Coffee Market Report
| The European Coffee Federation have reported that the port ware house stocks held within the warehouses in the ports of Antwerp, Bremen, Hamburg, Genoa, Le Havre and Trieste declined by 45,300 bags or 0.38% during the month of November, to see these stocks registered at 11,807,100 bags as at the end of the month. These stocks do not however include the coffee stocks held within Europe in transit bulk containers, unreported warehouses throughout Europe, on site roaster industry inventory stocks and with the combination of Eastern and Western European consumption at approximately 1 million bags per week, would most likely have been at least 2.5 million bags and perhaps even as much as 3 million bags of unreported stocks.
With this in mind and adding an estimated 2.5 million of unreported stocks to the reported stocks, it would appear that European coffee stocks for the end of November would have been sufficient to cater for in excess of 14 weeks of roasting activity. This would be seen to be a very safe number and well illustrates the good reason for the somewhat complacent attitude of the industry buyers towards the coffee markets and longer term coffee supply during the last quarter of last year, which was reflected by the soft trading range of the coffee terminal markets. What is perhaps even more significant is that this relatively high level of European consumer market stocks as at the end of November was despite the price resistant slow export volumes out of Vietnam that had prevailed throughout last year and was furthermore, despite the limited deliveries out of Mexico and Central America ahead of the forecasted larger overall new crop. Thus with strong evidence of good levels of consumer market stocks from the world’s leading consumer market which is likewise the case for North America as the second largest consumer market and with the larger new crops from Vietnam and Central America to the fore, there presently cannot be any consumer market concerns over medium term coffee supply and this factor remains bearish for market sentiment. The Vietnamese shall remain very much on holiday mode for the rest of the week, but the Brazilians shall return to work today, post their extended Carnival holiday. However the farmers and cooperatives shall encounter the prevailing soft reference prices of the international coffee markets, while the Brazil Real has recovered slightly against a softer U.S. dollar and trading at 3.93 Real to the dollar, will not be encouraging for any aggression in selling activity. Thus one might expect that the return of Brazil to the field of play so to speak shall not contribute much towards market direction for the day and that the physical coffee market shall remain lacklustre in nature, for the rest of this week. The May on May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 52.44 usc/Lb., while this equates to a 44.88% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,905 bags yesterday; to register these stocks at 1,585,753 bags. There was meanwhile a smaller in volume 1,650 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 12,441 bags. The commodity markets were mixed in trade yesterday, but once again and despite some support from the softer U.S. dollar that is in play, the overall macro commodity index maintained only a near to steady track for the day. The U.S. dollar remains under some pressure, following the indications yesterday from the U.S.A. Federal Reserve that they do not foresee any reason to consider any short term rising of U.S. interest rates, which should be supportive for some degree of stability within the commodity markets. The Brent Oil, London robusta Coffee, Cotton and Wheat markets had a day of buoyancy and the New York arabica Coffee and Soybean markets had a steady day, while the U.S. Oil, Natural Gas, Sugar, Cocoa, Copper, Orange Juice, Corn, 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 0.28% lower; to see this Index registered at 363.68. The day starts with the softer U.S. Dollar near to steady in early trade and trading at 1.453 to Sterling and 1.129 to the Euro, while North Sea Oil is steady in early trade and is selling at 29.60 per barrel. The London and New York markets started the day yesterday with modest buoyancy and maintained this track into the afternoon trade, but as the afternoon progressed and the volumes picked up a little both markets moved back towards par and with the New York market mostly remaining with some degree of positive buoyancy and the London market remaining very much on par. The New York market did not however manage to maintain its buoyancy and fell back to join the London market to trade around par and to take this sideways track for the rest of the day, but with the London market making a modest recovery later in the day and to take a positive track to the close. The London market ended the day on a positive note but with only 22.2% of the earlier gains of the day intact, while the New York market ended the day on a hesitantly steady note. This close does little to inspire and one might expect to see little better than another hesitant steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAR 1392 + 5 MAR 114.75 unch |
