Coffee Market Report

February 18 2014

The latest Commitment of Traders report from the London Robusta coffee market has seen the Speculative sector of the market decrease their net long position within the market by 6.12% during the week of trade leading up to Tuesday 11th. February, to register a net long position of 11,643 Lots on the day. This net long which is the equivalent of 1,940,500 bags is more than likely little changed over the period of mixed trade which has followed for the latter half of last week and the very quiet day, yesterday.

The National Exports Association in Nicaragua have reported that the countries coffee exports for the month of January were 10,008 bags or 10.05% lower than the same month last year, at a total of 89,550 bags. This lower performance and following the modest volumes of exports recorded for the last quarter of 2013, sees the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year 331,215 bags or 63.66% lower than the same period in the previous coffee year, at a total of 189,110 bags.

The authorities have as is now common for the region, attributed the sharp decline in Nicaraguan coffee exports to the devastating effects of Roya or Leaf Rust, but while one cannot discount the fact that Roya has caused some damage it is in this particular case, not the main reason for the sharp dip in the cumulative exports. This dip is much more related to the fact that during 2012 the Nicaraguans had been holding back from coffee sales in anticipation of much higher value sales to their socialist friends in Venezuela and finding that these were not forthcoming entered the last quarter of 2012 with substantial stocks, which they then liquidated over October and November of that year.

Furthermore one might comment that with the price resistance that prevails within the internal markets in Central America in general while the subsidised Colombian farmers have been freely selling increased volumes of new crop coffees to the consumer markets, that this has switched many commercial roasters away from higher priced Central American coffees to the Colombian alternative. This has so far resulted in lower export volumes from all of the Central American producers and has inflated the comparative lower figures for the first four months of this year that while related partially to dips in production for all but Honduras, are also lower due to declining market demand for their relatively higher value priced coffees. They nevertheless and without exception are all somewhat market manipulative in their reference to these lower volumes, as the attribute the lower exports to severely Roya damaged new crops.

The past weekend has seen most of the main coffee districts in Brazil in receipt of rains, but so far nothing very substantial and particularly so for the main arabica coffee state of Minas Gerais and their neighbours in north Sao Paulo state, with these districts having only reported receipt of between 20% to as low as 10% of their five year average rainfall for the month so far. There are however more rains forecasted and with them comes cooler weather and so long as they continue, it is bringing with it a relief from the hot and dry stress that the coffee trees have encountered over January and early February. Meanwhile the farmers within the internal market in Brazil proved to be relatively free sellers of their arabica coffee stocks during the previous week and at relatively low prices against the reference prices of the New York market, which does not indicate that they that can truly assess the potential of the forthcoming new crop so far foresee any devastating damage to this new crop.

The new Indian arabica coffee crop is nearing completion of its harvest, which is anticipated to exceed 1.6 million bags, while the countries new robusta coffee crop has started and can be expected to reach a peak over the coming weeks. This new robusta crop one might expect to exceed 3.7 million bags, of which approximately 14% shall be processed by the more expensive washed method, which does attract higher values from the consumer markets. Thus with new crop coffees flowing into the market within India and with some support from the firmer nature of the reference prices of the international markets, one might expect to see steady export volumes emanating from India for the coming months.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 3,615 bags on Friday, to register these stocks at 2,632,640 bags. There was meanwhile a sharper 6,937 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,800 bags.

The commodity markets were mostly closed yesterday for the Presidents day holiday in the U.S.A., which saw the Americans enjoy a long weekend albeit that many would have spent the day shovelling snow. Thus there is very little to report on the markets for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets remains with the Index registered at 533.95. The day starts with the softer U.S. Dollar steady and trading at 1.673 to Sterling and 1.371 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 109.30 per barrel.

The London coffee market with the New York market closed and trading solo started the day on a steady note, but within and environment of very thin and lacklustre trade. The market nevertheless retained some degree of buoyancy throughout the day and adding some additional value in the late afternoon’s trade, to end the day on a firm note. This close and ahead of the opening of the New York market today sees the arbitrage at an attractive to the roasters 59.84 usc/Lb., which equates to the consumer industry accounts to an attractive 42.05% price discount for the London robusta coffee market, relative to the New York arabica coffee market. This positive close for the London market does not however in light of the low volume of trade that was related to the close provide any indication for direction today, but one might expect to see a slow and cautiously steady start for both markets for early trade today against the prices set in New York on Friday and London yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1825 + 15 MAR 139.90 + 0.20

MAY 1818 + 12 MAY 142.30 + 0.35

JUL 1793 + 12 JUL 144.35 + 0.35

SEP 1785 + 14 SEP 146.20 + 0.30

NOV 1778 + 13 DEC 148.15 + 0.05

JAN 1765 + 8 MAR 150.15 – 0.20

MAR 1758 + 8 MAY 151.60 – 0.10

MAY 1758 + 8 JUL 152.10 – 0.95

JUL 1757 + 8 SEP 154.55 + 0.20

SEP 1757 + 8 DEC 156.95 + 0.40

Coffee Market Report

February 17 2014

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 96.74% in the week of trade leading up to Tuesday 11th. February, to register a net long position of 16,703 Lots on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 2.20%, to register a net long on the day of 56,051 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net short sold position within the market by 530.24%, to switch to a net long position of 7,499 Lots on the day. This speculative net long position within the New York market which is the equivalent of 2,125,933 bags has most likely been further buoyed over the following days of mixed trade, which has since followed.

