 86.07 per barrel.

The coffee markets opened the day in positive territory, both markets moving higher at the outset in the morning limited volume session.   The London robusta market continued the positive track into the early afternoon but with New York attracting negative pressure as the afternoon progressed; London lost some of the earlier gains but remained within positive territory for the rest of the day. The lower trend in New York by midsession attracted light speculative long liquidation; this was met with light industry and a degree of technical support coming in to support the market at the lows.  The forecasts for well dispersed rains predicted to reach the Brazil Coffee belt for the next fortnight dampened the speculative mood, together with the negative influence of a firming US Dollar in the macro yesterday. The Brazil Real is meanwhile trading at recovered rate of 2.46 to the US Dollar today.  The close in London was in positive territory after a relatively narrow range in trade yesterday, nearer to the days’ highs, and a lower day in New York which saw this market finish the day just off the lows, and set the close yesterday, as follows: 

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

NOV 2042 + 20 DEC 189.60 – 2.75
JAN 2042 + 18 MAR 193.95 – 2.70
MAR 2048 + 17 MAY 196.35 – 2.65
MAY 2060 + 15 JUL 198.40 – 2.60
JUL 2072 + 14 SEP 199.60 – 2.55
SEP 2083 + 14 DEC 200.30 – 2.50
NOV 2083 + 10 MAR 199.90 – 2.45
JAN 2072 + 13 MAY 199.25 – 2.60
MAR 2081 + 15 JUL 198.50 – 2.60 
MAY 2074 + 15 SEP 198.40 – 2.50

29th October, 2014.

Following the arrival of the delayed rains to the main Brazil coffee growing areas, the local weather forecaster Somar has predicted that a new cold front will bring widespread rains across the coffee areas over the weekend.  The wet conditions are expected to continue through most of next week.  This forecast coincides with the US based forecaster Commodities Weather Group, likewise forecasting new rains through the coffee belt in the eleven to fifteen day forecast period, while the further out sixteen to thirty day prediction is for the weather to turn slightly drier over the coffee areas in Bahia and Minas Gerais. These prevailing wet conditions have assisted to provide a degree of recovery in ground water retention levels, a factor which is positive for the development of the flowering but the country needs good rains on a continuous basis in these coming months, to help to establish the new biennially bearing 2015 crop to come. Thus one may anticipate that there shall be a continuation of keen interest in the prospects for the Brazil summer weather and for this to remain conducive to the developing crop in the weeks and months ahead.  

Meanwhile and presuming no longer term climatic issues to negatively affect the new crop prospects for Brazil, the latest forecast from respected commodity bankers Rabobank, has indicated that this next crop ought to be around 47 million bags of which 30 million bags arabica and balance Conilon Robusta.  The starting point for this estimate is a premise that this current crop which was affected by the unforeseen dry weather during development at the beginning of this year has a potential 47 million bags while the expectation for the lower bearing 2015 crop to come should, climatic anomalies aside, see the new crop in at around the same level. There are many months ahead however and the traditional bout of forecasts can be expected to come to the markets of the prospective size of the new Brazil crop to come in 2015, while it might be observed that in general private trade and industry forecasts are lacking at this time year on year. One might presume that the delayed onset of rains this year has inspired a degree of reluctance at this early stage of flowering for participants to as yet put forward official forecasts.  Although these forecasts will start to come through in the next couple of months and the reception of these reports are likely to be accompanied by a degree of speculation surrounding the potential size and impact of this new crop, which is seemingly to remain a topical factor to influence the markets. 

The arbitrage between the markets held steady yesterday to register this at 100.54 usc/Lb., while this equates to an attractive 52.27% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.  

The Certified washed Arabica coffee stocks held against the New York exchange posted an increase of 4,240 bags yesterday, to register these certified stocks at 2,376,324 bags.  There was meanwhile, a decrease of 1,390 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 29,467 bags. 

The commodity markets had a mixed and overall steady day yesterday, with the overall focus on the US Federal Reserve Bank meetings and their resulting announcements later today. The US Dollar weakened toward the latter half of the day to assist to prop up most commodities and a mild recovery registered in the Oil markets on the day. It was a positive day for Oil, Sugar, Cotton, Copper, Wheat, Corn, Soybean, Coffee and the metals markets, Gold, Silver, Platinum and Palladium, although a softer day for Cocoa and Orange Juice. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.60% lower to see this Index registered at 486.34. The day starts with the U.S. Dollar trading at 1.613 to Sterling and 1.273 to the Euro, while North Sea Oil is steady and is selling at $ 86.09 per barrel.  

The coffee markets opened the day yesterday with some buoyancy in London and on a softer note in New York.  The range and volume in both markets was muted and in London a particularly thin day, which with first notice day ahead, this market progressed in light volume on either side of unchanged. It was a little busier in New York yesterday in volume; however, the range was similarly narrow in comparative term and speculative sellers met with underlying light roaster and industry buyer activity to set the floor in the earlier session, where the market drifted along range bound.  The latter day activity perhaps spurred on more by the macro than in coffee alone, along with the much firmer Brazil Real at 2.48 to the US Dollar as the session progressed, encouraged latter day support in New York.  Thus the markets finished the day after a quiet days trade in London and a buoyant day in New York arabica, to set the close near to the days’ high in both markets in a degree of buoyancy, as follows:  

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

NOV 2022 + 10                  DEC 192.35 + 1.45
JAN 2024 + 11          MAR 196.65 + 1.50
MAR 2031 +   6          MAY 199.00 + 1.45
MAY 2031 +   7          JUL 201.00 + 1.50
JUL 2045 +   7          SEP 202.80 + 1.60
SEP 2058 +   8          DEC 202.35 + 1.60
NOV 2069 + 12          MAR 201.85 + 1.55
JAN 2073 +   8          MAY 201.10 + 1.60
MAR 2059 +   8          JUL 200.90 + 1.70 
MAY 2066 +   8          SEP 200.45 + 1.70

28th October, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market decrease their net long position within this market by 2.40% during the week of trade leading up to Tuesday 21st October; to register a net long position of 28,159 Lots on the day.  This net long which is the equivalent of 4,693,167 bags has most likely been slightly reduced during the period of mixed trade, which has since followed.

