The rainfall reports from Brazil have seen most of the main coffee districts experiencing irregular rains for the month so far and with many districts reporting below average rainfall for the month so far, but with good ground water retention levels following the past two months of good and often above average rains, there are no concerns being voiced. However, one might speculate, if the rainfall reports do not indicate normal rains in the coming month, this factor might start to become modestly supportive for speculative sentiment within the volatile New York market.

Reports from the coffee traders in Vietnam which last week had foreseen that the countries January coffee exports would only be in the region of 2.5 million bags, now foresee exports for the month might be in excess of 3.3 million bags. One might speculate that with the country closed for business for the week-long Tet New Year holiday from Monday 4th. February and only returning to work on Monday 11th. February, that many exporters would have planned to bring forward their early February export commitments, into late January shipments.

This holiday factor one would think, shall support the view that the January coffee export volumes shall be higher than initially expected. While with only six trading days left before the Vietnamese close for to celebrate the incoming Year of the Dog and with many speculating that only approximately 40% of the new crop coffee stocks have been sold by the farmers, there are expectations of some active selling activity due within the internal market in the coming days.

The March to March contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.08 usc/Lb., while this equates to 33.31% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 7,834 bags yesterday; to register these stocks at 2,481,019 bags. There was meanwhile a smaller in number 4,300 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,047 bags.

The commodity markets had a mixed day yesterday and with the overall macro commodity index on something of a sideways track for the day. The U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Orange Juice and Soybean markets ended the day on a positive note and Brent Oil was steady for the day, while the Cotton, Copper, Wheat, Corn, 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 0.02% higher; to see this index registered at 401.66. The day starts with the U.S. Dollar steady and trading at 1.312 to Sterling, at 1.131 to the Euro and with the dollar buying 3.772 Brazilian Real.

The London and New York markets started the day yesterday trading on a modestly positive note and maintaining this stance, into the early afternoon trade. As the afternoon progressed, both markets fell back to trade around par before bouncing back into positive territory and setting the markets on track for a positive close for the day.

The London market ended the day on a positive note and with 86.2% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 70.4% of the earlier gains of the day intact. This close and with evidence of some speculative short covering having come into play within the New York market yesterday, might assist to inspire some confidence. To set the markets for a steady start for early trade today, against the prices set yesterday, as follows:

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

JAN 1528 + 24                                                MAR 105.30 + 1.90
MAR 1548 + 25                                              MAY 108.45 + 1.80
MAY 1569 + 22                                              JUL 111.20 + 1.80
JUL 1587 + 22                                               SEP 113.90 + 1.70
SEP 1604 + 21                                               DEC 117.65 + 1.65
NOV 1623 + 21                                              MAR 121.35 + 1.65
JAN 1641 + 21                                               MAY 123.60 + 1.65
MAR 1660 + 21                                              JUL 125.75 + 1.65
MAY 1679 + 21                                              SEP 127.80 + 1.60
JUL 1695 + 21                                                DEC 130.80 + 1.60