Coffee Market Report
| The well-respected Brazil analysts Safras & Mercado have announced that with the new conilon robusta crop getting close to completion and the new arabica coffee crop heading towards an end July and early August peak, that so far approximately 52% of their forecasted new crop of 50.4 million bags has been harvested. Making note that the recent cold front and resulting rains within south east Brazil has interrupted the arabica coffee harvest for a few days, while in terms of the percentages they estimate that 92% of the new conilon crop has been harvested and along with 35% of the new arabica coffee crop.
In terms of these delays the weather forecasts are pointing to the possibility of a further mild cold front due to enter south east Brazil this coming weekend, which might bring further rain shower interruptions to the harvest of the new arabica coffee crop, but nothing in the way of damage to the quality of this harvest. In the meantime these rains to contribute to the maintenance of the ground water retention levels within the farms for the prevailing dry winter season, which could be seen to be positive for the farmers ahead of the end September start to the spring and summer rain season. While the resulting moist trees, provide them with more muscle to counter any possible mild frosts that might occur in the coming weeks. The Climate Protection Centre department of the U.S.A. National Weather Service have reported that there is more than a 90% chance that the prevailing mild El Nino on the Pacific Ocean shall continue into the New Year and with an 80% chance to continue into the start of the second quarter of next year. This El Nino however so far, not very strong and for the present, is not proving to be crop threatening for the Pacific Rim countries coffee crops. The El Nino is though likely to bring with it on the further afield terms, some increase for the potential of the spring and summer rains for the last quarter of this year, which would be conducive to good flowerings for the next 2016 Brazil coffee crop and the follow setting and carry of the cherry for this crop. Thus tending to bring a degree of reality to the early forecasts for a 2016 Brazil coffee crop, which point to something in excess of 60 million bags and bringing in a potential 5 million to 6 million bags surplus supply of Brazil coffees for the second half of next year and the first half of 2017. The El Nino does traditionally reduce the threat of sever hurricane activity over the June to November hurricane season within the Gulf of Mexico, which shall likewise reduce the threat of any hurricane damage to the developing new and potentially larger coffee crops from Mexico and Central America. Thus for the present the El Nino proves to be more of a negative influence upon speculative sentiment, for the coffee markets. Meanwhile and aside from the continued internal market price resistance that is being experienced within Vietnam, there is only muted selling activity of new crop coffees in Brazil and the tail end coffee stocks within Central America. This is assisting to dull the physical coffee market activity, which is anyhow now chasing business within a summer holiday season dampened demand within the main northern hemisphere consumer markets. All of this tending to reduce the impact of producer price fixation selling over the markets, but with the corresponding lacklustre consumer price fixation volumes under the markets and the negative nature of the speculative sector and funds within the markets, they presently remain within their relatively soft trading range. The arbitrage between the markets has broadened yesterday to register this at 46.87 usc/Lb., while this equates to a 37.42% price discount for the London robusta coffee market. This arbitrage remaining relatively to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,628 bags yesterday; to register these stocks at 2,157,985 bags. There was meanwhile a larger in volume 8,539 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,870 bags. The commodity markets showed some degree of overall buoyancy yesterday, despite the negative influences of the relatively strong U.S. dollar. The Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Silver and Platinum markets had a day of buoyancy, while the Sugar, Orange Juice and Gold markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.24% higher: to see this Index registered at 422.38. The day starts with the U.S. Dollar tending softer and selling at 1.541 to Sterling and 1.112 to the Euro, while North Sea Oil is showing some degree of buoyancy in early trade and is selling at 58.55 per barrel. The London and New York markets started the day yesterday on a positive note and maintained this stance trough into the afternoon trade, but with volumes remaining relatively modest through the normally high volume afternoon. The London market continued to maintain an erratic track for the rest of the day and moving either side of par, while the New York market took a modest and lacklustre downside track towards par for the rest of the day. The London market ended the day with modest buoyancy and with only 27.3% of the gains of the day intact, while the New York market likewise ended the day on a modestly positive note and with only 11.5% of the earlier gains of the day intact. This close does little to inspire, but perhaps with the weaker U.S. dollar in play and the markets nevertheless having ended the day on the positive side of par, one might expect to see a steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1855 + 10 JUL 122.75 – 0.40 |
