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I. & M. Smith (Pty) Ltd.

Coffee Market Report

07 Aug 2014

Coffee Market Report

August 07 2014

The National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of July were 81,742 bags or 21.79% lower than the same month last year, at a total of 293,312 bags. This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 431,403 bags or 13.89% lower than the same period in the previous coffee year, at a total of 2,673,721 bags.

It has to be noted however in terms of Guatemala, that while offers and sales of past crop top quality Honduras, Costa Rica and El Salvador coffees have since dried up and indicate that these coffees ahead of the new crop harvest that starts in two to three months’ time, that there are still offers of past crop quality coffees from Guatemala in the market. This indicates that while there is no doubt that Guatemala did have a smaller Roya or Leaf Rust affected past crop, that the lower export volumes are not only related to this factor, but also to the internal market price resistance this year in reaction to lower volumes, which have inflated the prices out of Guatemala and forced many traditional buyers to substitute these coffees with more affordable alternatives.

This substitution has mostly been related to the much larger production figures out of Colombia, who have shipped 1,768,000 bags or 21.31% more coffee over the first ten months of the present October 2013 to September 2014 coffee year, than the same period in the previous coffee year. While in terms of increasing production out of Colombia, one must look to the evidence of production for the month of July at 1,236,000 bags, which is a sixteen year high for this leading fine washed arabica coffee producer.

Nevertheless, the issue of Roya or Leaf Rust are now being controlled throughout Mexico and Central America and with the prospects for at least a 10% increase for the new crop from this region that combined, still remains the largest producer of fine washed arabica coffees. Guatemala in particular, is not quite matching this overall regional forecast, with early forecast for the country presently indicating a more modest 7% to 8% larger new crop, at around 4.4 million bags.

There is little new news coming out of Brazil where the larger northern coffee districts conilon robusta coffee crop is complete and the central and southern districts smaller arabica coffee crop is approximately 65% complete, but with this latter arabica coffee crop due to be close to completed by the end of this month. It is noted however, that despite the many forecasts for a partial drought affected dismal new arabica coffee crop from Brazil that the arabica coffee farmers are still relatively free and aggressive sellers of their substantial carryover stocks of past crop coffees, which makes one question how convinced they who are on the ground and know best are in the prospects for this new arabica crop to be as low as many in the trade have been indicating.

Likewise in terms of the forthcoming next arabica coffee crop in 2015, that the increased incidences of aggressive pruning and the stress to the trees on many farms, shall be as damaging to the new crop potential as is being suggested by many reports. Surely if the farmers truly believed in a dismal 2015 arabica coffee crop out of Brazil, they would be showing more price resistance and holding back stocks for higher value, rather than being the free sellers of their stocks as they are at present. But it is early days and once still needs to see a good spring and summer rain season from October 2014 to April 2014, if there is to be a reasonable new arabica coffee crop out of Brazil.

The arbitrage between the markets broadened yesterday to register this at 104.31 usc/Lb., while this equates to a relatively attractive 53.53% 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 7,602 bags yesterday, to register these stocks at 2,426,239 bags. There was meanwhile a smaller in volume 4,685 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 19,655 bags.

The commodity markets had a mixed but overall day of buoyancy yesterday, despite the steady nature of the U.S. dollar and with the Oil markets tending to steady the overall picture. The Oil, Natural Gas, Cocoa, Sugar, New York arabica Coffee, Copper, Soybean, Silver and Platinum markets had a day of buoyancy and the Cotton, Gold and Palladium markets were steady for the day, while the London robusta Coffee, Orange Juice, 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 0.78% higher; to see this Index registered at 520.77. The day starts with the U.S. Dollar showing some buoyancy and trading at 1.685 to Sterling and 1.339 to the Euro, while Brent Crude is steady in early trade and is selling at $ 104.10 per barrel.

The London and New York markets started the day quietly yesterday and with both markets tending softer in early trade, but with both markets taking a softer track into the afternoons trade. The markets came under a bit more pressure as the afternoon progressed and registered increased losses, but with the more volatile New York market soon bouncing back as the day progressed and moving back into positive territory, while the London market made a partial recovery from its lows. The London market continued to end the day on a modestly softer note and having recovered 60% of its earlier losses of the day, while the New York market ended the day showing some degree of buoyancy but with only 46.7% of the gains of the day intact. This nevertheless positive close for the New York market might well inspire a degree of buoyancy for the London market and a steady start for the New York market in early trade today, against the prices set yesterday, as follows:

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

SEP 1992 – 17 SEP 190.85 + 1.45

NOV 1996 – 11 DEC 194.85 + 1.45

JAN 1993 – 13 MAR 198.35 + 1.50

MAR 1999 – 11 MAY 200.35 + 1.60

MAY 2005 – 11 JUL 202.05 + 1.90

JUL 2009 – 6 SEP 202.85 + 2.00

SEP 2014 – 3 DEC 203.75 + 2.15

NOV 2020 + 2 MAR 204.55 + 2.25

JAN 2017 + 2 MAY 204.95 + 2.25

MAR 2017 + 2 JUL 205.40 + 2.25

 


Coffee Market Report

August 06 2014

The National Coffee Federation of Colombia have reported that the countries coffee production for the month of July was 205,000 bags or 19.88% higher than the same month last year, to total 1,236,000 bags. While the countries coffee exports for the month were 183,000 bags or 23.25% higher than the same month last year, at a total of 752,000 bags.

