Coffee Market Report
| The well-respected U.S. Department of Agriculture Foreign Agricultural Service or USDA have reported that following the past July to December 2015 harvest in Tanzania that brought in a new coffee crop that they have assessed to have been 8.7% higher than the previous 2014 harvest, they forecast a 200,000 bags or 16% dip for the forthcoming 2016 crop that shall be 1,050,000 bags. This new crop to be made up from 550,000 bags of arabica coffees and 500,000 bags of robusta coffees with domestic consumption estimated at a modest 50,000 bags shall be mostly related to exports to the consumer markets, with Japan and Italy proving to be the dominant export markets for Tanzanian coffees, followed by the U.S.A. and Germany.
There have been scattered rain showers over most of the main coffee districts in Brazil, which has caused some interruptions to the new crop harvest which is now getting close to 20% completed and is due to pick up pace over June and July. This harvest is of course mostly related to the conilon robusta coffees which come to maturity earlier than the arabica coffees, which shall really only start impacting upon the consumer markets in volume during August this year. Meanwhile the rains shall assist to maintain reasonable ground water retention levels within the main arabica coffee districts in Brazil, which are the districts that are traditionally vulnerable to frost damage over the mid May to mid-August winter season and with June and July being the most threatening months. It has however been twenty two years since frost has been an issue for the Brazil coffee industry and with fair ground water retention levels, it assists with the moisture levels within the trees and by nature, to ward off the damaging effects of light frosts. Thus one might guess that this shall be another year, when Brazil frost shall not be a factor to be concerned about and as is evident by the lack of consumer market frost insurance buying activity. Many in Brazil following yesterday’s Corpus Christi public holiday shall take today as a bridging day off and an extended public holiday, which has resulted in a slow week for Brazil sales. However with the Brazil Real having fallen back in value to 3.58 to the U.S. dollar it has eased to a degree some of the pressure within internal market in Brazil, in terms of new crop sales but with Brazil selling presently remaining slow and providing little impact in terms of price fixation hedge selling upon the international coffee terminal markets. The July on July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 47.16 usc/Lb., while this equates to a 38.81% 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 920 bags yesterday; to register these stocks at 1,351,384 bags. There was meanwhile a smaller in volume 639 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,482 bags. The commodity markets had a mixed but another relatively stable day yesterday, to see the overall macro commodity index showing a degree of buoyancy through the day. The Oil, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets had a day of buoyancy and the New York arabica Coffee market was steady, while the Natural Gas, London robusta Coffee and Gold markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.49% higher; to see this Index registered at 409.00. The day starts with a near to steady U.S. Dollar which is trading at 1.467 to Sterling and 1.119 to the Euro, while North Sea Oil is tending marginally softer in early trade and is selling at 48.95 per barrel. The London market and New York markets started the day yesterday on a mixed track, with the London market struggling to keep close to par and the New York market posting some modest buoyancy, with both markets retaining this stance into the early afternoon trade. As the afternoon progressed the and within an environment of thin and lacklustre trade the New York market slipped back to par and the London market extended its modest losses, but with both markets continuing to bounce back off the lows and take a mostly sideways track either side of par for the rest of the day’s41.7% of the earlier losses of the day intact, while the New York market ended the day on a steady to modestly positive note and with only 13.3% of the earlier gains of the day intact. This was very much a dull and lacklustre day’s trade and one would think that with a long weekend to the fore for both markets that shall see the New York market closed on Monday for the Memorial Day holiday and likewise the London market closed on Monday for the Spring Bank Holiday, that the markets are likely to encounter little better than a follow through hesitant steady start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. MAY 1619 + 3 |
