Coffee Market Report
| The Coffee Federation in Colombia have reported that the country’s coffee production for the month of June was 82,000 bags or 6.61% lower than the same month in the previous year, at a total of 1,158,000 bags. This performance does however follow many months of improved production and has contributed to the countries cumulative production for the first nine months of this new October 2015 to September 2016 coffee year to being 1,136,000 bags or 11.9% higher than the same period in the previous coffee year, at a total of 10,684,000 bags.
In terms of exports, the Coffee Federation in Colombia have reported that the country’s coffee exports for the month of June were 65,000 bags or 6.52% lower than the same month in the previous year, at a total of 932,000 bags. This lower performance does nevertheless contribute to the countries cumulative exports for the first nine months of this new October 2015 to September 2016 coffee year to being 631,000 bags or 7.1% higher than the same period in the previous coffee year, at a total of 9,514,,000 bags. These figures with Colombian coffee production and exports tailing off over the past couple of months, do confirm the expectations that the overly dry conditions that came with the El Nino phenomenon within the Pacific Ocean for the last quarter of last year and the first quarter of this year, has impacted negatively within many coffee districts in Colombia and the output from the countries Mitaca coffee crop. But in terms of the dip, it is significantly more modest than many had predicted, which might be due to the coming into maturity of many new disease resistant and higher yielding coffee trees that were planted in the recent year, to replace aged trees on many of the coffee farms. The question is now with the new main Colombian coffee crop due to start being harvested in less than four months’ time and with the El Nino now long passed, what shall be the prospects for this next main crop which for the present, is looking to be likely to be a reasonable crop. There are however concerns with the forecasts for a 75% chance for a La Nina phenomenon to start to develop within the Pacific Ocean during the last quarter of this year, that it might bring with it excessive and damaging rains for many of the Colombian coffee districts. These rains and if the La Nina does occur and with some degree of severity, would result in cherry drop crop losses and an increase in the threat of Roya or Leaf Rust for the farms, which would have a longer term effect upon production for the coming year. But this is as of yet not fact and for the present, the Colombian coffee production that has surged from the 8 million bags that came post the last La Nina phenomenon, continues to impress and is likely to get close to 13.5 million bags for the present coffee year. To maintain Colombia’s dominance of fine washed arabica coffee supply to the consumer markets, albeit that the producer bloc of Mexico and Central America maintains a marginally higher share of this top end quality coffee supply. The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 63.97 usc/Lb., while this equates to a 44.64% 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 decline by 2,750 bags yesterday; to register these stocks at 1,301,431 bags. There was meanwhile a smaller in number 275 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,923 bags. The commodity markets were mixed in trade yesterday and with concerns over the longer term economic prospects within Europe continuing to impact upon sentiment, to see the overall macro commodity index tending softer for the day. The Oil, Natural Gas, Cocoa, Cotton, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Sugar, Coffee, 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 0.21% lower; to see this Index registered at 432.23. The day starts with the U.S. dollar steady and trading at 1.297 to Sterling and 1.109 to the Euro, while North Sea Oil is neat to steady in early trade and trading at 47.10 per barrel. The London market and New York markets started the day yesterday on a softer note and with both markets taking a softer track into the afternoon trade, to see both markets aside from a brief pip up for the London market to value close par adding to their losses, as the afternoon progressed. Later in the day however there was something of a bounce off the lows for both markets to limit the losses of the day, which as nevertheless a day of negative trade. The London market ended the day of a softer note but having recovered 52.4% of the earlier losses by the close, while the New York market ended the day on a soft note but likewise, having recovered 59.1% of the earlier losses of the day by the close. This reversal of fortunes for the coffee markets has somewhat neutralised the technical picture and charts for the markets and provides mixed signals, but one might think that the reasonable recovery off the lows yesterday and despite some modest weakness for the Brazil Real that is trading this morning at 3.33 to the dollar, that the markets might be due for 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. JUL 1748 – 10 JUL 141.95 – 2.25 |