The Brazil hot and dry weather over the month of January which has inspired a bullish move within this market on behalf of both the funds and the speculative sector of the market over the past couple of weeks has seen the net long position of the speculative sector hit a thirty month high last week, but with this week’s rainfall reports from Brazil due to bring some degree of volatility to the market. Meanwhile with the combination of both the managed money funds and the speculators now holding long positions, the advent of good rains might well bring forth some profit taking selling but should the rains prove to be modest, one would think that they might well hold on to their positions and maintain the market within the present trading range.

The Vietnam Customs Authority have reported that the countries coffee exports of mostly robusta coffees for the month of January were 36% lower than the same month last year, at a total of 2,383,333 bags. This lower performance contributes to the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 31.3% lower than the same period in the previous coffee year, to total 7,001,667 bags.

Meanwhile with the interference of the Tet New Year holiday during the first week of February and this already a short month, while the continued inverted price structure of the reference prices of the London market do not encourage the international traders to take on medium terms stocks, the forecasts are for Vietnam coffee exports for the month of February to be a relatively modest 1.67 to 2 million bags. This would indicate that with stocks in hand and a potential to export approximately 26 million bags during the present coffee year, that should rains be forthcoming for Brazil to dampen overall coffee market speculative spirits that there might be some more aggressive catch up selling pressure within the internal market in Vietnam due to come into play. However if the Brazil rains are not up to expectations and the funds continue to buoy the markets, one might see the internal market traders in Vietnam continue to hold out for higher value sales.

The Uganda Coffee Development Authority has reported that the countries coffee exports of January was 12.5% higher than the same month last year, at a total of 391,514 bags. This figure will assist to inspire confidence in the prospects for the country to maintain an export performance for the present 2013 to 2014 coffee year, which shall once again well exceed the 3 million bags mark.

The National Coffee Council in El Salvador have forecast that due to the prevailing Roya or Leaf Rust, that the countries new crop that is presently in harvest shall be nearly 60% lower than the past crop and therefore, a twenty four year low. This decline related to both the damaging effects of the Roya and to the aggressive surgical pruning reaction that has been taken to the infestation, on the part of many of the commercial farmers in the country. This latest report that has doubled the earlier decline indications, might however be somewhat market manipulative in nature, as the slow new crop deliveries of late are also related to many farmers maintaining their price resistance and holding back coffees, in their to pressure new crop sales values higher.

Following some light rain showers over Thursday and Friday for the main coffee districts in Brazil, there were fair rains forecasted for the past weekend and for this week, but this past weekends have yet to be assessed in terms of specific figures. Thus one might expect to see a good deal of hesitancy for early trade today, as the coffee world awaits the meteorological reports from Brazil later on today.

The commodity markets on Friday were buoyed by the softer nature of the U.S. dollar, which encouraged support many of the markets, while the extreme cold weather in the eastern regions of North America further assisted to buoy confidence within the energy markets. The Oil, Natural Gas, Cocoa, New York arabica Coffee, Copper, Wheat, Corn, Gold, Silver, Platinum and Palladium market had a day of buoyancy, while the London robusta Coffee, Sugar, Cotton, Orange Juice and Soybean markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.51% higher, to see the Index registered at 533.95. The day starts with the soft U.S. Dollar trading at 1.677 to Sterling and 1.370 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 109.95 per barrel.

The coffee markets started the day on Friday with London market started the day on a softer note, with the negative sentiment that came with Brazil rain forecasts inspiring both producer fixation hedge selling and speculative selling pressure. However while the London market remained under pressure from the combination of thoughts of rain in Brazil and rising volumes of Vietnam selling activity, the New York market with some support from the positive nature of the macro commodity index recovered and ended the day ahead of the long weekend on a positive note. This mixed close and while players await news from Brazil and with the New York market closed for today’s Presidents Day holiday, is likely to see the London market take a cautious and hesitant slow and sideways start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1810 – 14 MAR 139.90 + 0.20

MAY 1806 – 16 MAY 142.30 + 0.35

JUL 1781 – 8 JUL 144.35 + 0.35

SEP 1771 – 4 SEP 146.20 + 0.30

NOV 1765 – 3 DEC 148.15 + 0.05

JAN 1757 – 3 MAR 150.15 – 0.20

MAR 1750 – 4 MAY 151.60 – 0.10

MAY 1750 – 4 JUL 152.10 – 0.95

JUL 1749 unch SEP 154.55 + 0.20

SEP 1749 unch DEC 156.95 + 0.40

Coffee Market Report

February 11 2014

Due to the absence of the writers, who are attending the 11th African Fine Coffee Association (AFCA) Conference and Exhibition in Burundi; www.eafca.org; our daily coffee market report will resume in detail and as usual, on 17th February, 2014.

Coffee Market Report

February 11 2014

11th February, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of the market decrease their net long position within this market by 6.63% in the week of trade leading up to Tuesday 4th February, to see this net long position registered at 12,402 Lots, on the day.

The more detailed January export figures from Brazil have been announced by the countries Coffee Export Association Cecafe, with green coffee exports for the month reported to be 140,000 bags or 6% higher than the same month in the previous year, at a total of 2.43 million bags. In addition, the exports for the month of value added soluble coffees calculated in terms of their green coffee equivalent were 9,590 bags or 3.7% higher than the same month in the previous year, at a total of 268,655 bags. The combined exports for the month registered an overall increase on that of the same month last year, at a total of 2.7 million bags.

Countering to a degree, the recent buoyancy within the terminal markets is latest weather reports from the Brazil coffee growing areas with prospects of rains to return to these areas within the fortnight, to bring some relief to the arabica coffee districts. There are however varied independent reports of some damage already sustained due to the unusual onset of dry weather during January, while the forecasts for rainfall and improved dispersion of rains may be expected to remain a focal factor spurring speculative sentiment within the markets.

