Coffee Market Report

May 11 2015

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non Commercial Speculative sector of this market increase their net short sold position within the market by 23.86% during the week of trade leading up to Tuesday 5th. May; to register a net short sold position of 12,056 Lots, this net short sold position which is the equivalent of 3,417,823 bags has most likely been little changed over the period of softer but finally recovered to overall sideways trade that has since followed.

The Association of Coffee Exporters in Brazil have announced their more detailed April export figures which indicate that green coffee exports for the month were 84,518 bags or 3% lower than the same month last year, at a total of 2,733,379 bags. Added to this they have reported that the countries value added soluble coffee for the month and calculated in terms of their green coffee equivalent were 34,820 bags or 11.6% lower than the same month last year, at a total of 300,138 bags.

This would result in the combination of green coffee and value added soluble exports for the month being 119,338 bags or 3.83% lower than the same month last year, at a total of 2,998,697 bags. However perhaps more important to note is the fact that the value of the country’s exports were 40.2 million U.S. dollars or 7.44% lower than the same month last year, at a total of 500.2 million U.S. dollars.

This is a matter of some concern that the soft market is catching up with Brazil and the forward sales are no longer buoying values of exports, which is resulting in the loss of value starting to exceed the volumes of coffee exports. However fortunately for the country’s coffee industry in terms of the farm gate values that might be related to the soft coffee exports, there has been the life vest that has come with the softer value of the Brazil Reais which was trading at around 2.23 to the U.S. dollar in April 2014 and at around 3.03 during April 2015. This would put the value of the April 2015 Brazil coffee exports in terms of Brazil Reais terms 25.77% higher than the same month last year, despite the lower volume, albeit that inflation within Brazil that is presently running at a rate of over 8% per annum is eating into this advantageous exchange rate insurance against softer international coffee prices.

The International Coffee Organisation have meanwhile reported that Brazil’s coffee exports for the period from April 2014 to March 2015 were 4.1 million bags or 12.54% higher than the same period in the previous twelve months, at a total of 36.8 million bags. Therefore with the added domestic consumption figure of possibly as much as 21 million bags, a coffee disappearance of in excess of 57.5 million bags over the period and a factor that would have in terms of the modest 2014 deficit crop, have significantly reduced the country’s coffee stocks.

The big question remains what were these stocks as if one is to apply the trade and industry assessments of the last 2014 crop that generally talk in terms of a crop of approximately 48 million bags and therefore the use of 9 million bags to fuel the subsequent high export volumes, it might indicate in terms of the prevailing relatively good volumes of internal market supported exports that continue, that the stocks in had as at April last year were in fact higher than the approximate 12 million bags that many had suggested. Albeit that these are rough figures, as there are some trade reports that have assessed the last 2014 crop at between 49 to 50 million bags, which would be nature indicate a lesser demand upon the large carryover stocks that were taken into the last 2014 harvest.

In terms of consumer market demand for Brazil coffees one might have to be cautious and see the surge in exports over April 2014 to March 2015 to have been somewhat accentuated by advantageous buying of competitive in value to Asian robusta coffees Brazil conilon robusta coffees, which came out of a significantly improved conilon crop in 2014. Rather than look to the surge in demand as a factor that is related to the more steady demand for Brazil arabica coffees and therefore to further suggest that the real dedicated consumer market demand for Brazil coffees is closer to 32 million to 33 million bags per annum and an overall domestic and export market demand of between 53 million to 54 million bags per annum, rather the higher figures reported above. Therefore indicating that following some of the latest new crop forecasts for a 2015 Brazil coffee crop in excess of 50 million bags, that there shall be sufficient carry over arabica coffee stocks to fulfil export market demand through to the next 2016 crop.

The arbitrage between the markets has broadened on Friday to register this at 54.91 usc/Lb., while this equates to an attractive 40.78% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 16,052 bags on Friday; to register these stocks at 2,196,056 bags. There was meanwhile a smaller in volume 10,252 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 44,086 bags.

The commodity markets again gained some support from a softer U.S. dollar on Friday, with the overall macro commodity index showing buoyancy. The U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Brent Oil and Orange Juice markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.16% higher to see this Index registered at 432.54. The day starts with the U.S. Dollar tending to show some buoyancy and selling at 1.542 to Sterling and 1.116 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 64.00 per barrel.

The London market started the day on Friday on a marginally softer note, but with the New York market starting the day with modest buoyancy, the London market quickly recovered into likewise modest positive territory. This set a positive mood and as the morning progressed, both markets started to surge forward in thin trade and with stop loss buy orders accentuating the gains. There was however something of a ceiling above the markets that took advantage of the surge and brought selling pressure into the markets to both stall the rally and see the markets reverse partially for the day, as the afternoon progressed. The London market continued to end the day on a positive note and with only 48.8% of the gains of the day intact, while the New York market ended the day on a positive note and with 59% of the gains of the day intact. This positive close is supportive for sentiment and despite some renewed muscle for the U.S. dollar; one might expect to see a cautious steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1717 + 39 MAY 132.90 + 2.05

JUL 1758 + 40 JUL 134.65 + 2.95

SEP 1784 + 39 SEP 137.35 + 2.85

NOV 1801 + 38 DEC 141.10 + 2.75

JAN 1818 + 38 MAR 144.85 + 2.75

MAR 1838 + 38 MAY 147.00 + 2.70

MAY 1860 + 39 JUL 148.85 + 2.65

JUL 1884 + 42 SEP 150.55 + 2.60

SEP 1904 + 42 DEC 152.60 + 2.60

NOV 1917 + 42 MAR 154.80 + 2.50

Coffee Market Report

May 08 2015

The National Coffee Association in Guatemala has reported that the country’s coffee exports for the month of April were 136,545 bags or 34.25% lower than the same month last year, at a total of 262,093 bags. This relatively dismal performance contributes to the cumulative coffee exports for the first seven months of the present October 2014 to September 2015 coffee year being 362,712 bags or 21.93% lower than the same period in the previous coffee year, at a total of 1,290,994 bags.

