Coffee Market Report
| The National Coffee Council of El Salvador has reported that the countries coffee exports for the month of April were 2,587 bags or 3.32% higher than the same month last year, at a total of 80,555 bags. This modestly improved performance does not however counter the countries internal market price resistance slow progress in the sales and exports of the new crop and the cumulative coffee exports for the first seven months of the present October 2015 to September 2016 coffee year are still 135,442 bags or 35.71% lower than the same period in the previous coffee year, at a total of 243,833 bags.
The well-respected U.S.A. Department of Agriculture Foreign Agricultural Service has reported that coffee production in India for the present October 2015 to September 2016 coffee year shall be 5,300,000 bags, with Robusta coffees contributing to 71.89% of the production and Arabica coffees to 28.11% of production. This production they estimate and with Robusta production steady on last at only 0.18% lower and Arabica production 8.76% lower than the previous year, to be overall a crop 2.75% lower than the previous year. It is noted however that this forecast on the part of the USDA is significantly 9.09% lower than the 5.83 million bags forecasted by the Coffee Board of India, who have so far not seen reason to lower their estimate that was published in December last year. The USDA estimate is likewise significantly lower than many other private trade and industry forecasts that had been talking in terms of and Indian coffee crop for the present coffee year, of something in the order of 5.5 million to 5.6 million bags. The USDA furthermore have forecasted that the follow on Indian coffee supply for the next October 2016 to September 2017 coffee year shall suffer from a further weather related 2.45% decline, to bring forth a crop of 5,170,000 bags. This crop to be related to a 72.59% Robusta coffee supply and a 27.41% arabica coffee has been forecasted lower due to weather related poor flowering, has also been forecasted to be even more significantly lower by the Indian coffee farmers. Thus there is seemingly some reality to the prospects of lower Indian coffee supply for the coming year, which might prove to assist towards longer term positive sentiment for the coffee markets. The well-respected U.S.A. Department of Agriculture Foreign Agricultural Service has reported that coffee production in Indonesia this year has suffered from the El Nino phenomenon dry weather over the past seven months and that with the new robusta coffee crop due to be 1.7 million bags or 16.3% lower than the previous year at 8.7 million bags, while the new arabica coffee crop is only 50,000 bags or 3.7% lower than the previous year’s crop, at 1.3 million bags. Thus they report that due to the 1.75 million bags or 14.9% lower crop this year and aside from the traditional green coffee imports that come into the country to assist to fuel the domestic market, it shall result in green coffee exports to dip by 1.6 million bags or 20.8% during the coming coffee year and to total a relatively modest 6.1 million bags. The July on July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 55.63 usc/Lb., while this equates to a 41.92% 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 550 bags yesterday; to register these stocks at 1,369,304 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,184 bags. The Certified Robusta coffee stocks held against the London exchange declined by 22,333 bags or 0.82% during the week of trade leading up to Monday 16th. May, to register these stocks at 2,715,000 bags. This in terms of the relatively high percentage of the stocks that are made up from the North American market friendly Brazil conilon robusta coffees is a surprisingly small decline, as many are expecting that the tight supply of conilon robusta coffees from Brazil would be encouraging a more aggressive draw down of these stocks on the part of the North American roasters. But perhaps it is an activity that is pending, rather than a lack of interest in these stocks. The commodity markets were mostly on a modest positive track in yesterday’s trade, which was reflected in the positive nature of the overall macro commodity index for the day. The Oil, Natural Gas, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Sugar, Cocoa, New York arabica Coffee and Copper markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.56% higher; to see this Index registered at 412.78. The day starts with a steady U.S. Dollar showing a degree of buoyancy and trading at 1.443 to Sterling and 1.128 to the Euro, while North Sea Oil is steady in early trade and is selling at 48.90 per barrel. The London market and New York markets started the day yesterday with immediate follow through buoyancy and with both markets maintaining a positive stance into the early afternoon trade, but while the New York market moved through the afternoon erratically trading either side of par and presumably attracting speculative profit taking and producer selling activity, the London market maintained a positive sideways stance. The London market continued to end the day on a positive note and with 61.9% of the earlier gains of the day intact, while the New York market ended the day on a softer note and with 66.7% of the earlier losses of the day intact. This mixed close and with the markets ending up either side of par might well indicate that the markets are perhaps suffering from being over bought and one might expect to see a little better than a near to steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAY 1670 + 12 MAY 131.85 – 0.85 |
