Coffee Market Report
| The coffee markets quietly headed into the Christmas break yesterday with little in the way of activity, but with the modest recovery of the Brazil real relative to the U.S. dollar which has come back from over 4 to the dollar to now trade at 3.94 to the dollar, proving to be both restrictive to Brazil selling and mildly supportive to sentiment, assisting to buoy the New York market. With the London market lacking strong selling pressure over the market, following suit and posting modest gains for the day.
Contributing to the flat fundamentals for the coffee market and following the many forecasts that have indicated that the global coffee supply for the October 2015 to September 2016 coffee year to be most probably only a modest 4 to 5 million bags and with the U.S. Department of Agriculture even indicating a small surplus supply, the analysts Coffee Network have reported that they only foresee a modest 2 million bags global coffee supply deficit. Thus with more than adequate global coffee stocks to eliminate any longer term tightness in coffee supply to the consumer markets and with the prospects so far for a significantly larger new arabica crop out of Brazil in 2016, there is presently little in the way of supportive news for the coffee markets. Thus for the present the markets are taking something of a sideways track within the presently relatively soft trading range, with little indication that the situation might change during the holiday season. Today with the Christmas Eve celebrations due later in the day, both markets are due for an early close and with the markets closed tomorrow, for the Christmas Day holiday. The London market shall remain closed on Monday, while the New York market is due for a late start and a shortened days trade on Monday, to further dampen trading spirits for the today. The March on March contracts arbitrage between the markets broadened yesterday, to register this at 51.37 usc/Lb., while this equates to a 42.47% 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 12,895 bags yesterday; to register these stocks at 1,736,937 bags. There was meanwhile a smaller in volume 7,655 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 51,953 bags. The Certified Robusta coffee stocks held against the London market were seen to decline by 1,667 bags on Monday 21st. December; to see these stocks registered at 3,312,000 bags. The commodity markets had a mixed day yesterday, but with the Oil markets posting recovery and assisting to buoy the fortunes for the overall macro commodity index for the day. The Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper and Orange Juice markets had a day of buoyancy, while the Cotton, Wheat, Corn, Soybean, 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 0.91% higher to see this Index registered at 376.52. The day starts with the U.S. Dollar near to steady in early trade and trading at 1.488 to Sterling and 1.093 to the Euro, while North Sea Oil is steady in early trade and is selling at 36.45 per barrel. The London and New York markets had a steady start for early trade yesterday, with both markets showing a degree of buoyancy and posting modest gains through to the afternoon trade, but again within an environment of thin and lacklustre holiday trade for the more volatile New York market. The New York market did however start to falter and moved back to just below par, while the London market retained a degree of buoyancy. The New York market did however attract support at its relatively modest lows and bounce back into positive territory, while the London market retained its modestly positive stance. The London market continued to end the day with a positive stance and with 53.8% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 80% of the earlier gains of the day intact. This close and with the prospects for thin and lacklustre trade for this shortened pre long weekend trading day, is likely to inspire little better than a cautiously steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JAN 1493 + 2 MAR 120.95 + 1.80 |
