Coffee Market Report
| The National Coffee Institute in Honduras have reported that countries coffee exports for the month of November were 15,053 bags or 14.39% lower than the same month last year, at a total of 89,558 bags. This lower performance contributes to the countries cumulative coffee exports for the first two months of the present October 2015 to September 2016 coffee year to being 24,155 bags or 17.89% lower than the same period in the previous coffee year, at a total of 110,873 bags.
This dip in cumulative exports for this new coffee year from Honduras does not however reflect any problems for the countries new crop, which has been delayed a little this year but is still being forecasted by the coffee authorities and local trade in Honduras to be a larger new crop of something in the region of 5.8 million bags. This larger new crop to potentially fuel a 10% increase in export volumes for this new coffee year, which the countries National Coffee Institute forecast shall exceed 5.2 million bags. The National Coffee Institute in Costa Rica have reported that the country’s coffee exports for the month of November were 9,699 bags or 23.5% lower than the same month last year, at a total of 33,036 bags. This dip in exports contributes to the countries cumulative coffee exports for the first two months of this new October 2015 to September 2016 coffee year to be 21,437 bags or 29.27% lower than the same period in the previous coffee year, at a total of 51,810 bags. But rather alike the situation in Honduras this dip in cumulative exports from Costa Rica does not indicate much, but rather a late start to the incoming new crop coffees, which is a crop that is being forecasted to at least match the last crop. With some forecasts indicating that the new Costa Rica crop might actually be approximately 5% larger than the past crop, which would fuel a small increase in exports for this new coffee year. This latest Rabobank coffee report forecasts a global coffee supply deficit for this new October 2015 to September 2016 coffee year of approximately 2.7 million bags. But this is a rather modest number and when one considers the significant carryover stocks in Vietnam that are indicated to be at least 5.5 million bags into the new coffee year and likewise, carryover stocks in Brazil into their new crop this year, it is a deficit that is unlikely to tighten up medium to longer term coffee supply. But the Rabobank report does indicate that with Brazil exports still relatively vibrant and following a deficit crop this year that supply might slow in the first half of next year and ahead of the new 2016 Brazil crop, which might bring some buoyancy back to the presently soft coffee markets during the first quarter of next year. The big question remains as to what are the prospects for the next Brazil crop that while it is a crop that would be factored into the coffee supply figures for the next October 2016 to September 2017 coffee year, shall actually start to impact with new crop conilon robusta coffee supply by May next year and new crop arabica coffee supply by July next year. In this respect and while numbers as high as 60 million bags have been forecasted, one has to note that with the prevailing financial problems being experienced by the Brazil government, that it will impact upon available state credit being forwarded to assist farmers to finance inputs towards the development of this new crop. This is aside from the less than perfect rains for the northern and north eastern conilon robusta coffee districts so far this year, which might make one take for the present a more conservative 56 to 57 million bags new crop forecast for Brazil, which would nevertheless still be a small surplus crop for the coming year. But with the need for Brazil to start rebuilding stocks post two years of using up their stocks to maintain their traditional consumer market supply, a smaller number that might indicate a more modest 3 million odd bags surplus, might if it starts being seen to be reality during next year, prove to be supportive for a degree of recovery and coffee market buoyancy during the first half of 2016. The March on March contracts arbitrage between the markets broadened yesterday, to register this at 51.23 usc/Lb., while this equates to a 42.53% 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 3,960 bags yesterday; to register these stocks at 1,826,558 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,405 bags. The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 833 bags on Tuesday 1st. December; to see these stocks registered at 3,338,000 bags on the day. The commodity markets were mixed in trade yesterday but with the U.S. dollar picking up some renewed muscle if impacted within many markets, to see the overall macro commodity index taking a softer track as the day progressed. The Coffee and Soybean markets nevertheless had a day of modest buoyancy and the Cocoa and Orange Juice markets were steady, while the Oil Natural Gas, Sugar, Cotton, Copper, Wheat, Corn, 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 1.10% lower to see this Index registered at 379.59. The day starts with the U.S. Dollar steady in early trade and trading at 1.493 to Sterling and 1.059 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 41.70 per barrel. The London and New York markets started the day with hesitant buoyancy yesterday and with improved value, but while the London market retained its modest recovery into the afternoon trade, the New York market once again started to come under pressure and fell back below par. The markets did however recover as the afternoon progressed and with trade particularly thin and lacklustre within the New York market, both markets took a modestly positive track towards the close. The London market ended the day on a positive note, but with only 35.7% of the earlier gains of the day intact, while the New York market likewise ended the day on a positive note and with 47.8% of the earlier gains of the day intact. This somewhat hesitantly positive close does little to inspire and with a firm U.S. dollar in play one might expect to see little better than a hesitant near to steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JAN 1499 + 9 DEC 117.80 + 0.65 |
