Coffee Market Report
| The well-respected United States Department of Agriculture Foreign Agricultural Service USDA have reported that Africa’s largest producer Ethiopia has brought to the fore a coffee crop for the present October 2015 to September 2016 coffee year that was 33,000 bags or 0.51% larger than the previous crop, at a total of 6,508,000 bags. While they further forecast that for the forthcoming October 2016 to September 2017 coffee year that the crop shall be 7,000 bags or 0.11% larger than the previous crop, at a total of 6,515,000 bags.
Based on this crop and with the country having a vibrant domestic consumption that the USDA estimates to be approximately 3 million bags per annum, they have forecasted that the Ethiopian coffee exports for the coming October 2016 to September 2017 coffee year shall be approximately 3,525,000 bags. However while there is no doubt clarity in terms of the Ethiopian coffee exports that are officially registered with the authorities, there really is no clarity in terms of domestic consumption as with an estimated 15 million Ethiopians directly or indirectly involved in the Ethiopian coffee industry and this number heavily weighted towards home roasting farmers, one cannot easily quantify how much coffee is related to domestic consumption. Taking this view that there has to be a considerable volume of coffee that is home roasted and not declared and furthermore, with informal coffee shared with home roasting family and friends within the urban districts of the country, one might rather suggest that the crop might be larger than is officially estimated. As with a population of in excess of 101 million people and most adults dedicated daily coffee drinkers, one might need to inflate the domestic consumption figure and likewise, appropriate the additional coffee consumed within the domestic market to a higher level of production and a crop that is more in line with the approximately 7.5 million bags that is voiced by many within Ethiopia. The Brazilian analysts Safras & Mercado and based on their forecast for a larger new Brazil crop of 56.4 million bags, have estimated that as at Tuesday 14th. June that 34% of this new crop has been harvested, which would indicate that the new crop harvest is due to peak in the coming few weeks. While within this same report they suggest that the recent cold front that impacted upon South East Brazil last week did not bring with it any damaging frosts for the coffee farmers. There have however been suggestions brought to the fore by the Brazil Farm Economy Institute IEA that the recent unseasonal rains that fell within the coffee districts in Southern Minas Gerais, Mogiana and Northern Sao Paulo had caused a relatively high percentage of ripe cherry to be knocked off the trees. These cherries would be mostly collected and not impact upon the volume of the harvest, but by nature of a degree of ground fermentation the quality of the coffees from these cherries would have been affected. This the IEA suggests shall lower the percentages of good and fine cupping coffees that would come from the affected farms, which shall likely have a positive effect in terms of tighter supply of quality coffees, upon the domestic prices for such coffees and likewise, the asking differentials relative to the New York market, for these qualities. The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 66.70 usc/Lb., while this equates to a 47.15% 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 remain unchanged yesterday; to register these stocks at 1,317,657 bags. There was meanwhile a 1,165 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,043 bags. The commodity markets were mixed but mostly taking a softer track yesterday, to see the overall macro commodity index softer for the day. The Natural Gas, New York arabica Coffee, Cotton, Orange Juice and Gold markets had a day of buoyancy and the London robusta Coffee had a steady day, while the Oil, Sugar, Cocoa, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.62% lower; to see this Index registered at 426.17. The day starts with the U.S. Dollar taking a near to steady track and trading at 1.425 to Sterling and 1.125 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and trading at 45.85 per barrel. The London and New York markets started the day on a near to steady note and with the New York market soon showing some good early gains, which was followed by more modest gains for the London market. As the afternoon progressed the New York market and London markets made further gains but faltered in mid-afternoon to see the New York market move briefly into negative territory and followed by the London market, but while the New York market soon recovered and once again showed positive buoyancy the London market struggled to return to just around par. The London market ended the day on a steady note but with only 11.1% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 38% of the earlier gains of the day intact. The struggle to maintain a positive stance in trade yesterday might indicate that the markets are looking a little toppy and one might well anticipate a softer start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1613 + 2 JUL 139.50 + 1.30 |
