Coffee Market Report

Following the harvest report from Brazil’s largest coffee cooperative Cooxupe, the Brazilian analysts Safras & Mercado who have estimated the new Brazil crop at 54.9 million bags, have estimated that by Tuesday this week that 86% of this new crop had so far been harvested. This they say is close to the historical progress of the harvest for this time of the year, while making note that at the same time last year 88% of the new crop had been harvested.

With the earlier to come to maturity new Brazil conilon robusta coffee crop having mostly completed its harvest, this estimate would indicate that so far close to 35 million bags of the new Brazil arabica coffee harvest has been completed. Thus further indicating no shortage of new crop arabica coffees becoming available for the countries exporters, but with some degree of internal market farmer price resistance in play at present, to limit any selling aggression for these new crop arabica coffees.

However, the evidence of these new crop Brazil arabica coffees becoming available to the consumer markets and with steady Colombian selling and the prospects of a larger new Central American crop due to come into play for the first quarter of the coming year, is tending to weigh upon speculative sentiment within the volatile New York market. This market for the present, lacking anything in the way of scare stories, in terms of medium to longer term arabica coffee supply.

The London robusta coffee market is meanwhile tending to hesitantly follow the softer track of the New York market, but with clear evidence that robusta coffee supply shall be relatively tighter on the medium term and until such time as the new Brazil conilon robusta and the new Indonesian robusta crops start to impact upon consumer market supply in June next year.

But while there shall be relatively tight robusta coffee supply for the next ten months or so, it is evident that Vietnam shall still have good carryover robusta coffee stocks of close to 4 million bags into their new crop that is due for the last quarter of this year, which will assist to ensure that there shall nevertheless be enough robusta coffee to fuel medium to longer term consumer market demand.

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 57.13 usc/Lb., while this equates to a 41.37% 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 883 bags yesterday; to register these stocks at 1,288,627 bags. There was meanwhile a larger in volume 2,510 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,175 bags.

The commodity markets seemingly took note of the flat inflation rate in the U.S.A., which is fuelling new speculation that it is unlikely that the U.S. Federal Reserve Bank shall be looking to raise interest rates during their forthcoming September meeting, to see the dollar remain flat for the day and to see the overall macro commodity index take a softer track for the day yesterday. The Brent Oil, Cocoa, Cotton, Wheat, Corn and Soybean markets nevertheless had a day of buoyancy and the U.S. Oil market and the Natural Gas markets were near to steady for the day, while the Sugar, Coffee, Copper, Orange Juice, 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 0.16% lower; to see this Index registered at 421.87. The day starts with the softer U.S. dollar near too steady and trading at 1.305 to Sterling and 1.130 to the Euro, while North Sea Oil is steady in early trade and trading at 49.05 per barrel.

The London market following a short period of early buoyancy soon followed the softer start for the New York market and with both markets taking a softer track into the early afternoon trade, with market sentiment remaining bearish for the day and with both markets triggering sell stops and extending their losses as the day progressed. This downside track while there was some light producer selling and industry buying in play was mostly related to speculative and fund activity within the volatile and influential New York market, but within an environment of relatively thin and low volume trade. The London market continued to end the day on a soft note and with 75.8% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 91.4% of the earlier losses of the day intact. This soft close and with the technical picture for the markets looking somewhat south for the present, is unlikely to inspire 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.

SEP 1753 – 22                                 SEP  135.05 – 2.35
NOV 1785 – 25                               DEC 138.10 – 2.65
JAN 1805 – 25                                MAR 141.30 – 2.60
MAR 1816 – 26                              MAY 143.20 – 2.55
MAY 1829 – 25                                JUL 145.00 – 2.55
JUL 1841 – 27                                  SEP 146.60 – 2.55
SEP 1853 – 27                                 DEC 148.85 – 2.55
NOV 1866 – 27                              MAR 151.00 – 2.50
JAN 1875 – 27                                MAY 152.20 – 2.45
MAR 1882 – 27                                JUL 153.25 – 2.45