This improved performance and following many improved months has contributed to the Colombian cumulative production for the first ten months of the present October 2013 to September 2014 coffee year being 1,768,000 bags or 21.31% higher than the same period in the previous coffee year, at a total of 10,065,400 bags. Likewise the countries cumulative exports for the first nine months of the present coffee year are 2,042,000 bags or 28.36% higher than the same period in the previous coffee year, at a total of 9,241,000 bags.

Based on the previous year’s performance and with Colombian production steadily rising, one might guess that the last three months of the present coffee year shall produce at least 1.7 million bags and therefore, see Colombia produce approximately 11.7 million bags during the present coffee year. Therefore to fuel exports of approximately 10.8 million bags, for the present coffee year. This much improved performance from Colombia assisting to counter much of the negative effects of the dip in Mexican and Central American production and the corresponding exports into the supply chain of fine washed arabica coffees, for the present coffee year.

Meanwhile with the Mexicans and Central Americans forecasted to bring in at least a 10% increase in crop from their next October 2014 to March 2015 harvest and adding in excess of 1.5 million bags to the fine washed arabica coffee supply while Colombia is expected to register a further small increase in crop, the supply of the top end mild coffees to the consumer markets is seemingly secure for the coming coffee year. This good supply factor is especially so, as there is flat growth within the traditional developed coffee markets for the present, which are the higher value markets that are related to these relatively expensive quality coffees. Making note that the impressive growth in single serves capsule coffees is very much related to the traditional developed coffee markets, which is resulting in less coffee fuelling more cups.

The full moon period this peaks on the 10th. August at the end of the week is to the fore and is by nature, the time when there is traditionally the most chance of a frost. But with the frost season over the south and central Brazil coffee districts not forecasted for particularly cold weather, one might not expect that frost shall be a factor for this year. Thus the focus now starts to be upon the late September to early October new spring and summer rain season, which shall be critical to the prospects for the next 2015 crop.

The positive crop news from Colombia while perhaps dampening some speculative spirits within the New York arabica coffee market does not detract from the problems that have been encountered early in the year for the main central arabica coffee districts in Brazil and with this factor still the headline event within the market, one might expect to see further scare stories emanating from Brazil. These not only related to the decline in arabica coffee yields for the new crop that is starting to tail off, but more so related to the resulting liquidation of the large carryover stocks and the critical nature of the potential for excessive pruning and stressed trees, in terms of the prospects for the forthcoming 2015 crop that shall not be supported by good carryover stocks. Thus one might see Brazil continue to underpin market sentiment and to limit the downside potential for the market, but presently and with many players still on holiday, the market can be expected to remain volatile.

The arbitrage between the markets narrowed yesterday to register this at 102.36 usc/Lb., while this equates to a relatively attractive 52.93% 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 decrease by 1,000 bags on yesterday, to register these stocks at 2,433,841 bags. There was meanwhile a smaller in volume 250 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,970 bags.

The commodity markets had a mixed but overall softer day yesterday, with some concerns over softer growth in the internal market China tending to take the lustre out of many markets. The Natural Gas, Wheat and Gold markets showed buoyancy and the Cocoa, London robusta Coffee and Palladium markets were steady, while the Oil, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Silver and Platinum market tended easier for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.54% lower; to see this Index registered at 516.76. The day starts with the U.S. Dollar showing some buoyancy and trading at 1.686 to Sterling and 1.336 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.40 per barrel.

The London and New York markets started the day quietly yesterday and with both markets tending softer in early trade, but attracting support during the afternoon against renewed concerns over the so far difficult to quantify negative effects of the early in the year partial drought to the new Brazil crop and so too, what effect it shall have upon the quality of the trees for the next crop. This new found buoyancy was however short lived and the markets once again started to come under pressure and with the London market continuing to end the day on a near to steady note, but with the New York moving back into negative territory and ending the day on a soft note and with 34.9% of the losses of the day intact. This close does not however provide much indication of direction but unless the speculative sector of the market steps in to provide support, might see the markets starting the day on a steady to softer track against the prices set yesterday, as follows:

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

SEP 2009 + 2 SEP 189.40 – 1.10

NOV 2007 – 1 DEC 193.40 – 1.00

JAN 2006 – 2 MAR 196.85 – 0.95

MAR 2010 – 2 MAY 198.75 – 0.40

MAY 2016 – 2 JUL 200.15 + 0.40

JUL 2015 – 5 SEP 200.85 unch

SEP 2017 – 5 DEC 201.60 – 0.75

NOV 2018 – 5 MAR 202.30 – 0.50

JAN 2015 – 5 MAY 202.70 – 0.60

MAR 2015 – 5 JUL 203.15 – 0.65

 


Coffee Market Report

August 05 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 1.22% the week of trade leading up to Tuesday 29th..; to register a net long position of 30,320 Lots on the day. This net long which is the equivalent of 5,053,333 bags has most likely been little changed or perhaps marginally increased over the period of mixed but range bound trade, which has since followed.

Government export statistics from Sumatra the main coffee producing island of Indonesia have reported that the islands robusta coffee exports in July were 692,139 bags or 74.54% lower than the same month last year, at a total of 236,350 bags. This modest total follows relatively modest robusta coffee export totals for the preceding five months and therefore the cumulative robusta coffee exports from Sumatra for the first ten months of the present October 2013 to September 2014 coffee year are 1,325,875 bags or 29.68% lower than the same period in the previous coffee year, at a total of 3,141,415 bags.