Following on from the Vietnam General Statistics office downward review of the country’s September coffee exports, to 1,622,550 bags., the government has since forecast that the country could export approximately 1,750,000 bags of mostly robusta coffees in this first month of the new October 2014 to September 2015 coffee year. These figures yet to be finalised would contribute to the country exporting around 24,882,417 bags of coffee over the first ten months of the calendar year thus far, or at 37.40% higher than cumulative exports over the same period in the previous calendar year.  

The arbitrage between the markets held steady yesterday to register this at 99.41 usc/Lb., while this equates to an attractive 52.07% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices. 

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of 7,400 bags yesterday, to register these certified stocks at 2,372,084 bags.  There was meanwhile, an increase of 6,600 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 30,857 bags. 

The commodity markets had a mixed and mostly lower day yesterday, the markets waiting further guidance as the next interest rate indicators by the US Federal Reserve Bank which two day policy meetings begin later today. It was an overall softer day for the metals markets with Gold, Silver and Palladium posting a softer close on the day.  It was a generally softer day for the Oil markets, while in tandem with the news of the Presidential elections outcome in Brazil and another term narrowly won by Dilma Rousseff, the Brazil Real softened on the day to touch upon fresh lows against the U.S. Dollar. This spilled over as negative pressure into the grains markets although these latter markets posted some recovery toward the end of the day.  It was a positive day for Corn, Soybean and Wheat markets, the other gainers on the day were Copper and Platinum, but a negative day for Orange Juice, Cocoa, Sugar, Cotton and Coffee. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.11% lower to see this Index registered at 483.45. The day starts with the U.S. Dollar trading at 1.61 to Sterling and 1.27 to the Euro, while North Sea Oil is steady and is selling at $ 85.36 per barrel.

The coffee markets opened the day on Monday in the wake of the news of the results from Brazil in anticipation that the weaker Brazil Real would apply further pressure to both markets, which gapped lower on opening. The opening lower market found support to set the floor for the day and once the initial volume of selling was removed, both markets regained ground during the morning session ticking over in light volume through and into positive territory.  There was little else in the markets yesterday to provide guidance while the macro focus moved to the US Fed meetings to start today and a softer US Dollar on the day.  The afternoon session slid back into negative territory in both markets, which in the modest volume of the day was met with limited industry support once more and another attempt to the upside in both markets toward the latter part of the session which finally assisted the markets to the finish line with some buoyancy and most of the recovery intact albeit in negative territory, to set the close in both markets yesterday, as follows:

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

NOV 2012 - 15 DEC 190.90 – 0.60
JAN 2017 - 11 MAR 195.15 – 0.60
MAR 2025 -   9 MAY 197.55 – 0.55
MAY 2038 -   9 JUL 199.50 – 0.55
JUL 2051 -   9 SEP 200.55 – 0.60
SEP 2061 -   9 DEC 201.20 – 0.80
NOV 2061 -   9 MAR 200.80 – 0.90
JAN 2051 -   9 MAY 200.25 – 0.75
MAR 2058 -   9 JUL 199.40 – 0.40 
MAY 2051 -   9 SEP 199.20 – 0.15

27th October, 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 5.42% in the week of trade leading up to Tuesday 21st October;  to register a net long position of 45,131 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 2.01%, to register a net long on the day of 43,668 Lots. 

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 2.86% to register a net long of 37,109 lots on the day.  This net long position is the equivalent of 10,520,401 bags has most likely decreased slightly over the period of overall more negative trade that has since followed and likewise, the net long position of the Managed Money Funds. 

The Brazilian weather issues have taken a bit of respite for the moment, the news from local and international weather forecasters predicting nearly all of Brazil’s main agricultural areas should receive good rainfall for the next fortnight having been absorbed to some degree by the latest round of speculative liquidation. Further attention has since turned to the developments surrounding the local Presidential elections held over the weekend and likewise a recovery in the Brazil Real which is currently trading at 2.473 to the US Dollar prior opening for business, later today.  

The physical coffee market for the meantime has picked up some pace ahead of the winter northern hemisphere roasting and with the advent of the rains in Brazil, improved consumer activity registered in the past week.  This has been supported by the advantageous in US Dollar terms, softer Brazil Real and improved sales within the internal market in Brazil last week.   

The forward prospects are meanwhile all positive thus far for the development of the harvests and new crop coffees which will soon start to come from the fine washed arabica producer bloc of Mexico, Central America and Colombia, as well as the new robusta crop to come from Vietnam in the next months.  This would indicate that a majority of the consumer industry roasters are tending to maintain a cautious view towards the markets and a continuation of a steady buying policy for the more attractive in value terms coffees which are coming to the fore.

The arbitrage between the markets narrowed on Friday to register this at 99.51 usc/Lb., while this equates to an attractive 51.96% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices. 

The Certified washed Arabica coffee stocks held against the New York exchange posted an increase of 1,650 bags on Friday, to register these certified stocks at 2,379,484 bags.  There was meanwhile, a decrease of 2,475 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,257 bags.

The commodity markets had a mixed but overall negative day on Friday, improved U.S. housing sales data assisted to boost confidence in this leading consumer sector and with improved sentiment in the equity markets, a softer day for safe haven Gold. The Oil markets were weighed down by ample supply indicators which similarly leant a softer mood to the day in these markets.  It was a softer day for the Grains; Soybean, Wheat, Corn finished in negative territory; as did Orange Juice, arabica Coffee, Platinum and Palladium. The Copper markets posted a flat day while Cocoa, robusta Coffee, Cotton and Silver registered a positive finish on the day. The US Dollar held steady on the day against other major currencies. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.47% lower to see this Index registered at 484.00. The day starts with the U.S. Dollar trading at 1.609 to Sterling and 1.269 to the Euro, while North Sea Oil is steady and is selling at $ 86.01 per barrel.

