Coffee Market Report
| There were reports of scattered light rain showers over some of the main coffee districts in South Eastern Brazil yesterday, which with the forecasts for rains due in the coming week and through to the first week in November, further dampened speculative spirits within the New York market. It is early days however and there shall be much focus upon the intensity of these forthcoming rains, as following the many weeks of hot and dry weather, the rains shall need to be substantial if they are to support a good setting of the flowerings for the forthcoming 2016 crop.
There is meanwhile little in the way of news coming to the coffee markets for the present, with Brazil weather aside, it is seemingly business as usual for all the other main producer blocs. In this respect the new and larger new Vietnam crop is starting to be harvested, while the new and potentially larger new Colombian main crop is in harvest. This to be soon followed by the start of the harvest of a new an also potentially larger Mexican and Central American crop and with this nearby surge in new coffee supply, tending to impact negatively upon market sentiment. The start of the new crop in Vietnam has yet to impact in terms of any selling aggression on the part of the farmers and internal market trade in the country, with some degree of price resistance continuing and with the farmer and internal traders continuing to pressure the short sold exporters to pay up for much needed coffee supply. One might guess however that should the rains in Brazil continue and to influence the international markets to remain within their prevailing soft trading range, that this shall likewise influence the internal trade to somewhat throw in the towel and start to release larger quantities of past crop robusta coffee stocks to the exporters in Ho Chi Minh City, which would in turn pressure export differentials lower for the first quarter of the coming year. Meanwhile in terms of currency the Brazil Reais is once again on something of a back foot and has slipped back to close to 3.94 to the U.S. dollar, which is making it a little easier for the exporter to inspire selling on the part of the farmers. There does however remain the problem of the relatively low percentage of bold screen 17 plus beans coming to the fore from the new arabica coffee harvest, which is creating a shortage of such coffees and significant price premiums for the bold bean grades. A price premium that is likely to remain a factor for the foreseeable future and most likely to remain in place, until the advent of the new crop in the middle of next year. The second month arbitrage between the markets narrowed yesterday, to register this at 52.82 usc/Lb., while this equates to a 42.48% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact in more volume upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,224 bags yesterday; to register these stocks at 1,895,365 bags. There was meanwhile a smaller in volume 972 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 60,312 bags. The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 2,667 bags on Tuesday 20th. October; to register these stocks at 3,397,833 bags on the day. The commodity markets were again mixed and lacklustre in trade yesterday, but with confidence starting to falter and the overall macro commodity index tending softer through the day. The Sugar, Cotton, Orange Juice, Wheat, Corn and Soybean markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, 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 0.43% lower to see this Index registered at 403.74. The day starts with the U.S. Dollar showing a degree of early buoyancy and trading at 1.542 to Sterling and 1.133 to the Euro, while North Sea Oil is steady in early trade and is selling at 46.50 per barrel. The London market started the day yesterday on a steady note, while the New York market opened with modest buoyancy but this was short lived and both markets soon came under pressure and headed south into negative territory. The New York market continued on its downside track into the afternoon trade but with the London market recovering into modest positive territory and with the markets following this mixed track of a positive London and a negative New York for most of the afternoon trade, before the London market finally succumbed and once again fell back below par. The London market ended the day on a modestly negative note and with 57.1% of the losses of the day intact, while the New York market ended the day on a very negative note and with 89.3% of the earlier losses of the day intact. This relatively dismal close does little to inspire and one might think that while there might be some degree of corrective buoyancy due for the New York market that one can expect 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 1553 – 4 DEC 121.00 – 3.75 |
