Coffee Market Report
| The General Statistics office in Vietnam have reported that with the estimates of this month coffee exports in hand and expected to be marginally lower than 2.17 million bags, that the countries coffee exports of mostly robusta coffees for 2015 shall be 24.3% lower than for the previous year. In this respect they have pegged the coffee exports for 2015 at just over 21.3 million bags, which is a figure that with the internal market price resistance that has prevailed for the year, has contributed to the record carryover stocks into their new harvest, which had been estimated at between 5 million to 7 million bags of robusta coffees.
The General Statistics office in Vietnam have however reported that with their December export estimate in hand that the countries coffee exports for the first three months of the new October 2015 to September 2016 coffee year in hand, that these exports shall prove to be 6.7% higher than the same period in the previous coffee year, at a total of 5,251,667 bags. This increase albeit a modest one, does perhaps provide an indicator that there might be some cracks in the resilience of the internal market price resistance coming to the fore and might further indicate with the financial demands that shall come with the forthcoming Tet New Year (Year of the Monkey) holiday over the second week of February, that there might be a further pick up in coffee export volumes due for the month of January. A factor that with the resulting price fixation hedge selling volumes coming to the market, might continue to impact upon the fortunes of the related London robusta coffee market in the coming month. One might note that the downturn in coffee exports for 2015 from Vietnam that it has contributed in a small way to the countries government now estimating that following a trade surplus of 2.14 billion U.S. dollars in 2014, the country shall experience a sharp reversal and report a 3.17 billion U.S. dollars trade deficit for 2015. Of course in terms of the coffee industry in Vietnam being a minor player in the overall economy there is unlikely to be pressure upon the internal traders to free up their significant stocks and dump coffee into the prevailing soft international coffee markets, but one might perhaps expect that with the economy coming under pressure in general, that it might have some impact upon the availability of finance for the internal traders that have been holding back stocks from the market over the recent months. This factor of a threat to available finance might make question the longer term ability of Vietnam and especially with a larger new crop adding to the internal market stocks, to maintain the same degree of price resistance during the coming year. If this proves to be the case and with the resulting increased selling activity out of Vietnam, it might impact negatively upon the longer term confidence of the speculative sector within the London robusta coffee market. The March on March contracts arbitrage between the markets narrowed on Thursday, to register this at 50.53 usc/Lb., while this equates to a 42.21% 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 2,325 bags on Thursday; to register these stocks at 1,734,612 bags. There was meanwhile no change 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 on Thursday, with many players off the field of play ahead of the holidays, but with the U.S. dollar a little unsteady for the day and the overall macro commodity index showing a degree of buoyancy, there was some assistance towards a degree of stability within many markets. The Oil, Natural Gas, Cotton, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Cocoa, Coffee, Copper, Wheat, Corn and Soybean markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher to see this Index registered at 377.75. The day starts with the U.S. Dollar near to steady in early trade and trading at 1.492 to Sterling and 1.097 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 36.75 per barrel. The London and New York markets had a steady start for early trade on Thursday, 24 December 2015, with the London market trading a little below par and the New York market marginally above par, in thin and lacklustre pre long weekend holiday trade. Trade was however thin and lacklustre and with most players already drifting off on holiday and with both markets due an early pre long weekend holiday early close, the markets attracted little in the way of support and the markets stuttered towards a marginally softer pre-Christmas close. The London market ended the day on a softer note and with 64.3% of the earlier losses of the day intact, while the New York market ended the day on an equally softer note and with 61% of the earlier losses of the day intact. This relatively soft close does little to inspire but with the London market remaining on holiday today and the New York market only due for a late opening and a shortened day’s trade today, one might expect little better than a steady start and very limited volumes for trade within this market today, against the prices set on Thursday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JAN 1485 – 8 MAR 119.70 – 1.25 |