The London market started the day on Friday with some hesitant buoyancy, but with both markets turning softer in early trade.  The London market did however recover into the afternoon’s trade, while the New York market continued on its softer track.  There was a renewal of interest and buyer fixation support posted toward the latter half of the session in both markets and with speculative support to boost the volume in both markets toward the end of the session.  The London robusta market finished the day on Friday in some buoyancy but off of the days highs ahead of the end month roll over, while New York found late in the day positive support to provide a improvement and to see this market recover some of its losses late in the day, but near to the end of the day to end the session in negative territory and on a softer note, the markets set the close on Friday as follows: 

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

NOV 2027 + 19 DEC 191.50 – 1.80
JAN 2028 +  6 MAR 195.75 – 1.75
MAR 2034 +  3 MAY 198.10 – 1.70
MAY 2047 +  2 JUL 200.05 – 1.40
JUL 2060 +  2 SEP 201.15 – 1.00
SEP 2070 Unch DEC 202.00 – 0.65
NOV 2070 + 4 MAR 201.70 – 0.35
JAN 2060 + 2 MAY 201.00 – 0.45
MAR 2067 + 2 JUL 199.80 – 0.70 
MAY 2060  - 5 SEP 199.05 – 1.15

24th October, 2014.

The arbitrage between the markets widened yesterday to register at 102.21 usc/Lb., while this equates to an attractive 52.88% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.  

The Certified washed Arabica coffee stocks held against the New York exchange posted an increase of 4,915 bags yesterday, to register these certified stocks at 2,377,834 bags.  There was meanwhile, a decrease of 8,260 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 26,732 bags.

The commodity markets were mostly steady yesterday with the Oil markets regaining some lost ground with news of broadly stronger than expected economic data from the Eurozone, assisting to fuel positive sentiment.  It was a similarly a firmer day for Soybean, Cotton, Corn, arabica Coffee, Wheat, Orange Juice, Copper and Palladium although a softer day for robusta Coffee, Sugar, Cocoa, Gold, Silver and Platinum. The US Dollar held steady on the day against other major currencies. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher to see this Index registered at 486.30. The day starts with the U.S. Dollar trading at 1.602 to Sterling and 1.265 to the Euro, while North Sea Oil is steady and is selling at $ 86.07 per barrel.

Following on from the bearish results posted in New York the day before, the London market opened lower, to set a new floor for the day which in a relatively slow and low volume day, held the range within a narrow band and steady albeit in negative territory. It was a more robust session in New York with improved volumes which started the day positively and drifted back toward midsession, but with industry buyer fixation support returning to the floor to see this market retrace and build upon the gains, to take an upside positive track for the rest of the day.  This trend was sustained right up to the final bell yesterday, to see New York register a positive close within improved volume and an overall tighter range through the day, with the appearance of some consolidation.  The Brazil Real meanwhile is trading softer at 2.497 to the US Dollar ahead of the presidential elections this weekend, while the forecast rains are now predicted to be around the Brazil coffee areas for the next fortnight, to add little in the way of directional influence with the markets seemingly have absorbed the weather factor, for the time being at least.  The close yesterday in both markets, after a moderately buoyant day was set as follows;  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/LbNOV    2008 – 17                                           DEC    193.30 + 2.20

JAN     2022 – 17                                          MAR    197.50 + 2.20
MAR    2031 – 17                                          MAY    199.80 + 2.15
MAY    2045 – 16                                          JUL      201.45 + 2.15
JUL     2058 – 15                                    SEP      202.15 + 1.90
SEP     2070 – 13                                          DEC     202.65 + 1.90 
NOV    2066 – 13                                           MAR    202.05 + 1.80
JAN     2058 – 13                                          MAY     201.45 + 210
MAR    2065 – 13                                          JUL     200.50 + 2.35 
MAY    2065 – 13                                          SEP     200.20 + 2.55

23rd October, 2014.

The focus in Brazil meanwhile remains the now anticipated arrival of the summer rains to set the flowering for the next new Brazil 2015 / 2016 crop to come.  Weather forecasts are now looking to widespread rains to reach the coffee areas in Brazil, with the arrival of a new cold front to bring forth good showers through the weekend and the coming week. The arrival of these delayed rains will assist to set the flowering for the next new Brazil 2015 crop to come and while there are still many months ahead, one might anticipate that the discussion will soon turn to the question of the continuation of rains to set the flowering for this new crop to develop. 

The short to medium term forecasts are optimistic meanwhile, for an increased potential for showers over the region in the latest sixteen to thirty day outlook as forecast by the U.S. based Commodities Weather Group.  While this next Brazil 2015 crop will follow on from this year’s arabica coffee crop harvest which was negatively affected by the partial drought during the first two months of this year.  In the meantime the Brazil Real is trading at an easier 2.49 to the U.S. Dollar, to provide inspiration to the internal market for current crop coffee sales.    

The arbitrage between the markets narrowed yesterday to register this at 98.61 usc/Lb., while this equates to a relatively attractive 51.60% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of 2,559 bags yesterday, to register these certified stocks at 2,372,919 bags.  There was an increase of 6,822 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 34,992 bags.

It was a mixed day on the commodity markets yesterday, the leading in influence Oil markets tending softer on the news of ample inventories being held in the top U.S.A. consumer market ahead of the northern hemisphere winter higher consumption months.  The U.S. Dollar firmed on the day to contribute toward the generally lower day. It was a softer day for Oil markets, Gold, Silver, Platinum, Palladium and Copper, the New York arabica market registered a further 4.6% decline on the day. Grains posted some gains and a firmer day for Wheat, Corn and Soybean, as did Orange Juice, Cotton, Cocoa and Sugar finish in positive territory on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.54% lower to see this Index registered at 484.72. The day starts with the U.S. Dollar trading at 1.6052 to Sterling and 1.264 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 84.71 per barrel.

The coffee markets started the day with a degree of buoyancy although in relatively thin volume at the outset. The London market remained in positive territory for much of the session although choppy with direction positive in the morning as buy orders met with limited upward resistance. The volume of trade remained thin throughout however, which once buyer support had been absorbed, failed to encourage further upward momentum and a generally slow and choppy session ensued.  After a similarly positive opening for New York yesterday, the morning session in this market was subdued and in light volume mildly positive.  The latter day news to come to the markets in the weather reports confirming rains to come to the Brazil coffee belt brought a degree of speculative liquidation back to the market in a continuation of long liquidation which was met with light shorts and industry support but with a lack of volume support this market drifted lower as the session progressed. 