This lower performance does despite rising domestic consumption within Indonesia that is impacting upon coffee stocks available for export, assist to provide some confirmation for the many reports that have indicated a lower new coffee crop for Sumatra this year. With relatively low export volumes expected to continue for the next seven to eight months and until such time as the potentially larger new crop shall start to come into play, so long as there are no unforeseen for the present weather problems for the island.

Thus with this tighter supply scenario out of Indonesia and with the potentially larger new Indian robusta coffee crop only due to start impacting early in the new year, it takes some of the competition away from the Vietnamese. This we would imagine shall see farmers and internal traders maintain some degree of price resistance in their selling activity of their remaining past crop stocks, which such resistance likely to continue a month or two past the end October start of the deliveries of their large new robusta coffee crop.

Reports from traders in Ho Chi Minh City in have indicated estimates that following exports that are estimated to have been around 1.42 million bags of mostly robusta coffees in July, that the country would more than likely look to export between 1.17 million and 2 million bags of mostly robusta coffees during the month of August. Much of these exports would of course be more related to deliveries of forward contract commitments rather than new business, but with exporters still looking to cover some of these contract commitments there can be expected to be slow but steady business being done within the internal market, as exporters chase down some of the remaining past crop stocks.

The International Coffee Organisation with their June statistics in hand, have reported that the coffee exports from all producers for the first nine months of the present October 2013 to September 2014 coffee year are 2,946,377 bags or 3.48% lower than the same period in the previous 2012/2013 coffee year, at a total of 81,822,860 bags. This dip is despite higher volumes of Colombian mild exports that come with the steadily rising production levels in Colombia and a small increase in exports of Brazil natural arabica coffees, which were not sufficient to counter the dip in exports out of the smaller Central American new crop and the downturn in trade stocks of robusta coffees, where the inverted price structure of the London market has not been encouraging for the consumer trade to buy in and carry robusta coffee stocks.

The arbitrage between the markets broadened yesterday to register this at 103.32 usc/Lb., while this equates to a relatively attractive 53.15% 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 8,146 bags on yesterday, to register these stocks at 2,434,841 bags. There was meanwhile a smaller in volume 2,850 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,720 bags.

The commodity markets had a day of overall buoyancy yesterday, with most markets tending to show some degree of recovery post the past few days of overall softness. The Oil, Natural Gas, Cotton, Copper, Orange Juice, Wheat and Corn markets had a day of buoyancy and the Sugar and Cocoa markets shed their early gains to end the day near to steady, while the Coffee, Gold, Silver, Platinum and Palladium markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.56% higher; to see this Index registered at 519.59. The day starts with the U.S. Dollar near to steady and trading at 1.687 to Sterling and 1.342 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 104.10 per barrel.

The London and New York markets started the day yesterday with the London market taking a softer track and the New York market showing so buoyancy in thin trade, with both markets maintaining this stance into the early afternoon’s trade. The New York market did however come under pressure as the afternoon progressed and moved into negative territory and with sell stops being triggered to accelerate the losses and trigger sharp losses, while the London market continued on a steady downside track. The New York market did however bounce back from the lows and almost made a full recovery, but without having any influence upon the soft nature of the London market. The London market continued to end the day on a soft note and with 97.8% of the sharp losses of the day intact, while the New York market ended the day on a modestly soft note but having recovered 79.6% of the earlier losses of the day by the close. This close does little to inspire strong confidence, but one might think that the late in the day recovery for the New York market might assist to bring some buoyancy to the London market and perhaps 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.

SEP 2007 – 90 SEP 190.50 – 1.85

NOV 2008 – 85 DEC 194.40 – 1.70

JAN 2008 – 84 MAR 197.80 – 1.55

MAR 2012 – 85 MAY 199.15 – 1.40

MAY 2018 – 85 JUL 199.75 – 1.15

JUL 2020 – 85 SEP 200.85 + 0.05

SEP 2022 – 89 DEC 202.35 + 1.25

NOV 2023 – 89 MAR 202.80 + 1.80

JAN 2020 – 89 MAY 203.30 + 1.85

MAR 2020 – 89 JUL 203.80 + 1.80

 


Coffee Market Report

August 04 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 12.03% in the week of trade leading up to Tuesday 29th. July; to register a net long position of 38,845 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 0.4%, to register a net long on the day of 44,975 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 24.44%, to register a net long of 27.250 lots on the day. This net long position that is the equivalent of 7,725,254 bags has most likely been increased over the period of overall firmer trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of July were 11,469 bags or 9.22% lower than the same month last year, at a total of 112,948 bags. This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 135,083 bags or 10.46% lower than the same period in the previous coffee year, at a total of 1,156,400 bags.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of July were 118,386 bags or 51.24% higher than the same month last year, at a total of 349,450 bags. This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 159,497 bags or 3.85% lower than the same period in the previous coffee year, at a total of 3,986,730 bags.

The preliminary coffee export figures from Brazil for the month of July indicate the Brail registered coffee exports for the month of July that was 850,000 bags or 44.27% higher than the same month last year, at a total of 2,770,000 bags. This significantly higher export performance being related to a good percentage of past crop arabica coffee stocks, which by nature of the indication of willing sales on the part of the farmers, still makes one cautious over the reality of some of the more extreme new crop loss reports.