Within Vietnam meanwhile, and following on from the lower robusta exports registered over the Tet New Year holiday month in January, the forecasts for an increase in exports in February are deemed to be positive. The trade within Vietnam are forecasting that with forward trade export commitments to fulfil, they foresee exports of mostly robusta coffees for the month to potentially reach between 1.67 million to 2 million bags during the month of February.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 2,072 bags yesterday, to register these stocks at 2,641,755 bags. There was a further 2,710 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 11,802 bags.

It was a mixed day on the commodity markets and sentiment supportive of the possibility that the new U.S. Federal Reserve Bank chair may not accelerate the prevailing economic tapering program. It was a firmer day for Gold, Wheat, Coffee, Silver, Platinum, Palladium and Cotton. The Oil markets, Cocoa, Copper, Sugar, Corn, Soybeans and Orange Juice markets ended the day softer. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets registered 0.18% lower, to see the Index registered at 524.726. The day starts with the U.S. Dollar trading at 1.641 to Sterling and 1.366 to the Euro, while Brent Crude is selling at $ 109.70 per barrel.

The London market started the day on a positive note which met with origin sellers to cap the gains and narrowly negative morning progressed. The New York market found limited upward support on opening although volumes increased during the session to a sizeable 56,235 Lots traded in the two front months in New York by the close of the day. The softer morning attracted buying support toward the middle of the session and gained momentum into the afternoon to see the trading range stretch 3.98% from low to high on the prompt month, however this is relatively tight in respect of the volatility of recent days. The weather news in Brazil remains the driving force for speculative sentiment and with the forecasts of potential rains to come within the next two weeks, the speculative spirits were somewhat dampened. The New York market faltered toward the latter half of the session with origin sellers present above the market and a close near to unchanged on the day. The London Robusta market managed to regain lost ground however toward the latter half of the day and a close in positive territory, to set the close yesterday somewhat mixed on a steady to softer note, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1796 + 20 MAR 136.20 + 0.50
MAY 1788 + 21 MAY 138.45 + 0.60
JUL 1759 + 25 JUL 140.45 + 0.60
SEP 1750 + 25 SEP 142.35 + 0.65
NOV 1746 + 24 DEC 144.65 + 0.80
JAN 1743 + 25 MAR 147.05 + 0.95
MAR 1738 + 25 MAY 148.45 + 0.90
MAY 1738 + 25 JUL 149.75 + 0.75
JUL 1733 + 25 SEP 150.95 + 0.55
SEP 1733 + 25 DEC 152.95 + 0.45

Coffee Market Report

February 10 2014

10th. February, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market liquidate their net short sold position within this market by 220.89% in the week of trade leading up to Tuesday 4th. February, to see this previous short sold position change to a net long position of 8,490 Lots on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.30%, to register a net long on the day of 57,309 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net short sold position within the market by 88.88%, to register a net short sold position of 1,743 Lots on the day. This speculative net short position within the New York market which is the equivalent of 494,133 bags has most likely been little changed over the following days of mixed trade, which has since followed.

Adding to the recent flurry of bullish news that has been coming forth to buoy sentiment within the New York market in terms of the dry weather news from Brazil, there was a report from the Brazilian exporter Terra Forte, which stated that due to the dry weather their earlier forecast for a 2014 Brazil crop of 53 million bags is now an unrealistic figure. The report did not specify a new lower figure for this forthcoming new crop, but was worded strongly enough to indicate a sharp decline might be on the cards.

In terms of the Brazil weather factor the much respected Brazilian meteorologist Somar has indicated that this shall be another dry week for the main Brazil arabica coffee districts, but with the prevailing high pressure over these districts due to break up in ten days’ time, with new rains coming in with the cold fronts from the south and to bring relief for the farms from the 17th. February onwards. This forecast does not however dispute that there has not already been some damage to the potential of the new crop from the dry month of January and while it does dampen some bullish spirits, the partial drought factor remains in play to buoy speculative spirits.

Countering to a degree the bullish news of the Brazil weather and its potential to lower the new crop potential for this year, is the news that the Colombian Government shall resume the price subsidies that the state provides to its coffee farmers. The uncertainty of the future of these subsidies has over the past week has been slowing internal market sales and likewise export sales and this latest news is likely to encourage increased catch up selling activity from Colombia, which shall contribute to increased volumes of price fixation hedge selling into the New York market.

The mixed nature of the markets closing prices on Friday has seen the week end with the arbitrage widening, to 55.14 usc/Lb., which increased the price discount to 40.63% for the London market. It is a very attractive discount for consumer market roasters who cannot easily increase their wholesale prices, in line with the positive nature of the markets. Thus one can presume that it shall further encourage consumer market buying interest for new crop Vietnam robusta coffees, during this week.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by a modest 2,000 bags on Friday, to register these stocks at 2,639,683 bags. There was meanwhile a sharper 9,205 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,512 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to have decreased by 46,833 bags or 10.12% over the two weeks of trade leading up to Monday 3rd. February, when they were registered at 416,000 bags. This reduction was to have been expected, as the inverted nature of the value of the London market is not conducive to the buying in and financing the holding of new crop robusta coffee stocks, which can be tendered to this exchange.

The commodity markets on Friday selectively reacted to a disappointing non-farms jobs growth report for the month of January, which was seen to potentially have some influence upon the U.S. Federal Reserve bank, in terms of the prevailing tapering program for their stimulus program, which some think might be slowed. The Oil, Natural Gas, Cocoa, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver and Palladium markets had a day of buoyancy, while the New York arabica coffee ended on a steady note and the London robusta Coffee, Sugar, Wheat and Platinum markets ended the day softer. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.49% higher, to see the Index registered at 525.70. The day starts with the U.S. Dollar trading at 1.642 to Sterling and 1.362 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 111.33 per barrel.