The volumes on the coffee markets yesterday were not as impressive as the past few sessions and one might suggest that after the bruising that the markets have taken in the past few days as the speculative sector absorb the news of wetter weather in Brazil, there may be an opportunity for respite and a little consolidation ahead.  Although with first notice day for the prompt month in London to too far away and the question of the extent of the speculative longs being held in the New York arabica market in particular, there are still unpredictable and volatile times ahead. London had a mildly buoyant day yesterday, although finally the mood turned negative in sympathy with the continuation of downward pressure in New York. The latter market which spent much of the session under negative pressure, managed a marginal recovery toward the end of the day to finish, near to the days’ lows in both markets, and the close yesterday in negative territory, as follows:

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

NOV    2025 – 21                                            DEC    191.10 – 8.30
JAN     2039 – 20                                           MAR    195.30 – 8.20
MAR    2048 – 20                                           MAY    197.65 – 7.95
MAY    2061 – 19                                           JUL     199.30 – 7.85
JUL     2073 – 20                                    SEP     200.25 – 7.60
SEP     2083 – 21                                           DEC     200.25 – 6.80 
NOV    2079 – 21                                           MAR    200.25 – 6.80
JAN     2071 – 21                                           MAY    199.35 – 6.90
MAR    2078 – 21                                           JUL     198.15 – 7.15 
MAY    2071 – 21                                           SEP     197.65 – 7.00 

22nd October, 2014.

Vietnam Customs data has reflected that the countries first half of October exports have surged by 76% from the same time last year, to register 845,000 bags on 15th October. The trade in Vietnam has forecast exports for the month of October of mostly robusta coffees to reach around 1.67 million bags. This is understandable as the coffee supply registers increased shipments to the main consumer markets heading into the higher volume winter roasting season. The internal market in Vietnam has been more active over the past few weeks, as farmers and internal traders look to liquidate stocks ahead of this month’s start of another large new crop. Although the most recently softer London robusta market has seen this internal market somewhat stalled and one would expect that the majority of exports flowing to the markets are related to forward contract commitments rather than new business.

The new crop developing in Vietnam is thus far free of any climatic disruption and ripening well, ahead of the peak harvest which is anticipated to be in November. The current crop stocks are meanwhile estimated to be at a record high going into the new harvest this year, which will maintain a comfortable buffer supply to the consumer markets as the new harvest starts in earnest.  The October 2014 to September 2015 Vietnam new crop, of which close to 96% is robusta coffee, is currently forecast to be in excess of 27 million bags.

The Uganda Coffee Development Authority have reported the country’s coffee exports for the month of September were 16,378 bags or 7.30% lower than the same month last year, at a total of 207,923 bags.  This has contributed to the countries cumulative export figures for the total twelve months of the October to September 2014 coffee year at 82,800 bags or 2.31% lower than the same period in the previous coffee year, at 3,499,829 bags.    

The focus in Brazil meanwhile remains the now anticipated arrival of the summer rains to set the flowering for the next new Brazil 2015 / 2016 crop to come.  This with forecasters including local weather forecaster Somar predicting that rain should intensify toward the latter half of this week, through the weekend and cover most the main coffee growing areas in Minas Gerais through to next week.  In the meantime the Brazil Real is trading at a weaker 2.48 to the U.S. Dollar, to provide inspiration to the internal market for new crop coffee sales.    

The arbitrage between the markets narrowed yesterday to register this at 106.24 usc/Lb., while this equates to a relatively attractive 53.21% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of 1,800 bags yesterday, to register these certified stocks at 2,375,478 bags.  There was an increase of 7,375 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 28,170 bags.

It was a mostly buoyant day on the commodity markets yesterday, which registered steady gains in the Oil markets, while the U.S. Dollar firmed against other major currencies supported by the release of positively received U.S. housing data.  The Oil, Wheat, Cotton, Orange Juice, Gold, Platinum and Palladium markets posted positive gains on the day, although it was a relatively steady to flat finish for Copper, Soybean and the Coffee markets.  The Sugar, Cocoa and Corn markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.68% higher to see this Index registered at 487.346.  The day starts with the U.S. Dollar trading at 1.6127 to Sterling and 1.272 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 86.17 per barrel.

It was another lower opening on the coffee markets yesterday, with a degree of follow through in London, which was met with further downward pressure as the New York arabica market pushed lower on opening.  The morning session found underlying support and direction moved to the positive in both markets. The arrival of the America’s however brought back volume selling activity to the floor and both markets retraced their losses to set a new low for the session toward the latter half of the day. In a reversal of fortunes however, there was evidence of both speculative and industry participation at these levels and both markets gradually clawed back to unchanged toward the end of the day, having regained all lost ground during the session. The markets set the close on a steady note on the close, as follows:

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

NOV     2046 – 3                                              DEC     199.60 + 0.20
JAN     2059 – 1                                               MAR    203.75 + 0.25
MAR    2068 – 1                                               MAY    206.05 + 0.45
MAY    2080 – 2                                               JUL     207.70 + 0.55
JUL     2093 – 2                                               SEP     208.35 + 0.50 
SEP     2104 – 1                                               DEC    208.45 + 0.60 
NOV    2100 – 1                                               MAR    207.75 + 0.70
JAN     2092 Unch                                           MAY    206.85 + 0.60
MAR    2099 + 7                                              JUL     205.95 + 0.65 
MAY    2092 + 7                                              SEP     205.35 + 0.70 

21st October, 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 within this market by 4.09% during the week of trade leading up to Tuesday 14th. October;  to register a net long position of 28,854 Lots on the day.  This net long which is the equivalent of 4,809,000 bags has most likely levelled off during the period of mixed trade, which has since followed.

The arbitrage between the markets narrowed yesterday to register this at 105.96 usc/Lb., while this equates to a relatively attractive 53.14% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange posted a decrease of a modest 500 bags yesterday, to register these stocks at 2,377,311 bags.  There was an increase of 275 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,795 bags.

It was a mixed day on the commodity markets yesterday, with weaker prospects indicated for Chinese economic growth in the fourth quarter, while the US Dollar lost some ground against other major currencies and ahead of the next round of reports from US for manufacturing data, to be released toward the end of this week. The Oil markets were buoyant yesterday, and an overall positive day for Gold, Silver Platinum, Palladium markets. It was a mildly positive day for Wheat, Soybeans much unchanged, with Corn, Orange Juice, Sugar, Coffee and Copper in negative territory on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.55% lower; to see this Index registered at 484.08. The day starts with the U.S. Dollar trading at 1.617 to Sterling and 1.283 to the Euro, while North Sea Oil is steady in in early trade and is selling at $ 85.06 per barrel.

