Coffee Market Report
| The new Brazilian conilon robusta coffee crop is in progress but with the harvest tending to be slower than would usually be the case at this time of the year, as fearing the extent of the smaller yields that is most definitely on the cards for this year’s crop, the farmers are holding back to gain us much as possible in the way of cherry yields out of their new crop. In the meantime and with robust domestic roaster industry demand for new crop conilon robusta coffees the farm gate asking prices remain relatively high in relationship to the reference prices of the London robusta coffee market, which shall most likely dampen buying spirits from the consumer market industries and particularly so within North America, which is the traditional export market for this somewhat unique cup quality of robusta coffees.
One might question when the positive nature of new crop conilon robusta coffees out of Brazil start to influence the North American industries to cast a more interested eye upon the good volumes of conilon robusta coffees being held within the certified stocks of the London market, which are now becoming a somewhat attractive in price alternative. The chances are good that this shall be the case and the resulting draw down of these certified stocks would seem to be potentially a positive factor, for the London robusta coffee market. The new Brazil arabica coffee crop is now starting to come to the fore in very small volumes, but with all indications that the new arabica crop shall be a much larger one and the early yields proving to be supportive of the many forecasts for a good arabica coffee crop. But perhaps more important in terms of traditional consumer market demand for Brazil arabica coffees is that fact that these early harvested coffees are indicating that the bold screen 17 plus bean factor shall once again exceed 30% and thus, a good recovery from the bold bean yields of less than 20%, which were experienced from the previous year’s partial drought affected crop. In the meantime and with a stronger domestic currency that sees the Brazil Real trading this morning at 3.53 to the U.S. dollar and relative to the prevailing soft prices of the reference prices of the international coffee terminal markets, internal market trade is showing price resistance and is relatively slow. This price resistance seemingly not only being influenced by the firmer currency and the soft international prices, but also with coffee stocks much depleted and the possibility of only very modest carryover stocks into the new crop, many farmers and coffee cooperatives are looking to rebuild their stocks out of the new crop and thus one would speculate that not all of the potentially much larger new arabica coffee crop shall actually be available to the export markets and in this respect, it might be seen in terms of supply to be an even rather than surplus crop. Thus potentially supportive for a modestly firmer New York market, for the second half of this year. While the main central highlands coffee districts in Vietnam have been experiencing scattered rain showers over the past few weeks, the new summer rain season has yet to kick off in any force and the region in terms of ground water retention levels remains relatively dry for the present. This factor continues to inspire the price resistant Vietnamese farmers and internal traders to continue with their price resistance towards the countries mills and exporters that they have actually maintained over the past couple of years, to see asking export differentials for Vietnam coffee remain relatively firm and with the consumer industries unable to live without the volumes of robusta coffees that the country supplies, these relatively positive prices are reluctantly but readily accepted by the consumer market industries. The July on July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 48.15 usc/Lb., while this equates to a 39.63% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,120 bags yesterday; to register these stocks at 1,377,193 bags. There was meanwhile no chance to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,455 bags. The commodity markets had a mixed day yesterday, but with the overall macro commodity index taking something of a softer track for the day, in line with the modest buoyancy for the U.S. dollar. The Oil, Coffee, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Cotton, 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 0.63% lower; to see this Index registered at 402.40. The day starts with a steady U.S. Dollar which is trading at 1.447 to Sterling and 1.139 to the Euro, while North Sea Oil is tending marginally softer in early trade and is selling at 43.35 per barrel. The London and New York markets started the day yesterday on a steady note and soon started to show some degree of modest buoyancy, to see the markets take a steady to positive stance into the afternoon trade. This stance that somewhat defied the negative dictates of the renewed muscle of the U.S. dollar and the soft nature of the overall macro commodity index seemingly inspired confidence and with producer selling volumes slow, the markets maintained a positive stance for the rest of the day. The London market continued to end the day on a positive note and with 80% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 73.5% of the earlier gains of the day intact. This close is somewhat constructive for sentiment and one might think that it should assist to inspire a steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAY 1584 + 32 MAY 120.90 + 1.80 |