The London market started the day coming under pressure on Friday with producer selling coming into play and accompanied by some speculative profit taking, while the New York market came under less modest negative pressure. The afternoon saw the London market remaining within negative territory, but with the Brazil news seemingly once again becoming an inspiration for speculative and fund chart buying support returning to the market, which posted a 7 usc/Lb. positive move for the day. The London market continued to end the day on a soft note and with 96.55% of the earlier losses of the day intact, while the New York market did not manage to hold on to its rally and shed all of its gains to end the day on a barely steady note. This rather disappointing end to the day’s trade for both markets is unlikely to encourage much better than a hesitantly steady to softer start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1776 – 84 MAR 135.70 – 0.05
MAY 1767 – 78 MAY 137.85 unch
JUL 1734 – 74 JUL 139.85 + 0.10
SEP 1725 – 74 SEP 141.70 + 0.30
NOV 1722 – 71 DEC 143.85 + 0.50
JAN 1718 – 69 MAR 146.10 + 0.50
MAR 1713 – 68 MAY 147.55 + 0.35
MAY 1713 – 68 JUL 149.00 + 0.20
JUL 1708 – 68 SEP 150.40 + 0.10
SEP 1708 – 68 DEC 152.50 + 0.0

Coffee Market Report

February 07 2014

The Coffee Federation in Colombia have forecasted that the countries coffee crop for this calendar year shall increase by 3.67%, to register a crop of the year of 11.3 million bags. While the Federation foresees that with significant hectares of recently re-planted farms that have still to see these new trees come to maturity, that the countries coffee crops are due to steadily increase further, over the coming years.

This positive report from Colombia is of course with unforeseen negative weather conditions aside and there might be some slight concern coming with the latest report from the U.S. Climate Prediction Centre, who have changed their position of a month ago that this shall be a neutral year for the Pacific Ocean in terms of the threat of El Nino. They have now forecast that there is indeed a threat of an El Nino developing during the second half of this year, but have not indicated if this forecast is related to a sever return of this weather phenomenon and so far there is no reason to foresee that it shall become an issue for the crops within the Pacific rim coffee countries of Colombia, Peru and Indonesia.

Meanwhile the Brazil weather issue continues to attract market attention, with the latest forecasts pointing at least a week and perhaps even one and half weeks of hot and dry weather for the central main arabica coffee districts of Minas Gerais and north Sao Paulo. Thus indicating that the new crop coffee development shall struggle through to around the 20th. of the month, with new crop cherry expansion somewhat stalled by the lack of rain and the declining ground water retention levels.

There is however for the present some degree of insurance in terms of a potential dip in Brazil arabica coffee production for this year, from the extensive carryover stocks from the previous crop, which had been estimated to be in the region of 8 million bags. Thus one might foresee that even if Brazil is due to bring forth a deficit crop for this year, that it shall not severely impact upon medium to longer term Brazil arabica coffee supply.

The decline in stocks would however be something of a concern if one is to assume that with 2015 due to be a biannually lower crop year that the carryover stocks into next year’s crop might be severely depleted, but the question would be if the evidence of extensive pruning by many Brazil farmers during the last quarter of last year might not rather bring a good new growth crop into play for next year. This scenario and presuming that the Brazilian weather over the main coffee districts remains normal for the last quarter of this year and the first quarter of next year, shall more than likely influence a larger rather than a smaller crop for the coming year.

Meanwhile with the rally in the reference prices of the international market over the past few days, there has been and advantageous increase in internal market selling aggression in Brazil this week, which has allowed for exporters to take significant short term stock cover for their short to medium terms forward sales commitments. This shall insure that there shall be no hiccups in Brazilian coffee supply to the consumer markets for the foreseeable future, which shall take some of the bite out of the prevailing tightening supply of fine washed arabica coffees from Central America, which many mainstream roasters supplement with higher percentages of price competitive natural arabica coffees from Brazil.

The late in the day dip in value of the New York market yesterday has seen the arbitrage between the London robusta coffee market and the New York arabica coffee market narrow to 51.38 usc/Lb., which likewise reduced the price discount to 37.85% for the London market. It is however still a very attractive discount for consumer market roasters who cannot easily increase their wholesale prices, in line with the positive nature of the markets. Thus one can presume that it remains good days for the Vietnamese coffee farmers, who can take advantage of their still holding significantly good new crop robusta coffee stocks, which are chasing much improved market value.

The Certified washed Arabica coffee stocks held against the New York market were seen to have decreased by a modest 6,039 bags yesterday, to register these stocks at 2,637,683 bags. There was meanwhile a similar 5,622 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 23,717 bags.

The commodity markets were mixed yesterday and with most markets remaining within a relatively narrow trading range, to result in dull day’s trade within the majority of the markets. The New York arabica Coffee market was however once again the excitement of the day, as the market triggered a new nine month high in value and somewhat expectantly attracted price fixation selling and speculative profit taking, to reverse the upside track. The Oil, Cocoa, Cotton, Copper, Soybean, Gold, Silver, Platinum and Palladium market ended the day on a positive note, while the London robusta Coffee market was steady and the Natural Gas, New York arabica Coffee, Sugar, Orange Juice, Wheat and Corn markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.20% lower, to see the Index registered at 523.12. The day starts with a steady U.S. dollar trading at 1.633 to Sterling and 1.359 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 108.30 per barrel.