The coffee markets opened following on from the weekend news of delayed rain to have reached the Brazil coffee growing areas, and with both markets triggering losses on opening, London mildly so although followed by the New York start which met with immediate seller pressure into a void of resistance to see this market gap lower by 2.06% on opening.  With New York taking the lead sentiment in London quickly followed suit to push this latter market lower and set a new floor where stops were triggered to steady out the markets and the bout of speculative liquidation eased off to be met with underlying buyer support, as volumes increased into the latter half of the days’ trade.  Overall a softer day with London regaining some lost ground toward the latter half of the day with 2.41% of the losses retained against this market and a close near to the lows on the day.  With close on half of the days total losses in New York posted from the opening bell, the rest of the day albeit in negative territory pivoted around the 200 usc/Lb., level in the prompt month with a mild 3.10% recovery from the lows of the day toward the latter half of the session.  This could not finally be sustained into the last hour of trade on the day to see this market whittle away the gains and register a close near to the days’ low, and set a softer close on both markets yesterday, as follows: 

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

NOV     2049 – 68                              DEC   199.40 – 11.25
JAN     2060 – 69                              MAR   203.50 – 11.10
MAR    2069 – 69                               MAY   205.60 – 11.05
MAY    2082 – 69                               JUL   207.15 – 10.85
JUL     2095 – 68                              SEP   207.85 – 10.40
SEP     2105 – 68                              DEC   207.85 – 10.20
NOV    2102 – 68                               MAR   207.05 – 10.10
JAN     2092 – 68                              MAY   206.25 –   9.95
MAR    2092 – 68                               JUL   205.30 –   9.85 
MAY    2085 – 68                               SEP   204.65 –   9.65

20th October, 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 14.79% in the week of trade leading up to Tuesday 14th. October;  to register a net long position of 47,719 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 2.08%, to register a net long on the day of 42,807 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 18.50% to register a net long of 38,201 lots on the day.  This net long position is the equivalent of 10,829,983 bags is the highest net long held in arabica coffee futures since March 2008, that has most likely decreased slightly over the period of overall more negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Centre of Nicaragua has reported that the country’s coffee exports for the month of September were 146,029 bags, an increase of 76.90% on that of the same month last year. This higher performance has contributed to the country’s cumulative coffee exports for the cumulative twelve months of the present October 2013 to September 2014 coffee year, although exports for the season registered a total of 1,770,044 bags or 8.20% lower than the same period in the previous coffee year.

There are positive reports coming forth from local forecasters in Brazil, to see slightly improved chances for rain over the next two weeks to come to the main coffee growing belt in Brazil.  This is forecast with anticipated heavier rainfall and improved dispersion over Brazil’s south east region to the end of October.  This news has subsequently dampened sentiment for the upside in the New York arabica market and one might expect this trend to continue, so long as the delayed rains arrive and set a more seasonal pattern until the reality and assessment of these rains are in play.

The Certified Robusta coffee stocks held against the London market were seen to increase by 138,000 bags or 7.40% over the two weeks of trade leading up to Monday 13th. October to register these stocks at 1,999,166 bags. 

The arbitrage between the markets narrowed on Friday to register at 114.08 usc/Lb., while this equates to a relatively attractive 54.16% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged on Friday, to register these stocks at 2,377,811 bags.   There was meanwhile 1,525 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,520 bags.

The commodity markets were mixed on Friday, as improved U.S. consumer data coming to the markets to provide a boost for sentiment, also adding muscle to the U.S. Dollar on the day. It was a positive day for Oil, Platinum and Palladium, whereas the Cocoa and Sugar markets were steady. The day posted losses on the Gold, Silver, Soybean, Corn, Coffee Wheat and Orange Juice markets which tended softer on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.21% lower; to see this Index registered at 486.77.   The day starts with the U.S. Dollar steady and trading at 1.608 to Sterling and 1.273 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 85.77 per barrel.

The London market started the day on Friday on a softer note, as did New York open with a degree of buoyancy but subjected to downward pressure in both markets early on in the session.  This trend continued through the morning, although a mild recovery was posted within a relatively narrow range in modest volume and negative territory until the America’s came to the floor later in the day, whereupon the softer trend in both markets attracted reserved buying support to set a more steady momentum as the day progressed. The markets met with another bout of seller pressure toward the end of the day, with the overall negiative close accompanied by the news of prospective wetter weather to come to Brazil, to see these markets settle near to the lows of the day in both markets and a softer close on Friday, as follows: 

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

NOV 2117 – 37                          DEC 210.65 – 6.45
JAN     2129 – 39                          MAR 214.60 – 6.45
MAR    2138 – 39                                                MAY 216.65 – 6.40
MAY   2151 – 38                                             JUL 218.00 – 6.25 
JUL     2163 – 39                                                SEP 218.25 – 6.15
SEP     2173 – 39                                                DEC 218.05 – 6.20
NOV    2170 – 39                                                MAR    217.15 – 6.20
JAN     2160 – 39                                                MAY    216.20 – 6.30
MAR    2160 – 39                                                JUL     215.15 – 6.45
MAY    2153 – 39                                                SEP     214.30 – 6.45 

17th. October, 2014.
The Brazilian weather issues are for this week on something of a back foot, as market players are tending to show a degree of exhaustion following the past month of excitement over the persistent scare stories that relate to the hot and dry weather, in terms of its effects upon the next 2015 crop.  This has stalled the upside rally for the New York market and one might expect that with the delayed spring and summer rain season due to start during the second half of next week, that the market shall remain in something of a doldrums until the reality and assessment of these rains are in play.

Meanwhile with the new Central American crop maturing and with the lower grown coffees already ripening, the indications are that weather conditions have been perfect for the development of this new crop and with the combination of Mexico and the Central Americans due to bring in a combined 1.5 to 2 million bags larger crop from their October to March harvest.    This regional crop to be something of the order of 18 million bags, which shall be added to the steadily increasing supply from Colombia, who are on track for a 12.5 to perhaps even 13 million bags crop for this new October 2014 to September 2015 coffee year.

