Coffee Market Report
| The internal market in Vietnam is apparently still showing price resistance to the dictates of the relatively soft prices in the London market, with traders estimating that farmers and internal traders are still holding significant stocks of past crop coffees. These stocks being estimated by traders, to be in excess of 9 million bags and with the perspective that with the new crop harvest due to start in only twelve to thirteen weeks’ time, that there shall soon be pressure on the holders of the stocks to accept the reality of the market prices and become more aggressive sellers.
This scenario is causing something of a cloud over the London market, as the threat of rising selling activity from Vietnam over the next three months, does most certainly threaten the medium term fortunes of this market. While in the meantime the consumer roasters who utilise robusta coffees, remain in a strong position and are able to maintain a hand to mouth buying stance, while the await the medium term impact of increased volumes of robusta coffee to come to the market. Vietnam aside there was no other striking fundamental news coming to the markets yesterday, which is a factor that continues to highlight the fact that there is nothing in the way of threat to the medium to longer term coffee supply for the present. Thus providing nothing in the way of support for sentiment within the markets which are presently in something of a doldrums, ahead of the more active post northern hemisphere holiday season, for the last four months of the year. In terms of potential threats to the market one can only consider albeit an unlikely threat the fact that Brazil is still within its frost threatening season and with the more vulnerable time of the next full moon due in just over two weeks’ time, which would be followed by the next milestone of the new Brazil spring and summer rain season that is due to start at the end of September. But so far the longer range weather forecasts do not indicate any problems due, from either frost or drought and provide little reason for the industry or the speculative sectors of the market to take any precautionary cover within the prevailing soft terminal markets. The arbitrage between the markets has broadened yesterday to register this at 52.98 usc/Lb., while this equates to a 40.14% 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 2,175 bags yesterday; to register these stocks at 2,155,145 bags. There was meanwhile a larger in volume 3,589 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,881 bags. The European warehouses of the New York exchange in Antwerp, Barcelona, Hamburg and Bremen presently account for 1,470,018 bags or 68.21% of the stocks, while the U.S.A. based warehouses of the exchange in Houston, Miami, New Orleans and New York hold the balance of the stocks. With Mexico and the Central American countries contribute 1,070,370 bags or 49.67% of the stocks and followed by Colombia who contribute 374,975 bags or 17.4% of the stocks, Peru who contribute 364,654 bags or 16.92% of the stocks, the African countries (Burundi, Rwanda, Tanzania and Uganda) who contribute 290,119 bags or 13.46% of the stocks, India who contribute 36,180 bags or 1.68% of the stocks and Brazil who contribute 18,847 bags or 0.87% of the stocks. The commodity markets were mixed yesterday, but with the overall macro commodity index still showing a degree of buoyancy for the day. The Oil, Sugar, Cocoa, New York arabica Coffee, Cotton and Orange Juice markets had a day of buoyancy and the London robusta Coffee and Platinum markets had a steady day, while the Natural Gas, Copper, Wheat, Corn, Soybean, 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 0.35% higher: to see this Index registered at 427.02. The day starts with the U.S. Dollar relatively steady and trading at 1.564 to Sterling and 1.099 to the Euro, while North Sea Oil is steady in early trade and is selling at 58.10 per barrel. The London and New York markets started the day yesterday on a steady note, but with the London market struggling to maintain par, while the New York market retained a degree of buoyancy. The markets entered the afternoon with the London market remaining within a narrow trading range either side of par, while the New York market added to its gains and took something of a positive track. As the afternoon progressed the London market remained marginally positive and the New York market maintained a positive stance, but with the London market coming under pressure and once again dipping below par for most of the rest of the afternoon and gaining little from the sideways positive track of the New York market. The London market continued to recover in late trade and end the day on a very modestly positive note and with only 30.8% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 86.5% of the earlier gains of the day intact. This close and especially the steady nature of the more volatile New York market might prove to be supportive for a follow through steady start for the markets for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1867 + 3 JUL 129.85 + 3.25 |