The London and New York markets had a more erratic day of trade yesterday, with both markets attracting producer price fixation selling pressure, which saw both markets trading either side of par through the day. The London market did however recover from its lows and end the day on a steady note, but with the New York market finally succumbing to selling pressure and ending the day of a soft note and with 88.6% of the earlier in the day’ losses intact. This later in the day negative correction within the New York market would be seen to be dampen speculative sentiment, but with the fundamental of continued dry weather in Brazil still in play, one might expect to see a producer selling softer start for the London market but a hesitant degree of corrective buoyancy for the New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1860 + 3 MAR 135.75 – 7.35

MAY 1845 – 3 MAY 137.85 – 7.25

JUL 1808 – 3 JUL 139.75 – 7.10

SEP 1799 – 3 SEP 141.40 – 6.95

NOV 1793 – 4 DEC 143.35 – 6.70

JAN 1787 – 5 MAR 145.60 – 6.60

MAR 1781 – 5 MAY 147.20 – 6.40

MAY 1781 – 5 JUL 148.80 – 6.35

JUL 1776 – 5 SEP 150.30 – 6.35

SEP 1776 – 5 DEC 152.45 – 6.40

Coffee Market Report

February 06 2014

The Coffee Federation in Colombia have reported that the countries coffee production for the month of January was 134,000 bags or 15.28% higher than the same month last year, to total 1,011,000 bags. This corresponded to the countries coffee exports for the month being 224,000 bags or 30.15% higher than the same month in the previous year.

These much improved figures from Colombia which had been anticipated and already factored into market sentiment, contributed to the countries cumulative coffee production for the first four months of the present October 2013 to September 2014 coffee year being 1,093,000 bags or 34.11% higher than the same period in the previous coffee year, to total 4,297,000 bags. Likewise contributing to the cumulative coffee exports for these four months of the present coffee year to being 1,158,000 bags or 41.33% higher than the same period in the previous coffee year, at a total of 3,960,000 bags.

This sharp increase in both production and exports from Colombia over the past four months, has so far countered most of the negative effects of price resistant slower new crop export volumes out of Mexico and Central America, in terms of consumer market reaction to these slower exports from the region. Albeit that it is not only internal market price resistance that is playing its part slowing exports from Mexico and Central America, as there is most certainly reality to the fact that the past two years of increased Roya or Leaf Rust infestation within the region, has had a negative effect upon the size of this regions crops.

Roya or Leaf Rust in Mexico, Central America and Peru that is damaging world fine washed arabica coffee has however for the past few days, been completely overshadowed by the concerns over the dry weather over the main arabica coffee districts in Brazil, in Southern Minas Gerais and northern Sao Paulo provinces. This factor having triggers a sharp knee jerk reaction on the part of the speculative and fund sectors of the New York market and very evident in terms of the 286,183 Lots traded within this market over the past four days, which is the equivalent of 81,131,625 bags of coffee. This figure, corresponds to the equivalent of 54% of World 2013 to 2014 coffee year production in just four days of trade, in terms of private trade and industry assessment of world production for the present coffee year.

The International Coffee Organisation have reported that they forecast world coffee production for the present October 2013 to September 2014 coffee year to be 700,000 bags or 0.48% higher than their figure for the previous coffee year, at a total of 145,000,000 bags. This calculation is based on a 7.2% increase in robusta coffee production for this coffee year to total 60.4 million bags of robusta coffee and to a 3.8% decline in arabica coffee production, to total 85.4 million bags and therefore a 41.4 to 58.6 ratio of robusta and arabica production.

This overall crop for the present coffee year is however as is traditional for the ICO figures to be conservative approximately 3 million to 6 million bags lower than most of the usually more reliable private trade and industry forecasts for production for this present coffee year, but perhaps as there is of course some reality to the negative effects of dry weather in Brazil, the ICO figure might this year prove to be closer to the mark. One would expect however that following the recent emotive reaction to the dry weather in Brazil, the next ICO report shall lower its crop estimate and therefore, indicate a market sentiment supportive deficit coffee supply for this coffee year, against an approximate annual coffee demand of 146 million bags. Thus supportive for the thought that even if it rains by mid-February in Brazil and the markets suffer from a negative correction, they will nevertheless trade within a much more positive trading range than they have over the past few months.

The Certified washed Arabica coffee stocks held against the New York market were seen to have decreased by a modest 770 bags yesterday, to register these stocks at 2,643,722 bags. There was meanwhile a more substantial 8,719 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,095 bags.

The commodity markets with the U.S. dollar losing a little weight for the day were mostly on the positive side for trade yesterday and once again, with the Coffee markets the star for the day. The Oil, Cocoa, Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver, Platinum and Palladium markets had a firmer day’s trade, while the Natural Gas, Sugar and Wheat markets had a softer day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.57% higher, to see the Index registered at 524.16. The day starts with a steady U.S. dollar trading at 1.630 to Sterling and 1.352 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 107.55 per barrel.