There has been some talk over the warmer weather in Colombia over the recent weeks and an increase in the incidences of Coffee borer beetle or Broca, but the National Coffee Federation has reported that these incidences are isolated and are not seen to be a serious problem.   While with good prevailing value and profits from new crop sales, the farmers are financially strong enough to afford the chemical inputs that are necessary to control the problem.

With the new crop developing in Indonesia and weather conditions presently favourable for the coffee farmers, the even the more conservative of forecasts are talking in terms of a larger new crop to start impacting upon the market from April next year.   This new crop expected to recover from this year’s dismal crop of approximately 8 million bags to 9.5 million bags depending on which reports one cares to recognise, to something in the order of 11 million bags.   With some early forecasts tending to talk of even more impressive numbers, but it is still early days and while there is no doubt going to be increased Indonesian coffee supply for the second half of next year, the volume shall only become clear by the second quarter of the coming year.

The report from Nestle that sales for the first nine months of this year have been relatively soft and below predictions and with particular emphasis on slower sales in the developing Asian markets, contributes to some questions over global coffee consumption growth.   Particularly so, as over the past few years it has been the developing Asian markets have contributed too much of this growth.   While in the meantime with the economic woes in Europe which is the world’s largest market and combined with the rapid growth in market share of the parsimonious single serve coffee machines and capsules, this market is posting flat to lower consumption figures.   The Nestle sales were however not negative in compared to the previous year, but only below the targeted 5% factor, which is seen to be unachievable now and therefore, is not an indication of reduced coffee demand within the Asian markets.

The physical coffee market for the meantime remains lacklustre and cautious and with the majority of the consumer market industry players tending to step back to await the influence of the delayed rains in Brazil to step back into the market in more intensity, while the consumer market trade are likewise showing caution in terms of taking on longer term stocks.   Thus one can expect little in terms of physical trade aggression for the short term and until at least the end of the month, with the probability of some catch up excitement during November, once the Brazil situation can be more accurately assessed.

The arbitrage between the markets broadened yesterday to register this at 118.76 usc/Lb., while this equates to a relatively attractive 54.70% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged yesterday, to register these stocks at 2,377,811 bags.   There was meanwhile also no change recorded for the number of bags pending grading for the exchange; to register these pending grading stocks at 18,995 bags.

The commodity markets were mixed yesterday, but with some degree of buoyancy experienced within many markets and with good economic data from the U.S.A. assisting to counter the bearish news from Europe and Asia.   The Oil, Natural Gas, Sugar, New York arabica Coffee, Wheat, Corn, Soybean and Platinum markets showed buoyancy, while the Cocoa, London robusta Coffee, Cotton, Copper, Gold and Silver markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.09% higher; to see this Index registered at 487.79.   The day starts with the U.S. Dollar steady and trading at 1.609 to Sterling and 1.280 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 85.80 per barrel.

The London market started the day yesterday on a softer track, while the New York market in thin trade showed a degree of buoyancy.  The markets headed into the afternoon with the London market maintaining its soft stance and the New York market maintaining its buoyancy.   As the afternoon progressed the New York market added some more weight and the London market recovered most of its earlier losses, but with the London market struggling to move into positive territory.   The New York market ran out of steam later in the day and the London market carried on to end the day on a near to steady note and having recovered 88.9% of the earlier losses of the day, while the New York market ended the day on the positive side of par but with only 23.7% of the earlier in the day’s gains intact.   This was not really an inspirational close and one might expect to see 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.
                                                
NOV     2154 – 1                                                 DEC     217.10 + 1.10
JAN      2168 – 4                                                 MAR    221.05 + 1.15
MAR     2177 – 4                                                 MAY    223.05 + 1.20
MAY     2189 – 4                                                  JUL    224.25 + 1.25
JUL      2202 – 4                                                  SEP    224.40 + 1.10
SEP      2212 – 5                                                 DEC    224.25 + 0.90
NOV     2209 – 5                                                 MAR    223.35 + 0.65
JAN      2199 – 5                                                 MAY    222.50 + 0.55
MAR     2199 – 5                                                  JUL    221.60 + 0.55
MAY     2192 – 5                                                  SEP    220.75 + 0.55

16th. October, 2014.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by a marginal 11,211 bags or 0.19% during the month of September, to register these stocks at 6,027,292 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.
 
Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 7,027,292 bags, it would have equated to at least a very safe 14.3 weeks of roasting activity and a very safe reserve, ahead of the higher volume winter roasting season.   This substantial stock situation assisting to maintain the complacent attitude that prevails within the physical coffee trade in North America, where industry buyers maintain a wait and see attitude towards the prospects for the pending but somewhat delayed spring and summer rain season in Brazil, which shall dictate the prospects for the next 2015 Brazil crop.

The Vietnam Customs Authority have reported that the countries coffee exports for the month of September were lower than traders forecasts for exports for the month of between 1.67 million to 2 million bags and have been registered at only 1.62 million bags, which is only marginally 0.4% lower than the previous months performance.   These exports having contributed to the country’s cumulative exports for the October 2013 to September 2014 coffee year having been 17.7% higher than the previous coffee year, at a total of 27.78 million bags.   This being a volume that shall most probably be mirrored during this new October 2014 to September 2015 coffee year, albeit that Vietnam with its mostly robusta coffee crop shall during this new coffee year, encounter increased competition from a larger new Indian crop that is soon to start and by April next year, a larger new Indonesian robusta coffee crop.

The U.S.A. based Commodities Weather Group came forth yesterday that while rains were expected for South East Brazil for the end of this month and throughout the coming month, that these rains would not completely cover all of the main arabica coffee and sugar growing areas in central and southern Brazil.   This report should have been seen to be potentially supportive for the New York market and was in fact followed by a modest degree of buoyancy for the market, but did not result in a rally and the buoyancy turned out to be short lived, as the report was somewhat countered by a more positive rainfall report from the well-respected Brazilian meteorologist Somar.

The Somar report indicated that rains were due to start in the main central and southern arabica coffee districts of Brazil by the second half of next week and would carry on from thereon, into the following month.  This report indicating that the prevailing market supportive dry weather in Brazil was in reality just two to three week delay in the start of the new spring and summer rain season, rather than an indication of a severely damaging drought for the next 2015 crop.   Thus it proved to be news that was negative for the end of the day market, with the New York market taking a dip and likewise, taking the wind out of the sails of the London market that had been showing buoyancy through the day.

