The respected Brazilian analysts Safras & Mercado have reported that they estimate that so far 45% of the new conilon robusta coffee crop has been harvested and 19% of the new arabica coffee crop, out of their forecast for 11.5 million bags of conilon coffees and 39.6 million bags of arabica coffees, due from what they foresee to be a 51.1 million bags new crop.

This new crop forecast on the part of Safras & Mercado is however being disputed by many internal market players within Brazil, who assess that the forecast might be approximately 10% larger than reality. However there are many others and including international market players with a strong Brazilian footprint, who see this forecast to be close to reality and for the present and evident by the relatively bearish sentiment within the New York arabica coffee market, it would seem that the belief remains more in line with the higher numbers being forecasted.

Meanwhile Brazil weather conditions and following some unseasonal rains over the main arabica coffee districts within Brazil, the weather conditions have returned to more normal for the year dry conditions for most of the coffee districts. Albeit that many districts have been reporting relatively warm conditions for the start of the month, but there is a cold front now moving in from the south and bringing with it seasonal colder winter weather conditions. But with most forecasts indicating that these conditions do not bring with them and frost risk.

The U.S. government National Weather Service’s Climate Prediction Centre have reported that so far there are no active El Niño or La Niña patterns developing within the Pacific Ocean and this is likely to continue for the next three to four months, but that they do still foresee a 35% to 50% chance for an El Niño to start to come into the play by the end of the year. This news assisting to restrain speculative aggression towards the coffee markets, which for the present encounter a complete lack of fundamental threat for longer term global coffee production into the coming year.

In terms of the physical coffee market it remains lacklustre in nature, ahead of the slower summer roasting season for the main stream northern hemisphere markets. While with declining internal market stocks contributing to internal market price resistance within Vietnam, the soft nature of the reference prices of the New York market contributing towards a lack of selling aggression for new crop arabica coffees within Brazil and internal market price resistance towards short sold exporters in Indonesia, tending to slow sales for the present.

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 37.93 usc/Lb., while this equates to 29.48% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 7,576 bags yesterday; to register these stocks at 1,505,491 bags. There was meanwhile a smaller in number 5,672 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,079 bags.

It was a mixed but mostly more positive day for the commodity markets yesterday, with the overall macro commodity index taking a positive track for the day. The Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets having a day of buoyancy, while the Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.52% higher, to see this Index registered at 404.64. The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.272 to Sterling and at 1.120 to the Euro, while North Sea Oil is steady in early trade and selling at $ 46.15 per barrel.

The coffee markets opened the day yesterday with the London market taking remaining hesitantly close to par, while the New York market started the day with modest buoyancy and with the markets retaining this stance, into the early afternoon trade. Both markets soon started to falter and to drift back into modest negative territory but this reversal of the fortunes for the markets were short lived, with the London market returning to par and the New York market once again back into positive territory. With the London market finally joining the New York market in positive territory for late trade, which saw the markets and in line with the overall macro commodity index, ending the day on the positive side of par.

The London market ended the day on a positive note and with 81.8% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 63.2% of the earlier gains of the day intact. This modestly positive nature of this close does however do little to inspire confidence and one might suspect that the markets might only be due for a hesitantly steady start for early trade today, against the prices set yesterday, as follows:

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

JUL 1983 + 11                                                  JUL 126.35 + 0.60
SEP 2000 + 9                                                    SEP 128.65 + 0.60
NOV 1995 + 6                                                 DEC 131.15 + 0.55
JAN 1979 + 5                                                 MAR 135.70 + 0.65
MAR 1966 + 6                                               MAY 138.00 + 0.65
MAY 1966 + 8                                                 JUL 140.25 + 0.70
JUL 1978 + 9                                                   SEP 142.30 + 0.70
SEP 1990 + 8                                                  DEC 144.75 + 0.65
NOV 1997 + 8                                               MAR 147.15 + 0.55
JAN 2004 + 8                                                 MAY 148.20 + 0.55