The London market started the day on a follow through buoyancy yesterday and followed by a similar positive start for the New York market and with both markets attracting support to maintain their modest buoyancy into the afternoon’s trade. The markets did however once again attract some negative producer price fixation selling pressure and dips into negative territory, but this soon dried up and with the speculative and fund support under the markets and some catch up industry price fixation buy stops coming into play, the markets once again started to surge and with buy stops being triggered to add to the gains within what was another day of very active trade. The London market continued to end the day on a positive note and with 90.6% of the gains of the day intact, as did the New York market likewise end the day on a positive note and with 91.9% of the gains of the day intact. This overall positive close is perhaps due to assist towards positive sentiment and to a steady to buoyant start for the markets for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1857 + 48 MAR 143.10 + 6.85

MAY 1848 + 47 MAY 145.10 + 6.70

JUL 1811 + 48 JUL 146.85 + 6.55

SEP 1802 + 45 SEP 148.35 + 6.45

NOV 1797 + 46 DEC 150.05 + 6.20

JAN 1792 + 44 MAR 152.20 + 6.00

MAR 1786 + 44 MAY 153.60 + 6.10

MAY 1786 + 44 JUL 155.15 + 6.25

JUL 1781 + 44 SEP 156.65 + 6.35

SEP 1781 + 44 DEC 158.85 + 6.10

Coffee Market Report

February 05 2014

The first few days have seen the Brazil coffee districts continue hot and dry and this continues to fuel the rising volumes of speculation towards significant damage to the prospects of the forthcoming new crop in Brazil which had largely prior to this issue, been foreseen to be in the region of 55 million bags. This dry weather that forecasts indicate might continue through to next week and for some districts until the following week, has inspired some incredible volumes of fund and speculative trade for both markets, but for the New York market even more so than London.

This trade that has seen the funds going long into the markets has allowed for some better value catch up price fixation hedge selling on the part of the producers, but with many stepping back from the market to await for new highs and by nature of demands for higher values for new business, the differentials for the arabica coffees relative to the New York market for new business are firming ahead of the market.

This price resistant scenario on the part of the producers is likely to continue until the markets start to falter, which one would think to be unlikely before there are forecasts for nearby rains in Brazil. Thus in terms of the consumer industry buyers, it is going to be a case of biting the bullet and covering nearby needs no matter the prices, which shall maintain slow but steady business to maintain some buying pressure under the market. The question is however how much short term consumer price fixation buying might be left to come into play, as a good percentage would have been triggered by stop loss fixations, over the past three days.

Aside from the price resistance being shown by the Mexicans and Central Americans for the sales of their new crop coffees and despite the rising value of the reference prices of the New York market, the volumes of price fixation selling over the market are also being slowed by the uncertainty over what the price subsidy new rules shall be in Colombia. With the present subsidy that is the equivalent of approximately 26 usc/Lb. under debate and awaiting new rules, many farmers have stepped back from the internal market with their new crop coffees and have thus slowed selling and price fixation selling into the New York market from this leading fine washed arabica coffee player. Thus, further assisting to raise the ceiling over the market, as the funds and speculators came in to cover for the Brazil drought risk.

Meanwhile the surge in the value of the New York arabica market that had assisted to inspire the buoyancy for the London robusta coffee market, has been a welcome relief and inspiration for the Vietnamese coffee farmers and internal traders, coming back from their Tet New Year holiday to higher reference prices to sell against for their significant volumes of new crop coffee stocks. This has brought with it catch up selling from Vietnam and with the resulting price fixation hedge selling, finally some pressure coming upon the prompt months within this market. The result has been to see the arbitrage between the markets rises significantly to a significant 54.2 usc/Lb., which equates to a very attractive 39.78% price discount for the London robusta coffee market, relative to the New York arabica coffee market.

The problem remains however as so long as the structure of the London market remains inverted an with the prompt months offering a premium to the forward months, in that it does not allow for the international trade to safely take on and hedge longer term robusta coffee stocks. This is making it difficult for the farmers and internal market traders in Vietnam to significantly increase the volumes of sales to the exporters, who are largely restricted to only being able to buy in their shorter term requirements that are necessary to fulfil their short to medium term short sales.

But perhaps if the coffee markets start to lose their enthusiasm in the near future and steady, the catch up internal market selling aggression in Vietnam shall have an influence upon the structure of the London market, which will allow the international trade to take on stocks and deliver some to the certified stocks of this market. This would suggest that unless there really is a drought forthcoming for Brazil, that the London market is due to come under some degree of medium term negative pressure.

The Certified washed Arabica coffee stocks held against the New York market were seen to have decreased by a substantial 18,476 bags yesterday, to register these stocks at 2,644,492 bags. There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,367 bags.

The commodity markets selectively were affected by the renewed cold weather in North America, which buoyed spirits within the Natural Gas, U.S. Oil and Grains markets yesterday. While the hot and dry weather in Brazil not only buoyed the New York arabica Coffee market, but also the Sugar market. The U.S. Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Silver, Platinum and Palladium markets had a day of buoyancy, while the Brent Oil, Cocoa, London robusta Coffee and Gold markets had a softer days trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.72% higher, to see the Index registered at 521.17. The day starts with a steady U.S. dollar trading at 1.634 to Sterling and 1.351 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 107.25 per barrel.

The London market started the day on a follow through buoyancy yesterday and followed by a similar positive start for the New York market and with both markets attracting support to maintain their buoyancy into the afternoon’s trade. This positive stance was however muted and the lack of upside aggression started to attract the combination of speculative profit taking and producer price fixation hedge selling, to see both markets move back into negative territory and with the New York market posting losses of 2.90 usc/Lb. for the day and the London market $ 82.00 per Mt for the day. The selling pressure in New York did however start to wane later in the day and to allow this market to post a modest recovery, but with the London market continuing upon its negative track. The London market ended the day on a soft note and with 70.7% of the earlier losses of the day intact, while the New York market ended the day with modest buoyancy and with only 15% of the earlier gains of the day intact. This mixed but tending softer close of the markets but with the Brazil weather hanging over the markets to retard producer selling aggression might see the markets due for a hesitant sideways to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1809 – 58 MAR 136.25 + 0.30

MAY 1801 – 38 MAY 138.40 + 0.55

JUL 1763 – 36 JUL 140.30 + 0.75

SEP 1757 – 32 SEP 141.90 + 0.70

NOV 1751 – 32 DEC 143.85 + 0.50

JAN 1748 – 32 MAR 146.20 + 0.65

MAR 1742 – 32 MAY 147.50 + 0.70

MAY 1742 – 32 JUL 148.90 + 0.85

JUL 1737 – 32 SEP 150.30 + 0.95

SEP 1737 – 32 DEC 152.75 + 1.35

Coffee Market Report

February 04 2014

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of the market increase their net long position within this market by a modest 3.43% in the week of trade leading up to Tuesday 28th. January, to see this short long position registered at 13,284 Lots, on the day. This net long position which is the equivalent of 2,214,000 is likely to have been significantly increased over the period of very positive trade that has since followed.