The Brazil Coffee Council who is traditionally conservative in their crop forecasts and post crop figures, stepped in while the markets were already well buoyed on Friday, to state that they were not surprised that the markets had reacted positively last week to a modest new crop. While stating that they now see both the present and the next 2015 crop, to be only around a modest 40 million bags each. What was quite remarkable was that rather than further supporting the market, the report was immediately followed by the New York market losing half of its earlier gains of the day. Perhaps the Coffee Council by nature of usually being 10% to 15% below reality brought some of the preceding low new crop reports into question.

The Coffee Board of India have reported that the country’s cumulative coffee exports for the first ten months of the present October 2013 to September 2014 coffee year were 64,150 bags or 1.48% higher than the same period in the previous coffee year, at a total of 4,389,650 bags.

The Ivory Coast have reported their June exports from their robusta coffee crop to have been 72,017 bags or 28.49% lower than the same month last year, at a total of 180,783 bags. This lower performance has contributed to the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year registered at 102,983 bags or 10.66% lower than the same period in the previous coffee year, at a total of 863,500 bags. This is a relatively modest number in terms of the countries estimated crop at around 1.7 million to 1.8 million bags, but there is also local soluble coffee processing within the country and of course, the unquantifiable volumes of coffee that traditionally gets smuggled into the neighbouring countries.

The arbitrage between the markets broadened on Friday to register this at 101.16 usc/Lb., while this equates to a relatively attractive 51.59% 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 13,721 bags on Friday, to register these stocks at 2,442,987 bags. There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had an overall softer days trade on Friday, with little in the way of excitement seen in the majority of the markets with the exception of early trade for the coffee markets. The London robusta Coffee, Cotton, Wheat and Gold markets ended the week with buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Copper, Orange Juice, Corn, Soybeans, Silver and Platinum markets ended on a softer note. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.66% lower; to see this Index registered at 516.71. The day starts with the U.S. Dollar steady and trading at 1.683 to Sterling and 1.342 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.70 per barrel.

The London and New York markets started the day on Friday taking a follow through positive track, with the New York market leading the way to add some more weight in early afternoon trade and adding double digit value to the market and a new three month peak in value, which was followed in a more hesitant and cautious manner, by added value for the London market. The New York market did however finally bring into play producer price fixation selling and speculative profit taking and started to fall back from the 12.35 usc/Lb. gains for the day, with sell stops coming into play to accelerate the losses and a 15.8 usc/Lb. reversal and with the London market shedding some weight in line with this change of sentiment. The London market ended the day on a modestly positive note and with only 10% of the gains of the day intact, while the New York market ended the day on a soft note and with 78.3% of the losses of the day intact.

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

SEP 2097 – 7 SEP 192.35 – 2.70

NOV 2093 + 4 DEC 196.10 – 2.65

JAN 2092 + 9 MAR 199.35 – 2.60

MAR 2097 + 11 MAY 200.55 – 2.90

MAY 2103 + 12 JUL 200.90 – 3.00

JUL 2105 + 9 SEP 200.80 – 3.10

SEP 2111 + 12 DEC 201.10 – 2.85

NOV 2112 + 12 MAR 201.00 – 3.35

JAN 2109 + 12 MAY 201.45 – 3.15

MAR 2109 + 12 JUL 202.00 – 2.65

 


Coffee Market Report

August 01 2014

Yesterday was another one all about coffee in terms of the relatively flat holiday season commodity markets, as the report by the Brazilian coffee exporter Terra Forte that has pegged the new Brazil crop at just over 45.78 million bags triggered short covering for the New York market and with follow through buoyancy for the London market. This within an environment of thin trade that assisted to accentuate the early gains, set the base for the rest of the day, where the bulls dominated the more volatile and speculative New York market.

Following on from the Terra Forte report and perhaps throwing some more fuel upon the speculative fire within the New York market, was a report by Sterling Smith a futures market specialist in the Chicago offices of Citigroup, who reported that the new Brazil crop would be an even lower 41.75 million bags. This forecast very much in line with the traditionally excessively conservative Brazil National Coffee Council, who forecasted the new crop at between 40.1 million to 43.3 million bags on the 4th. April. While the same report also indicated that due to the damage done to the trees within the arabica coffee districts in Brazil, the follow on 2015 crop would only be a modest 40 million bags.

Thus with new crop forecasts ranging between 41 million bags and 50.5 million bags and with no certainty as of yet and until a good percentage of the new arabica coffee crop has been hulled to truly assess the yields from the harvested cherries, the market remains within a short term period of uncertainty. Albeit that the majority of the more reliable forecasts are still within the 48 to 49 million bags crop factor, which would mean an approximate 4 million to 6 million bags deficit crop, which is in terms of the approximate 12 million bags of carryover stocks into the new crop, a deficit coffee supply that is presently not threatening to consumer market demand.

The Vietnam Economic Times journal reported yesterday that the Agricultural Ministry in Vietnam is targeting further developments in the countries value added coffee industry and with an intent that by 2020, the country should be exporting approximately 25% of its coffees in the form of soluble instant coffees and roast and ground coffees. This would be an impressive figure in terms of Vietnam’s present export volumes of approximately 26 million bags of mostly robusta coffees per annum, which would make one question the reality of such a figure, albeit that Vietnam does have the advantage of a developing new coffee consuming market in its neighbouring countries.

