Coffee Market Report
| The Global Agricultural Information Network of the U.S. Department of Agriculture Foreign Agricultural Service has forecast that the Indian coffee crop for this new October 2015 to September 2016 coffee year shall be 140,000 bags or 2.57% lower than their assessment of production for the previous coffee year, at a total of 5.3 million bags. This new crop which they assess shall be made up by 71.89% robusta coffees and 28.11% arabica coffees, they suggest shall be buoyed in terms of coffee supply for this new coffee year, by a carryover stock of in excess of 2.69 million bags.
This forecast in terms of the official forecast on the part of the Coffee Board of India, can be seen to be somewhat conservative in nature, as they had earlier in the year on the basis of the flowerings for the new crop, forecast coffee supply for this new coffee year at closer to 5.9 million bags. Following a crop for the previous coffee year of approximately 5.4 million bags, which is a number that the USDA has agreed with. Meanwhile and despite the many high profile coffee shop chains operating within mostly the main urban centres in India, the USDA have estimated that domestic coffee consumption shall remain flat for this new coffee year, at a relatively modest 1.25 million bags. Therefore leaving the major part of the country’s coffee production for export, which if correct would indicate that with the combination of the only marginally lower new crop and the relatively high carryover stocks, that there shall be steady Indian coffee supply to the consumer market during this coffee year. There was little in the way of other striking coffee news coming to the fore yesterday, which is a factor that continues to dampen speculative spirits within the volatile New York market. But with the continued price resistance and relatively slow sales out of Vietnam the London robusta coffee market is still managing to maintain some relative muscle, with the arbitrage between the London and New York markets narrowing. But the question still remains over the significant past crop robusta coffee stocks that are being held by farmers and internal traders in Vietnam, with the prospects that once the new crop coffees stocks start to build that there might be some liquidation of these stocks coming into play. This is a factor in terms of the potential for increased volumes of robusta coffees coming to the market, providing a potential ceiling to the prices within the London market. The second month arbitrage between the markets narrowed yesterday, to register this at 48.15 usc/Lb., while this equates to a 38.86% 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 increase by 3,175 bags yesterday; to register these stocks at 1,892,878 bags. There was meanwhile a larger in volume 6,468 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,409 bags. The Certified Robusta coffee stocks held against the London exchange were seen to increase by 9,167 bags on Tuesday 3rd. November; to register these stocks at 3,349,000 bags on the day. The commodity markets were mixed but many came under pressure later in the day yesterday, with the news from the U.S. Federal Reserve bank that economic conditions might well justify an interest rate hike in December, which brought a firmer U.S. dollar into play. The Natural Gas, Coffee, Wheat, Corn, Soybean and Platinum markets nevertheless had a day of buoyancy, while the Oil, Sugar, Cocoa, Cotton, Copper, Orange Juice, 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 1.15% lower to see this Index registered at 396.98. The day starts with the U.S. Dollar steady and holding onto yesterday’s gains in early trade and trading at 1.538 to Sterling and 1.087 to the Euro, while North Sea Oil is steady in early trade and is selling at 46.85 per barrel. The London and New York markets started the day yesterday on a steady to modestly buoyant note and with the New York market gaining support from the sentiment around the firmer nature of the Brazil Real, which was due to slow sales out of Brazil. The London market followed the positive influences of the New York market and with both markets adding some weight in early afternoon trade, but as the afternoon progressed and the New York market came under pressure to move back towards par, the London market maintained most its gains. The New York market nevertheless bucked the negative influences of the softer overall macro commodity index to recover some of its losses from the earlier highs of the day, while the London market continued on its steady sideways positive track through to the close. The London market ended the day on a positive note and with 75.8% of the gains of the day intact, while the New York market ended the day on a modestly positive note, but with only 14.6% of the earlier gains of the day intact. This uncertain close in New York and with the charts tending to look somewhat negative, does not inspire much confidence and with a firmer U.S. dollar in play one might expect to see only a hesitantly near to steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. NOV 1628 + 20 DEC 120.50 + 0.25 |