The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of January were 35,189 bags or 25.69% lower than the same month last year, at a total of 101,802 bags. This lower performance has contributed to the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 77,893 bags or 24.52% lower than the same period in the previous coffee year, at a total of 239,833 bags.

The National Coffee Institute in Honduras have reported that the countries coffee exports for the month of January were 90,874 bags or 14.21% lower than the same month last year, at a total of 548,795 bags. This lower performance has contributed to the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 143,945 bags or 12.75% lower than the same period in the previous coffee year, at a total of 985,121 bags.

The National Coffee Organisation in Guatemala have reported that the countries coffee exports for the month of January were 41,264 bags or 15.52% lower than the same month last year, at a total of 224,570 bags. This lower performance has contributed to the countries cumulative exports for the first four months of the present October 2013 to September 2014 coffee year being 158,662 bags or 23.47% lower than the same period in the previous coffee year, at a total of 517,491 bags.

The preliminary figures from Brazil have reported that the countries coffee exports for the month of January were 200,000 bags or 8.51% higher than the same month last year, at a total of 2.55 million bags. This improved performance is despite some degree of internal market price resistance, as with Brazil coffees proving competitive in price within the consumer markets, the consumer market demand has remained steady and with the added support of a weaker Brazil real to the dollar, the export sales have been relatively active.

The latest report from the International Coffee Organisation has recorded World coffee exports for the month of December to have been 5.84% lower than the same month in the previous year, at a total of 8.54 million bags. This figure contributes to the cumulative world coffee exports for the last calendar year of 2013 to have been 1,977,723 bags or 1.78% lower than world coffee exports in the previous year, to have totalled 108,851,182 bags.

These world coffee exports for 2013 were made up by a 62.69 to 37.31 ratio of arabica to robusta coffees, with this ratio having seen the arabica share recover from the previous year’s ratio of 60.75 to 39.25 arabica to robusta coffee exports. But this recovery on the part of the arabica coffees is mostly related to the weakening of Brazil natural arabica coffee prices and a degree of price resistance on the part of Vietnam, which has allowed for the arabica coffees to regain some market share.

One might imagine however that with Vietnam still sitting upon significant stocks of unsold new crop robusta coffees and from a much larger new crop that these coffees shall soon have to start coming to the market, which will result in increased volumes of robusta coffee exports. This shall more than likely assist to see some recovery for the market share for robusta coffee, which might for this year return to a close to 60 to 40 ratio for arabica and robusta coffee exports. Particularly so, if the markets can retain some of their regained value of the past few days, which shall encourage price sensitive main stream roasters to start chasing the less expensive coffees.

The Certified washed Arabica coffee stocks held against the New York market were seen to have increased by 4,043 bags yesterday, to register these stocks at 2,662,968 bags. There was meanwhile a more modest 3,507 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,367 bags.

The commodity markets despite some concerns over medium term demand from China’s slowing growth rate remained relatively buoyant yesterday, within many markets. While the coffee markets were once again the star of the day, as surged and with the New York market hitting eight and half month highs. The Coffee, Sugar, Cocoa, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a positive day, while the Oil, Natural Gas, Cotton, Copper, Orange Juice and Palladium markets tended softer. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.47% higher, to see the Index registered at 517.44. The day starts with a steady U.S. dollar trading at 1.629 to Sterling and 1.351 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 107.25 per barrel.

The London market started the day on a follow through positive track yesterday and followed by a similar positive start for the New York market and with both markets attracting support to maintain their upside track into the afternoons trade. This positive stance started to attract the combination of fund, speculative and roaster buy stops, with added substantial volumes of trade and accelerated the gains for the New York market, while the London market that was perhaps anticipating producer selling soon to come post the Tet holidays, faltered as the afternoon progressed. The London market continued to nevertheless end the day on a very positive note and with 71.8% of the gains of the day intact, while the New York market ended the day on a very strong note and with 96% of the gains of the day intact. Following such aggressive and high volume gains for the markets and with the pending post-holiday robusta export sales due from Vietnam, one might foresee some degree of speculative exhaustion for the markets and it is possible that one shall see a modest negative profit taking correction being due for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1867 + 56 MAR 135.95 + 10.75

MAY 1839 + 60 MAY 137.85 + 10.65

JUL 1799 + 64 JUL 139.55 + 10.50

SEP 1789 + 66 SEP 141.20 + 10.30

NOV 1783 + 67 DEC 143.35 + 10.05

JAN 1780 + 70 MAR 145.55 + 9.75

MAR 1774 + 69 MAY 146.80 + 9.35

MAY 1774 + 69 JUL 148.05 + 8.80

JUL 1769 + 69 SEP 149.35 + 8.30

SEP 1769 + 69 DEC 151.40 + 7.80

Coffee Market Report

February 03 2014

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net short sold position within this market by 49.04% in the week of trade leading up to Tuesday 28th. January, to see this short sold position registered at 7,023 Lots, on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 0.50%, to register a net long on the day of 57,483 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net short sold position within the market by 26.46%, to register a net short sold position of 15,668 Lots on the day. This speculative net short position within the New York market which is the equivalent of 4,441,809 bags has most likely been sharply reduced and even possibly getting close to being a net long position over the following days of overall positive trade for the market and likewise, the Managed Money fund net short position within this market.