With official Coffee Board of India forecasts for a much improved new coffee crop due to start at the end of the year that shall exceed 5.7 million bags, there has been focus upon the slow start to the monsoon rain season. There have however been reasonable rains over the past few weeks and while erratic, are seemingly quite sufficient for the development of the new crop. Thus for the present, there is little concern to be seen, in terms of the prospects for this potentially larger new crop.

The arbitrage between the markets broadened yesterday to register this at 99.61 usc/Lb., while this equates to a relatively attractive 51.07% 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 3,232 bags yesterday, to register these stocks at 2,456,708 bags. There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had another mixed but overall negative day yesterday, with the exception of the very emotive coffee markets, which surged in value for the day and with the New York market experiencing its most dramatic rally since May this year. While many market players are awaiting the latest U.S. jobs data that is due out later today, which are expected to be positive but negative in terms of commodities, as this might influence and earlier than expected rise in the dollar interest rate and a stronger dollar to come into play. The Natural Gas, Cocoa, Orange Juice and Wheat markets had a day of buoyancy and the Coffee markets their dramatic rally, while the Oil, Sugar, Cotton, Copper, Corn, Soybean, Gold, Silver, Platinum and Palladium markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% lower; to see this Index registered at 520.15. The day starts with the U.S. Dollar maintaining its new found muscle and trading at 1.687 to Sterling and 1.339 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.50 per barrel.

The London and New York markets started the day yesterday taking a strong positive stance and one that set both markets on an upside track into the afternoon’s trade and with trading volumes building, as buy stops started to be triggered to accelerate the gains. The gains were further assisted by the thin volumes of producer selling over the market, as with most of the northern hemisphere trade on holiday, there remains little physical buying interest in play. The London market continued to end the day on a positive note and at the highs of the day with 98.5% of the gains of the day intact, as did the New York market end close to the highs of the day and with 89.6% of the gains of the day intact. This strong close is somewhat constructive for market sentiment and one might expect to see a follow through steady start for early trade today, against the prices set yesterday, as follows:

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

SEP 2104 + 67 SEP 195.05 + 12.55

NOV 2089 + 58 DEC 198.75 + 12.40

JAN 2083 + 57 MAR 201.95 + 12.25

MAR 2086 + 56 MAY 203.45 + 11.85

MAY 2091 + 54 JUL 203.90 + 11.20

JUL 2096 + 50 SEP 203.90 + 10.85

SEP 2099 + 44 DEC 203.95 + 10.55

NOV 2100 + 36 MAR 204.35 + 10.70

JAN 2097 + 36 MAY 204.60 + 10.75

MAR 2097 + 36 JUL 204.65 + 10.65

 


Coffee Market Report

July 31 2014

The fine washed arabica coffee producer bloc of Central America, Dominican Republic, Colombia and Peru, but excluding Mexico, have reported that the bloc’s combined coffee exports for the month of June were 8.63% lower than the same month last year, at a total of 2.39 million bags. This lower export performance has contributed to the bloc’s cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year being 3% lower than the same period in the previous coffee year, at a total of 21.17 million bags.

Added to these figures would be an estimated 250,000 bags plus of exports from Mexico, which would increase the month’s exports to approximately 2.64 million bags of fine washed arabica coffees, from the South and Central America. Likewise with an estimated 1.9 million bags of exports from Mexico for the first nine months of the present coffee year, cumulative exports from this region of 23.07 million bags.

The Brazilian coffee exporter Terra Forte have come to the fore yesterday, with a new crop forecast for Brazil of 45,784,000 bags. This forecast based on the company’s latest estimate the new arabica coffee crop shall dip to a modest 28.3 million bags, which is 22% lower than their pre partial drought forecast. While by nature of these figures, the company would agree that the new conilon robusta crop was close to 17.5 million bags.

The same report did not provide any forecasts for the next 2015 crop, but did stress that post the partial drought over January and February in the main central arabica coffee regions, that the farms have suffered and with many showing evidence of dramatic losses of vegetative growth. This indicating that with the combination of such losses and some incidences of Leaf Rust, that the country shall be due for a relatively modest arabica coffee crop for the coming year.

It is however a report from an exporter and many might see it to be somewhat market manipulative in nature, but it does nevertheless assist to buoy speculative support within the market that is presently lacking any new fundamental news. This report assisting to a degree in yesterday’s trade, to keep the New York market at the higher end of the prevailing trading range for this more speculative and volatile of the two markets. While there has to be little doubt that over the coming weeks, that there shall be some more market supportive low crop reports emanating from Brazil.

There are reports from Indonesia of early flowering within the main coffee producing island of Sumatra, which would usually indicate the prospects for a good sized new crop, which would start being harvested early in the coming year. But this is still very much related to weather conditions for the coming months, which are for the time being looking to be favourable and conducive for a good Indonesian new robusta crop in 2015. Likewise in terms of the smaller arabica crop that accounts for approximately 13.7% of overall coffee production for Indonesia, a similarly improved 2015 crop.

The arbitrage between the markets narrowed yesterday to register this at 90.10 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 1,912 bags yesterday, to register these stocks at 2,459,940 bags. There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had another mixed but overall negative day yesterday, but with many players on holiday, many markets experienced the accentuated moves that come with relatively thin trade. The Sugar, Cocoa, New York arabica Coffee, Copper, Wheat, Corn, Silver, Platinum and Palladium markets showed buoyancy and the London robusta Coffee market was steady, while the Oil, Natural Gas, Cotton, Orange Juice, 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 0.25% lower; to see this Index registered at 521.87. The day starts with the U.S. Dollar maintaining its buoyancy and trading at 1.691 to Sterling and 1.339 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 105.00 per barrel.