The arbitrage between the markets narrowed yesterday to register this at 117.48 usc/Lb., while this equates to a relatively attractive 54.39% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 8,650 bags yesterday, to register these stocks at 2,377,811 bags.   There was meanwhile a smaller in volume 6,070 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,995 bags.

The commodity markets were mixed yesterday, but overall are coming under pressure over dismal global economic forecasts and with the U.S.A. aside, prospects for soft medium to long term demand.   The Cocoa, Orange Juice, Gold and Silver markets showed some buoyancy and the London robusta Coffee and Platinum markets were near to steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Corn 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 1.11% lower; to see this Index registered at 487.36.   The day starts with the U.S. Dollar tending softer and trading at 1.597 to Sterling and 1.282 to the Euro, while North Sea Oil is showing softness in early trade and is selling at $ 82.40 per barrel.

The London market started the day yesterday showing good buoyancy and starting off on a positive track, while the New York market started the day on a steady thinly traded steady track.   The London market built upon its gains into the afternoon’s trade and with the New York market remaining mostly on the positive side of par, to add some further weight during the afternoon post the Commodities Weather Group’s Brazil forecast.  This was however short lived and the New York market once again came under pressure to drop back into negative territory and start on a gradual downside track that eventually had a negative influence upon sentiment and the fortunes for the London market.   The London market continued to end the day only near to steady, while the New York market ended the day on a soft note and with 79.7% of the earlier losses of the day intact.   This soft close within the more volatile New York market and despite some degree of support from  an overnight softer U.S. dollar is unlikely to inspire confidence and one would expect little better than 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.
                                                
NOV     2155 unch                                              DEC     216.00 – 5.90
JAN      2172 – 2                                                 MAR    219.90 – 5.85
MAR     2181 – 3                                                 MAY    221.85 – 5.75
MAY     2193 – 3                                                  JUL    223.00 – 5.70
JUL      2206 – 1                                                  SEP    223.30 – 5.65
SEP      2217 unch                                             DEC     223.35 – 5.50
NOV     2214 unch                                             MAR     222.70 – 5.15
JAN      2204 unch                                             MAY     221.95 – 4.95
MAR     2204 unch                                              JUL     221.05 – 4.95
MAY     2197 unch                                              SEP     220.20 – 4.85

15th. October, 2014.
The National Coffee Organisation of Guatemala have reported that the country’s coffee exports for the month of September were 51,489 bags or 21.18% lower than the same month last year, at a total of 191,593 bags.  This has contributed to the countries cumulative exports for the just completed October 2013 to September 2014 coffee year being 533,690 bags or 14.56% lower than the same period in the previous coffee year, at a total of 3,132,243 bags.

The National Coffee Council of El Salvador have reported that the country’s coffee exports for the month of September were 35,580 bags or 79.16% lower than the same month last year, at a total of 9,367 bags.  This dismal performance which follows a much lower October 2013 to March 2014 harvest and likewise modest export volumes through the year has contributed to the countries cumulative exports for the just completed October 2013 to September 2014 coffee year being 674,332 bags or 57.48% lower than the same period in the previous coffee year, at a total of 498,736 bags.

One has to comment however that while this dip in production and exports from El Salvador is very much related to the devastating effects of the Roya or Leaf Rust infestation, that with approximately 70% of coffee farming in El Salvador being related to commercial rather than smallholder farmers, that many commercial farmers had taken steps to apply aggressive retuning or stumping of their trees in 2013, to more easily counter the effects of Roya.   Thus accentuating the decline in production that came with the disease and that already the coming new crop can be expected to be 60% larger and followed by a much larger 2015/2016 crop.

It is likewise the case for El Salvador’s neighbours for the coming new crop which while not expected to increase quite as dramatically as El Salvador, they are overall looking towards generally improved crops.   This with modest increases forecasted for Mexico, Guatemala and Nicaragua and as steady performance for Costa Rica, while the authorities in Honduras are talking about a rather impressive 1 million bags increase.   Thus adding approximately 1.7 million bags to overall regional production of mostly fine washed arabica coffees, from the coming harvest.  

While the majority of forecasts for the new Vietnam crop that is just starting have indicated a new crop that shall be similar to the previous crop of approximately 28.5 million bags, there was a report yesterday from officials in the main central highlands that their districts new crop might in fact be as much as 6.9% larger than the last crop.    Thus in terms of the new Vietnam crop so far and a crop that is made up from approximately 96% robusta coffees, there would appear to be little reason for concerns over medium to longer term supply from this the second largest producer and exporter.

There is however prospects for increasing demand for robusta coffees in the coming year as the growth in global coffee consumption is heavily weighted towards the price sensitive new markets and therefore robusta coffees, while with the relatively firm arabica coffee prices; there is inspiration for use of higher percentages of robusta coffees within the more price sensitive brands.   This factor made easier by the rapidly increasing market share that is being taken by single serve capsule coffee machines, which are by nature of their extraction process much friendlier towards the use of the presently half price robusta coffees in the blends.  

The arbitrage between the markets broadened yesterday to register this at 123.29 usc/Lb., while this equates to a relatively attractive 55.56% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,286 bags yesterday, to register these stocks at 2,386,461 bags.   There was meanwhile a smaller in volume 2,200 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,925 bags.

The commodity markets were mixed yesterday and despite the softening nature of the oil markets and the buoyancy of the U.S. dollar, the overall macro commodity index was nevertheless relatively steady.  The Sugar, Cocoa, New York arabica Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy, while the Oil, Natural Gas, London robusta Coffee and Cotton markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.03% higher; to see this Index registered at 492.83.   The day starts with the U.S. Dollar maintaining its recently acquired muscle and trading at 1.590 to Sterling and 1.264 to the Euro, while North Sea Oil is showing softness in early trade and is selling at $ 84.85 per barrel.