With the month of January passed, the government trade data from the leading coffee island of Sumatra had confirmed the islands robusta coffee exports for the month of January were 18,138 bags or 15.09% higher than the same month last year, at a total of 138,320 bags. This positive export performance has contributed to the cumulative robusta coffee exports from Sumatra for the first four months of the present October 2013 to September 2014 coffee year being 606,436 bags or 40.33% higher than the same period in the previous coffee year, at a total of 2,110,005 bags.

The latest report from India and despite some degree of internal market price resistance and talk of a smaller crop, has seen the cumulative coffee exports for the country for the first four months of the present October 2013 to September 2014 coffee year 358,917 bags or 33.40% higher than the same period in the previous coffee year, to total 1,433,583 for the period. This is under the circumstances of talk of a 10.23% dip in production for this coffee year and the relatively soft prices that prevailed over most of the period quite a surprise and makes on question, the reality of forecasts for such a sharp dip in production.

The Tet New Year holiday in Vietnam shall continue for today, but one would suspect that with the celebrations coming to a close, that already there would be focus within the internal market upon the relatively strong technical correction to the value of the reference prices of the London robusta coffee market over the holiday period, which saw this market add over 6% in value. This being a factor that might well start to inspire some post-holiday increase in selling aggression within the internal market in Vietnam, as the farmers internal market traders remain with significant quantities of unsold new crop robusta coffee stocks.

A report from Brazil on Friday that the state of Sao Paulo has experienced a record month in terms of hot and dry weather which is a factor mirrored in southern Minas Gerais and therefore covering the dominant arabica coffee districts in the north of Sap Paulo state and the southern have of Minas Gerais, inspired market buoyancy for the New York market and mirrored in the London market on Friday. The reaction was despite the earlier report from the well-respected meteorologist Somar that stated that while January was indeed a hot and dry month, it is still too early to fear severe damage to the forthcoming new Brazil arabica coffee crop.

The Certified washed Arabica coffee stocks held against the New York market were seen to have decreased by 10,371 bags on Friday, to register these stocks at 2,658,628 bags. There was meanwhile a more modest 2,833 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,874 bags.

The commodity markets were mixed on Friday and with mostly speculative fundamental factors coming into play, to direct the direction within the markets, rather than general economic factors. The coffee markets were the star of the day, with the later in the day explosive action that came to the New York market as high volume stop loss buy stops were triggered and mirrored by similar activity within the London market. The Coffee, Sugar, Cotton, Orange Juice, Wheat, Soybean and Silver markets had a day of buoyancy and the Platinum market was steady, while the Oil, Natural Gas, Cocoa, Copper, Corn, Gold and Palladium markets were softer for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.51% higher, to see the Index registered at 515.01. The day starts with a steady to marginally stronger U.S. dollar trading at 1.641 to Sterling and 1.349 to the Euro, while Brent Crude is showing modest buoyancy in early trade and is selling at $ 107.05 per barrel.

The New York market started the day on a positive track on Friday and mirrored within the London market, as with a lack of producer price fixation selling pressure over the markets and early in the day volumes relatively thin, the markets easily attracted buoyancy. As the day progressed and with positive values triggering the combination of funds, speculative short covering and roaster buy stops the volumes started to surge and accentuated the gains for both markets, to see the week end on a rather bullish note for coffee. The London market continued to end the day on a positive note and with 69.8% of the earlier in the day’s gains intact, while the New York market similarly ended the day on a very positive note and with 87.4% of the earlier in the day’s gains intact. This strong close for both markets that is supportive for the charts, can be expected to contribute towards a steady start for the markets in early trade today against the relatively impressive and somewhat unexpected prices set on Friday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAR 1811 + 37 MAR 125.20 + 5.20

MAY 1779 + 34 MAY 127.20 + 5.15

JUL 1735 + 32 JUL 129.05 + 4.90

SEP 1723 + 31 SEP 130.90 + 4.80

NOV 1716 + 29 DEC 133.30 + 4.50

JAN 1710 + 30 MAR 135.80 + 4.30

MAR 1705 + 29 MAY 137.45 + 4.15

MAY 1705 + 29 JUL 139.25 + 4.10

JUL 1700 + 29 SEP 141.05 + 4.15

SEP 1700 + 29 DEC 143.60 + 4.30

Coffee Market Report

January 31 2014

The eyes of the coffee world are becoming more and more focused upon the weather and in more particular the rainfall reports from the main coffee districts in Brazil and with the dominant arabica coffee state of Minas Gerais being closely watched, as day by day the weather remains mostly dry and hot. So far with the month of January near to over, the rainfall within Minas Gerais coffee districts has been between only 15% to a still very modest 23% of the five year average rainfall for the month. There have of course been some rains during the month, as there were also reasonable ground water retention levels inherited from the previous months of fair rains, but while these relative hot and dry conditions cannot be called drought, there is no doubt that they are going to retard to a degree new crop cherry development.

In terms of the weather forecasts the well-respected Somar meteorological report indicates that the prevailing hot and dry weather is due to continue until the 10th. February, which shall accentuate the problems of dry weather within the main central coffee districts for the next two weeks. While to add to these concerns there are farmers starting to talk of wilting leaves and slow