The London market started the day yesterday taking a softer stance, while the New York market experienced a steady to buoyant start for the day. Trade was however very thin for the more speculative and volatile New York market but relatively steady within the London market that recovered its losses during the afternoons trade, in line with the New York market that had likewise recovered from a short term afternoons dip back into negative territory. The London market continued to end the day on a steady note, while the New York market ended the day on a positive note and with 72% of the gains of the day intact. This somewhat mixed close provides little in the way of guidance for the markets and one might expect that despite the somewhat market supportive report from Brazil yesterday, that the market shall be due to 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.

JUL 2047 + 13

SEP 2037 + 3 SEP 182.50 + 1.80

NOV 2031 unch DEC 186.35 + 1.75

JAN 2026 – 2 MAR 189.70 + 1.75

MAR 2030 – 3 MAY 191.60 + 1.65

MAY 2037 – 3 JUL 192.70 + 1.45

JUL 2046 – 3 SEP 193.05 + 1.20

SEP 2055 – 3 DEC 193.40 + 1.00

NOV 2064 – 3 MAR 193.65 + 0.95

JAN 2061 – 3 MAY 193.85 + 0.95

 


Coffee Market Report

July 30 2014

The harvesting within the main central and southern coffee districts in Brazil is due to start picking up steam again this week, following the past few days of rain interruption. These rains have not really caused any problems as the harvest is still well ahead of where it was at the same time last year, with the country’s leading Cooxupe Cooperative reporting that as at the 25th. July that 64.6% of their new crop harvest had been completed, as opposed to only 54.9% on the same date last year.

Meanwhile with the recent rains having assisted to buoy the ground water retention levels that suffer during the dry winter harvest season, it will assist the trees to counter the stress of the harvest and to carry them through to the end September start for the spring and summer rain season. These forthcoming rains really do need to be good, if the country is to bring in a reasonable new crop for the coming year, by when the carryover arabica stock levels shall be very much depleted.

These ground water retention levels becoming even more important in terms of the medium term weather forecasts in Brazil indicating a rain free period of three weeks for Brazil, by when the new crop can be expected to be getting closer to completion. But it shall still take some weeks to follow, prior to the hulling and grading of new crop coffees to truly start to indicate the yield outturns from this new crop and to bring to the market some more clarity as to the size of this new arabica coffee crop, which remains a matter of continued debate for the market players.

Physical coffee trade remains very much stalled for the present, with the majority of the northern hemisphere industries on their summer holidays and with most main stream roasters holding good short to medium term forward cover. Thus with the traders reluctant to take on to much in the way of speculative stocks and particularly so in terms of robusta coffees to be hedged against the inverted price structure London market, the internal market in Vietnam is at best described as dull. While with Indonesia celebrating the end of Ramadan Eid el Fitr celebrations, there is no activity so far this week within the second largest of the Asian coffee players.

The arbitrage between the markets narrowed yesterday to register this at 88.44 usc/Lb., while this equates to a relatively attractive 48.94% 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 14,965 bags yesterday, to register these stocks at 2,461,852 bags. There was meanwhile a larger in volume 17,020 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The thin and steadily declining nature of the New York certified arabica coffee stocks are presently having little impact upon market sentiment, as all are aware that the Mexicans and Central Americans who dominate these stocks are soon due for a larger new crop. This new crop forecasted to be approximately 10% larger than the past Roya or Leaf Rust effected past crop and potentially joined by rising coffee production and supply from neighbouring Colombia, which shall ensure steady fine washed arabica coffee supply to the consumer markets. This supply complemented by prospects for slightly increased fine washed arabica coffee supply from the new Tanzania crop, which is soon to start coming to the market.

The commodity markets had a mixed but overall negative day yesterday, but with some degree of support coming from improved economic figures from Japan. However the firmer nature of the U.S. dollar had its influence, to take degree of support out of many of the markets. The Brent Oil, Natural Gas, Cocoa, London robusta Coffee and Silver markets showed some buoyancy, while the U.S. Oil, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Platinum and Palladium markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.64% lower; to see this Index registered at 523.20. The day starts with the U.S. Dollar maintaining its buoyancy and trading at 1.694 to Sterling and 1.340 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 107.30 per barrel.

The London and New York markets started the day yesterday on a steady note and with modest gains in thin early trade, but with both markets dipping back in value for the early afternoon’s trade and heading into negative territory. This reversal in fortunes for the market did however attract underlying support and with the London market finally moving back into positive territory, while the New York market recovered most of its losses. The London market continued to end the day with modest buoyancy and with 60% of its gains of the day intact, while the New York market ended the day on a soft note, but having recovered 85.2% of the earlier losses of the day by the close. This ability to recover from the negative effects of earlier afternoon losses for both market is perhaps modestly constructive for sentiment, but one might think that lacking any new fundamental supportive news and with the technical trade somewhat in a holiday mood, that the markets might struggle to do much more than take a steady stance for early trade today against the prices set yesterday, as follows:

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

JUL 2034 – 2

SEP 2034 + 6 SEP 180.70 – 0.40

NOV 2031 + 7 DEC 184.60 – 0.35

JAN 2028 + 7 MAR 187.95 – 0.25

MAR 2033 + 8 MAY 189.95 – 0.30

MAY 2040 + 10 JUL 191.25 – 0.30

JUL 2049 + 30 SEP 191.85 – 0.55

SEP 2058 + 15 DEC 192.40 – 0.55

NOV 2067 + 17 MAR 192.70 – 0.55

JAN 2063 + 24 MAY 192.90 – 0.55

 


Coffee Market Report

July 29 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 2.72% the week do trade leading up to Tuesday 22nd.; to register a net long position of 29,956 Lots on the day. This net long which is the equivalent of 4,992,667 bags has most likely been little changed or perhaps marginally increased over the period of lacklustre range bound trade, which has since followed.

