Coffee Market Report
| The harvest of the new Vietnam crop is picking up in volume, but has yet to have any marked impact upon internal market selling activity, as there remains a degree of price resistance in play in reaction to the still relatively soft nature of the reference prices of the London market. Thus for the present it remains a waiting game on the part of the consumer market industries, who continue to slowly buy at premium differentials only such robusta coffees that are deemed necessary to cover short term requirements.
The big question is with the weight of carryover stocks into the new crop as to when pressure might build up upon farmers and internal traders to look to liquidate past crop stocks and to start to cash in new crop coffee stocks, which is now starting to look to be something that will only start to take place in the New Year and ahead of the Tet New Year holidays, which come into play early in February next year. Unless of course there might be reason for the London market to attract support and significantly added value, but for the present there seems to be little sign of this occurring. Meanwhile in terms of added value for Vietnam coffees and within an article in the Vietnam Economic Times, it is reported that the Vietnam Coffee and Cocoa Association have forecast that the country is due to see exports of value added soluble coffees to have risen by 25% during this year, with an estimated 67,500 metric tons of soluble coffees due to be exported during the year. One might suggest that the countries soluble coffee factories shall continue to aggressively market these processed coffees and that one might expect the volumes of such exports to continue in the coming year, with perhaps even some increase in the volumes exported. Vietnam aside there was little in the way of fundamental news coming to the markets yesterday, but with producer selling volumes quiet and seemingly a steady stance being taken by the funds towards the coffee markets, it was a day of mostly thin and lacklustre trade. To see the markets setting something of an improved trading range, but perhaps cautious over the prospects of catch up producer selling that might come into play against any further gains in value. The second month arbitrage between the markets broadened yesterday, to register this at 54.19 usc/Lb., while this equates to a 43.53% 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 5,887 bags yesterday; to register these stocks at 1,843,019 bags. There was meanwhile a smaller in volume 960 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,777 bags. The Certified Robusta coffee stocks held against the London exchange were not reported yesterday, so we can only report the figure as at Friday 20th. November; when these stocks were registered at 3,352,667 bags. The commodity markets were mixed in trade yesterday, but with the overall macro commodity index having another day of modest buoyancy. While with tomorrows Thanksgiving Holiday in the U.S.A. on the horizon and most likely to become a long weekend for many players, there is now a degree of complacency within many markets. The Oil, Cocoa, Coffee, Cotton, Copper, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Natural Gas, Sugar, Orange Juice, Wheat and Corn markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.10% higher to see this Index registered at 384.00. The day starts with the U.S. Dollar steady in early trade and trading at 1.510 to Sterling and 1.066 to the Euro, while North Sea Oil is showing some buoyancy in early trade and is selling at 44.50 per barrel. The London and New York markets opened the day yesterday with modest buoyancy and taking a steady track into the afternoon trade, when there was a short spell of pressure upon both markets to take the New York market back to par and the London market into modest negative territory. The markets did however recover and with the New York market taking the lead back into positive territory and with both markets continuing to have something of a positive day’s trade. The London market ended the day on a positive note and with 61.1% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 67.2% of the earlier gains of the day intact. This overall positive close and with the charts tending to take a positive look is most likely due to inspire a degree of cautious confidence and 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. NOV 1517 + 11 DEC 122.45 + 2.50 |
