Coffee Market Report
| The Brazil government, who had authorized the importation of green coffee from Peru early last year to have the decision suspended by the courts, has once again legislated that the countries domestic roasters can import green coffees from Peru. This decision has brought to the fore immediate criticism from the country’s coffee farmers and from the National Coffee Council who represent the coffee farmers, who foresee the possibility of low grade coffees out of the mostly fine washed arabica Peru coffees providing competition for the Brazilian coffee farmers within what is the world’s second largest consumer market.
Meanwhile the progress towards the impeachment of the Brazilian President is back on track and has by nature assisted to buoy the value of the Brazil Real which is trading this morning at 3.47 to the U.S. dollar, which would tend to encourage internal market price resistance for new sales. However with the reference prices of the international coffee markets presently on an upside track, one would think that there shall be continued slow and steady trade for new crop coffees. There are mixed signals coming to the fore from the exporters in Vietnam, with forecasts for the countries May coffee exports of mostly robusta coffees being indicated at between 2 million and 2.7 million bags. The general feeling is however leaning towards the higher number as despite the internal market prices dictating premium differentials relative to the price dictates of the London market; there really is no affordable alternative in any volume of robusta coffees, to the supply out of Vietnam. The dry weather delayed new Indonesian robusta coffee crop is however due to start coming into full harvest in June and albeit that this new crop is being forecasted to be as much as 10% lower than the previous crop, there can be expected to be more active selling coming into play for Indonesian robusta coffees by July this year. However with an ever increasing domestic market demand and therefore only approximately five to six million bags of robusta coffee from the new Indonesian crop available for export, it is not expected that there shall be and degree of selling aggression and for the foreseeable future the Vietnam coffees even with premium export differential prices, shall remain the competitive robusta coffees within the consumer markets. The July on July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 53.45 usc/Lb., while this equates to a 41.51% 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 858 bags yesterday; to register these stocks at 1,371,464 bags. There was meanwhile a smaller in volume 550 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,245 bags. The Certified Robusta coffee stocks held against the London market were seen to decline by 0.48% over the week of trade leading up to Monday 9th. May; to register these stocks at 2,737,333 bags on the day. While with the premium differentials that robusta coffees in general are able to demand from the consumer markets, it is unlikely that there shall be much in the way of new coffees being tendered to these stocks in the foreseeable future. Rather it is most likely that with a good percentage of these stocks being related to the North American market friendly Brazil conilon robusta coffees and with tight supply this year of such coffees, that there might be a more aggressive draw down from the North American industry of these stocks. Thus one might suggest that in the coming months these certified robusta coffee stocks shall steadily decline, to contribute towards positive sentiment under the London market. The commodity markets generally had a positive day yesterday, with the overall macro commodity index taking a positive track for the day. The Oil, Natural Gas, Sugar, Cocoa, Coffee, Wheat, Corn and Soybean and Silver markets had a day of buoyancy, while the Cotton, Copper, Orange Juice and Gold markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.36% higher; to see this Index registered at 405.95. The day starts with a near to steady U.S. Dollar which is trading at 1.445 to Sterling and 1.138 to the Euro, while North Sea Oil is steady in early trade and is selling at 44.10 per barrel. The London and New York markets started the day yesterday with a positive correction for the London market and follow through buoyancy for the New York market and with the markets maintaining a modestly positive track, into the early afternoon trade. As the afternoon progressed and with both markets looking stable the markets added more value and continued on a steady positive track which hit something of a ceiling as the afternoon progressed and with the London market briefly coming under pressure, while the New York market continued on a relatively steady sideways track. The London market did however recover from its dip to end the day on a positive note and with 83.3% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 80.7% of the earlier gains of the day intact. This overall positive close and with the charts likewise looking positive for the present is likely to be supportive for a follow through steady start for early trade today, but one might expect to see some opportunist producer selling pressure coming into play later in the day against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAY 1631 + 25 MAY 126.90 + 1.75 |