The report from Starbucks that the company has already locked in 60% of its coffee prices for the coming year and by nature this confirming that their confidence in the lack of downside risk to international coffee prices, has assisted to support market sentiment for some of the speculative sector of the market. Thus contributing one would think, within the prevailing environment of thin and lacklustre holiday trade, to some degree of buoyancy within the market that is presently at the higher end of the recent trading range.

This is of course not the main support factor for the New York arabica coffee market that registered a two month high during trade yesterday, as this is mostly related to speculative and fund coverage in relationship to the uncertainty of the prospects for both the present partial drought affected new Brazil. This harvest has encountered a short term hiccup, with the past few days of unseasonal heavy rains, which seemingly had some influence upon price supportive short covering activity during the day. But inability of the market to hold on to all of its earlier in the day gains, might well be a sign that the market is getting a bit toppy for the present and might if the upside track falters during this week, bring forth the negative effects of increased producer catch up price fixation hedge selling activity.

It is traditional at this time of the year and a few weeks prior to the start of the new crop harvest in Vietnam for the Vietnam Coffee and Cocoa Association to come forth with a market manipulative low new crop forecast and once again, they have come forth with a forecast for a new crop of around 23 million bags. This new crop that they say has suffered from an early in the year drought and followed by excessive rains, they report shall be 1.3% lower than the last crop, which would indicate that they see the last crop to have only been 23.3 million bags.

This past crop figure in terms of Vietnam with a domestic coffee consumption of well in excess of 1 million bags per annum and exports for the first ten months of the present coffee year of 23.33 million bags, does already illustrate the unrealistic nature of the figures being quoted by the Vietnam Coffee and Cocoa Association. While the so called early in the year drought was in reality the end of the seasonal October to March dry season and meanwhile, the rain season has been mostly normal since April and it is unlikely that with private trade and industry forecasts looking to a new crop that shall match the 27.5 million plus past crop, that this forecast from the Vietnam Coffee and Cocoa Association shall have much impact upon market sentiment.

In fact contrary to the market supportive report coming from the Vietnam Coffee and Cocoa Association for this the world’s leading robusta coffee supplier, the London robusta coffee market is presently falling behind the recovery in prices that is being experienced by the New York arabica coffee market. This would indicate that despite the discounted price advantageous that the robusta coffees offer to the consumer market roasters, there is presently not concern on the part of the international industry players in terms of medium to longer term robusta coffee supply.

The arbitrage between the markets broadened yesterday to register this at 89.11 usc/Lb., while this equates to a relatively attractive 49.20% 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 642 bags yesterday, to register these stocks at 2,476,817 bags. There was meanwhile a larger in volume 5,200 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 550 bags.

The commodity markets had a mixed day yesterday, with most markets remaining within a relatively thin trading range for the day. The Coffee, Cotton, Copper, Corn, Soybean, Gold, Platinum and Palladium markets showed buoyancy, while he Oil, Natural Gas, Sugar, Cocoa, Orange Juice, Wheat 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 0.08% higher; to see this Index registered at 526.56. The day starts with the U.S. Dollar tending steady and trading at 1.697 to Sterling and 1.343 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.65 per barrel.

The London and New York markets started the day yesterday on a steady note and with modest gains in thin trade, but with both markets dipping back in value for the early afternoon’s trade. This dip was however short lived and the markets soon recovered into positive territory and with the New York market building upon its gains to trigger hit a two month high, but once again attracting selling pressure to dip back into negative territory, while the London market continued on a sideways positive track. The London market continued to end the day on a positive note and with 50% of the earlier gains of the day intact, while the New York market recovered from its afternoon dip and ended the day on a positive note and with 45.9% of the gains of the day intact. This overall positive close is perhaps supportive for a steady start for early trade today, but with the threat of producer selling coming into play for the New York market against the prices set yesterday, as follows:

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

JUL 2036 + 12

SEP 2028 + 12 SEP 181.10 + 1.95

NOV 2024 + 11 DEC 184.95 + 2.15

JAN 2021 + 11 MAR 188.20 + 2.20

MAR 2025 + 11 MAY 190.25 + 2.40

MAY 2030 + 10 JUL 191.55 + 2.55

JUL 2036 + 10 SEP 192.40 + 2.60

SEP 2043 + 10 DEC 192.95 + 2.55

NOV 2050 + 10 MAR 193.25 + 2.55

JAN 2039 + 10 MAY 193.45 + 2.45

 


Coffee Market Report

July 28 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 4.06% in the week of trade leading up to Tuesday 22nd. July; to register a net long position of 34,675 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 0.07%, to register a net long on the day of 44,797 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 11.05%, to register a net long of 22,701 lots on the day. This net long position that is the equivalent of 6,435,633 bags has most likely been increased over the period mixed but overall firmer in value end of the week technical trade which has since followed and likewise, the net long position of the Managed Money Funds.