The London market started the day yesterday taking a softer track, while the New York market opened with a degree of buoyancy and with the London market soon recovering and with both markets heading into the afternoon on a modestly positive track.    This was however short lived and the London market soon slipped back into negative territory again and followed the New York market likewise, moving back into negative territory.  The New York market did however soon recover and while the London market remained within negative territory, the New York market maintained its renewed modest buoyancy.    The London market continued to end the day on a soft note and with 65.2% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 80.9% of the gains of the day intact.   This mixed close but with the New York market ending the day near to the highs is likely to inspire something of a positive start for the London market but perhaps only a hesitantly cautious steady to soft start for the New York market against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2155 – 14                                                DEC     221.90 + 3.80
JAN      2174 – 15                                                MAR    225.75 + 3.75
MAR     2184 – 15                                                MAY    227.60 + 3.80
MAY     2196 – 14                                                 JUL     228.70 + 3.65
JUL      2207 – 14                                                 SEP     228.95 + 3.55
SEP      2217 – 13                                                DEC     228.85 + 3.65
NOV     2214 – 13                                                MAR     227.85 + 3.45
JAN      2204 – 13                                                MAY     226.90 + 3.25
MAR     2204 – 13                                                 JUL     226.00 + 3.25
MAY     2197 – 13                                                 SEP     225.05 + 3.15

14th. October, 2014.
The respected Brazilian meteorologists Somar have reported yesterday that not only shall there be little chance of rain for the main central and southern arabica coffee districts for this week, but the temperatures are due to be very hot and generally well in excess of 30 Celsius, which shall be damaging for the modest early flowerings that occurred with some scattered showers a couple of weeks ago.   The report does however foresee that the prevailing dry air mass over South Eastern Brazil breaks up during the second half of next week, that it shall allow cold fronts to enter the country from the south and bring with them, some widespread rains.

Meanwhile the U.S.A. based meteorologists Commodity Weather Group have forecasted above average rainfall to come to South Eastern Brazil in the next 11 to 15 days, while they also forecast that the mild El Nino phenomenon could possibly soon start to occur within the Pacific Ocean that would bring with it above average rainfall for South Eastern Brazil.  Thus for the present there would appear to be a general consensus that the delayed start to the Brazil spring and summer rain season shall eventually develop into a normal rain season for the rest of the summer, but the question remains how much damage this delay might have already caused for the prospects of next year’s Brazil arabica coffee crop.

There is no doubt that some damage has been incurred but there is also the factor to consider that stressed coffee trees do tend to flower better, once the rains occur.   Therefore so long as the damage from the now low ground water retention levels and the coming days of hot weather is not too extreme, there is the possibility of a nevertheless good flowering to come.  This so long as the forecasts for fair follow on rains, might well limit the losses to the new crop potential and might likewise bring with these flowerings and rains some better new arabica coffee crop forecasts.    Albeit that there is no doubt that the new Brazil arabica coffee crop for 2015 is still likely to be a deficit crop and with this year’s relatively modest crop, shall result in the liquidation of most of the large carry over arabica coffee stocks from last year, to fuel near to steady Brazil arabica coffee supply through to the follow on 2016 crop.

The International Coffee Organisation have reported that the Roya or Leaf Rust affected coffee production from Mexico and Central America for the just completed October 2013 to September 2014 coffee year was 13.4% lower than the previous coffee year, at a total of 16.02 million bags.   This volume that is marginally more modest that private trade and industry reports that talk in terms of 16.3 to 16.5 million bags, they say has contributed to global arabica coffee production for the coffee year having been close to 4% lower than the previous coffee year, at a total of 85.3 million bags.

Mexico and Central America are however seemingly coming out of their Roya or Leaf Rust problems and with the combination of improved prices and state subsidies, their farmers are getting the infestation under control and with a much improve new crop starting to be harvested.  But the agricultural ministry in Peru is not showing as much confidence in their famers efforts to control Roya and with having caused a 22.4% dip in production for this year’s just completed new crop, which they have pegged at approximately 3.45 million bags and even lower than the private trade and industry reports of around 3.8 million bags.   One might hope thought that with the Agricultural Ministry having declared a state of emergency for 11 of the country’s coffee districts and presumably due to provide longer term assistance and the assistance of more profitable higher prices, that Peru shall follow the developments in Mexico and Central America towards improve controls and some degree of recovery for next year’s April to September new crop harvest.  Thus adding to growing washed arabica coffee supply to the consumer markets, which is already coming with the improved yields from Mexico, Central America and Colombia.
 
The arbitrage between the markets narrowed yesterday to register this at 118.81 usc/Lb., while this equates to a relatively attractive 54.47% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

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 2,389,497 bags.   There was meanwhile a larger in volume 2,770 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 10,725 bags.

The commodity markets were mixed yesterday and despite the softening nature of the oil markets and the buoyancy of the U.S. dollar, the overall macro commodity index was relatively steady.   Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and the Sugar market was steady, while the Oil, Natural Gas, New York arabica Coffee and Orange Juice markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.28% higher; to see this Index registered at 492.69.   The day starts with the U.S. Dollar steady and trading at 1.608 to Sterling and 1.272 to the Euro, while North Sea Oil is relatively steady in early trade and is selling at $ 87.20 per barrel.

The London and New York markets started the day yesterday showing early buoyancy and carried this through to the afternoon, but with the New York market starting to come under pressure during the afternoon and heading back into negative territory, while the London market maintained its muscle.  This remained the track for the rest of the day for both markets and with the London market continuing to end the day on a positive note and with 65% of the earlier in the day’s gains intact, while the New York market ended the day on a softer note and with 82.1% of the earlier in the day’s losses intact.   This mixed close provides little in the way of guidance, but one might expect that with the fundamental of continued dry weather in Brazil that there might well be a degree of corrective buoyancy for the New York market and a near to steady start for the London market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2169 + 10                                               DEC     218.10 – 2.30
JAN      2189 + 13                                               MAR    222.00 – 2.20
MAR     2199 + 13                                               MAY    223.80 – 2.25
MAY     2210 + 13                                                JUL    225.05 – 2.30
JUL      2221 + 13                                                SEP    225.40 – 2.45
SEP      2230 + 13                                               DEC    225.20 – 2.40
NOV     2227 + 13                                               MAR    224.40 – 2.55
JAN      2217 + 13                                               MAY    223.65 – 2.70
MAR     2217 + 13                                                JUL    222.75 – 2.85
MAY     2210 + 13                                                SEP    221.90 – 3.25