Coffee Market Report
| The respected Brazilian analysts Safras & Mercado who have forecasted the new Brazil crop at 56.4 million bags, have reported that as at Tuesday this week, that 52% of the new Brazil crop had been harvested. This is of course related to most of the conilon robusta coffee crop having been harvested, but would seemingly indicate that already in excess of 18 million bags of the new arabica crop, has also been harvested.
Thus one might think that by the second half of next month, that there shall be good quantities of new crop arabica coffees from Brazil coming to the market, which will assist the countries exporters to fulfil their already extensive forward sale export commitments. This will assist to support a steady export performance out of Brazil for the coming coffee year, but with perhaps less volume than had been the case for the second half of last year and the first quarter of this year, when export volumes were buoyed by significant quantities of the now mostly liquidated carryover stocks. There is disturbing new coming out of Colombia where the truckers strike continues and is stalling deliveries of new crop parchment coffees to the coffee mills and likewise, graded coffees from the mills to the export ports. This is disrupting exports from Colombia of not only coffee but for commodities in general, which is due to cause the problem of late shipments to the consumer markets. There are however negotiations due to take place with the truckers on Sunday which are likely to carry on during next week, but even a conclusion of this strike will remain a disruptive for exports factor, while exporters try to catch up with their export commitments. The Association of Coffee Growers in Nicaragua have voiced their disappointment with the countries National Commission for Transformation and Development of Coffee Production, who have yet to start financing the 2013 plan to assist farmers to replace aged coffee trees with new disease resistant and higher yielding varieties. This plan which mirrors the similar and successful programs in Colombia and Honduras as is evident from the growing production over the past few years in these countries was targeting a medium term 80% increase in coffee production in Nicaragua, but so far the coffee farmers are seemingly unable to access the funding behind this program. Meanwhile and while there is no doubt that coffee production in Honduras has risen in the recent years to well in excess of 6 million bags per annum, the countries official exports are not reflecting this crop. This is related to the high volumes of fine washed arabica Honduras coffees that continue to be smuggled into Guatemala and Mexico, by farmers and internal traders looking to avoid local taxes and to take advantage of the relatively higher value that coffees can attract from these countries. The Coffee Institute in Honduras having estimated that at least 766,000 bags of new crop Honduras coffee, have taken this alternative and unofficial market route this year, which has caused them to lower their forecasted export volumes for the present October 2015 to September 2016 coffee year to between 5.21 to 5.29 million bags. Weather reports from India are indicating that the countries monsoon rain season is well on track and are presently marginally ahead of average, which is good news for the countries coffee farmers as they look towards the next arabica coffee crop that starts being harvested during the last quarter of the year and followed, by the new robusta coffee harvest. This new Indian crop for the present is being forecasted by trade and industry players, to be approximately 5.5 million bags and made up from a 29 to 71 ration of arabica and robusta coffees. The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 61.88 usc/Lb., while this equates to a 43.64% 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 4,514 bags yesterday; to register these stocks at 1,296,917 bags. There was meanwhile a similar in number 4,344 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,267 bags. The commodity markets were mixed in trade yesterday, but with European economic confidence somewhat on the wane for the present and the U.S. dollar showing a degree of muscle, many markets turned softer and with the overall macro commodity index taking a softer track for the day. The Cocoa, London robusta Coffee, Orange Juice and Corn markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Soybean, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.25% lower; to see this Index registered at 426.83. The day starts with the U.S. dollar steady and trading at 1.293 to Sterling and 1.108 to the Euro, while North Sea Oil is steady in early trade and trading at 44.80 per barrel. The London market and New York markets started the day yesterday on a steady note, but with the London market very quickly picking up some value while the New York market took an erratic track into the afternoon trade. The New York market picked up support and good gains in early afternoon trade but soon hit a ceiling and a reversal in its fortunes, with the negative influences of the overall macro commodity index assisting to dampen sentiment and see the market swiftly drop back below par, but with the London market maintaining its positive track. The London market continued to end the day on a positive note and with 68.4% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 71.4% of the earlier losses of the day intact. This mixed close gives likewise mixed signals but with the technical picture and the charts for the New York market tending to look softer, one might suspect only 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 1760 + 12 JUL 140.45 – 1.50 |