The security in terms of medium term Brazil coffee supply had been reconfirmed by the Brazil governments crop supply agency, who confirmed on Friday the countries coffee stocks of mostly arabica coffees, were at their highest since 2007, as at March this year. This report indicating reality to the earlier reports that had pegged the carryover stocks into the new crop at being in excess of 12 million bags and therefore, a guarantee of steady supply through to the next 2015 crop.

In the meantime the National Coffee Council in Brazil have somewhat predictably come forth with a new crop forecast for the country that is a low 40.1 to 43.3 million bags, with comment that the probability is for the crop to be at the lower level. This is however a forecast that most would view as market manipulative in nature and thus is unlikely to have much impact upon market sentiment, but does nevertheless assist to dampen the spirits of any bears within the market.

New crop figures in Brazil aside the main focus is now on the prospects for the next 2015 Brazil crop, which shall need to be a good crop to assist in the recovery of the by then depleted stocks and to maintain steady Brazil coffee supply through to 2016. Thus with above average winter rains for many of the main coffee districts and the resulting assistance to maintain ground water retention levels ahead of the main spring and summer rain season that is due to start at the end of September, the prospects are for a good start to the forthcoming flowerings for the new crop.

With the export registrations for the month in hand and the month nearly over, the government in Vietnam have come forth with their preliminary export volume for the month of mostly robusta coffees, which they peg at being 6.3% lower than the same month last year, at 1.42 million bags. This they note would contribute to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 0.7% lower than the same period in the previous coffee year, at a total of 23,33 million bags.

The arbitrage between the markets broadened on Friday to register this at 87.71 usc/Lb., while this equates to a relatively attractive 48.96% 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 increase by 1 bag on Friday, to register these stocks at 2,476,175 bags. There was meanwhile a modest in volume 550 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,750 bags.

The commodity markets ended the week with some degree of overall buoyancy, but within continued lacklustre holiday trade for the majority of the markets. The Brent Oil, Sugar, New York arabica Coffee, Wheat, Corn, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the U.S. Oil, Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice and Soybean markets had s softer days trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.22% higher; to see this Index registered at 526.15. The day starts with the U.S. Dollar tending steady and trading at 1.698 to Sterling and 1.343 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.30 per barrel.

The London and New York markets started the day on Friday on a softer note but with the New York market soon attracting sufficient support in thin trade, to bounce back into positive territory, while the London market maintained its negative track. The New York market encountered some short term negative pressure in early afternoon trade but again bounced back to maintain its positive track for the rest of the day. The London market did not however fare so well and the market closed on a negative note and with 51.6% of the losses of the day intact, while the New York market ended the day on a positive note and with 44.7% of the gains of the day intact. This mixed close provides little indication for the markets and one might think that with physical trade mostly absent from the holiday market for the present and the speculative sector of the markets cautious, that the markets are due for at best a 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.

JUL 2024 – 17

SEP 2016 – 16 SEP 179.15 + 0.85

NOV 2013 – 15 DEC 182.80 + 0.85

JAN 2010 – 15 MAR 186.00 + 0.85

MAR 2014 – 16 MAY 187.85 + 0.80

MAY 2020 – 17 JUL 189.00 + 0.55

JUL 2026 – 19 SEP 189.80 + 0.45

SEP 2023 – 21 DEC 190.40 + 0.40

NOV 2040 – 23 MAR 190.70 + 0.30

JAN 2029 – 23 MAY 191.00 + 0.25

 


Coffee Market Report

July 25 2014

25th. July, 2014.

The Certified robusta coffee stocks held against the London robusta coffee exchange were seen to rise by 117,667 bags or 10.26% in the two weeks of trade leading up to Monday 21st. July; to register these certified stocks at 1,265,000 bags.

The arbitrage between the markets remained steady yesterday to register this at 86.13 usc/Lb., while this equates to a relatively attractive 48.31% 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 3,390 bags yesterday, to register these stocks at 2,476,714 bags. There were 3,940 bags drawn from the number of bags pending grading for the exchange; to register these pending grading stocks, at a reduced 5,200 bags.

The commodity markets were mixed yesterday, with the latest release of employment data from leading economy U.S.A. report of reduced jobless claims thus far in July, providing some buoyancy to sentiment in this largest consumer market. There remains however a general undercurrent of uncertainty within the context of prevailing geopolitical turbulence and the appearance of some restraint as a result. It was a softer day in the Oil markets, Cotton, Orange Juice, Wheat, Corn, and a positive day for Copper, Coffee, Sugar, Cocoa, Soybean, within the metals markets a negative day for Gold, Silver and Platinum and some buoyancy for Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up of 17 markets is 0.40% lower; to see this Index registered at 525.00. The day starts with the U.S. Dollar trading at 1.699 to Sterling and 1.347 to the Euro, while Brent Crude is steady in early trade and is selling at $ 105.56 per barrel.

It was a positive start to the day in the coffee markets yesterday, with London robusta buoyant and in positive territory at the outset. The New York arabica market, following on from the positive close started the day mildly buoyant with both markets gaining ground during the morning session. While New York maintained a mild and muted positive range during the session with light volume, this was in