This relatively sharp dip in the cumulative exports from Guatemala which has more than adequately compensated for by the 902,584 increase in exports from neighbouring Honduras and the 199,000 bags increase in exports from Colombia, is perhaps mostly related to internal market price resistance that has inflated asking price differentials by the Guatemalan exporters over the past seven months, rather than problems with the size of the new crop. But there is the added factor that there have been lower volumes of cross border coffees from Honduras contributing to the Guatemalan coffee exports, which impact upon both the volumes out of Guatemala and to the rising volumes out of Honduras over the period.

The autumn weather conditions in Brazil have so far brought with them fair rains and in many instances above average for this generally very dry pre winter month, to further assist to maintain fair ground water retention levels ahead of the dry winter harvest season. This will further assist the trees to cater for the stress that comes with the harvest season, while building up stability towards the post winter spring and summer rain season and the flowering for next year’s new crop. This next rain season in terms of the widely expected El Nino developing within the Pacific Ocean that traditionally has an influence upon increased rains in south east Brazil, is so far expected to be positive for the prospects of next year’s new crop.

In terms of the forthcoming summer rain season for Vietnam that is critical for the prospects of the forecasted larger new year end crop of mostly robusta coffees is so far looking to be a normal season, with early forecasts indicating that the region shall be in receipt of between nine and ten tropical low pressure storms. Of these the forecasters expect that between four to five of the storms shall directly impact on Vietnam and bring with them very good rains, which shall assist to build up good ground water retention levels ahead of their dry October to April winter and spring season. Thus so far, the positive new crop forecasts for the world’s second largest producer would seem to be good.

Thus with weather news for the world’s two largest producers Brazil and Vietnam who account for approximately 57% of world production during a good yielding coffee year being so far positive for rising coffee supply for 2016, there is presently little in the way of supportive fundamental news in play. Especially so as aside from Brazil and Vietnam, there are no striking weather related scare stories coming forth from any other producer blocs and with forecasts for potentially rising production levels from Colombia, Indonesia, Peru and Central America over the next twelve months, the markets look to remain within the hands of the bears and somewhat flat in nature for the foreseeable future.

The arbitrage between the markets has broadened yesterday to register this at 53.77 usc/Lb., while this equates to an attractive 40.83% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,060 bags yesterday; to register these stocks at 2,212,108 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,834 bags.

The commodity markets generally gained little support from the softer U.S. dollar yesterday, with the overall macro commodity index taking a negative track for the day. The Sugar, Cocoa and New York arabica Coffee markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.96% lower to see this Index registered at 427.17. The day starts with the U.S. Dollar while softer against news of a conservative win in the UK to the pound tending to show some buoyancy in general in early trade and selling at 1.543 to Sterling and 1.119 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 63.80 per barrel.

The London market started the day yesterday on a steady to softer note, while the New York market had a relatively steady start, but with the London market losing some weight into the afternoon’s trade, while the New York market experienced added positive buoyancy. As the afternoon progressed the London market maintained a softer track, while the New York market added to its gains and while this latter market did encounter a bout of selling pressure and dip back towards par it was short lived and the New York market soon recovered, while the London market bounced back from its lows. The London market continued to end the day on a soft note but having recovered 60% of its earlier losses of the day by the close, while the New York market ended the day on a positive note and with 71.4% of the gains of the day intact. This close while positive in terms of the buoyancy retained within the New York market does not inspire much in the way of confidence and one would expect to see only a hesitant and cautious close to steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1678 – 14 MAY 130.85 + 2.80

JUL 1718 – 18 JUL 131.70 + 1.75

SEP 1745 – 18 SEP 134.50 + 1.75

NOV 1763 – 18 DEC 138.35 + 1.70

JAN 1780 – 18 MAR 142.10 + 1.70

MAR 1800 – 17 MAY 144.30 + 1.65

MAY 1821 – 16 JUL 146.20 + 1.60

JUL 1842 – 18 SEP 147.95 + 1.65

SEP 1862 – 20 DEC 150.00 + 1.65

NOV 1875 – 20 MAR 152.30 + 1.65

Coffee Market Report

May 07 2015

The Colombian Coffee Growers Federation has reported that the country’s coffee production for the month of April was 92,000 bags or 11.06% higher than the same month in the previous year, at a total of 924,000 bags. This higher performance follows many months of rising production levels and the cumulative production for the first seven months of the present October 2014 to September 2015 coffee year is now 312,000 bags higher than the same period in the previous coffee year, at a total of 7,143,000 bags.

It is similarly the case in terms of Colombian fine washed arabica coffee exports and the Coffee Growers Federation has reported that coffee exports for the month of April were 105,000 bags or 12.77% higher than the same month last year, at a total of 927,000 bags. This improved performance has contributed to the countries cumulative exports for the first seven months of the present coffee year to be 199,000 bags or 2.98% higher than the same period in the previous coffee year, at a total of 6,885,000 bags.

All indications are now that with the mid-year Mitaca crop harvest starting that Colombia is on track for the present coffee year towards production of close to 13 million bags, which is a long way up from the dip during the La Nina phenomenon to production below 8 million bags. Likewise with Colombia having been a relatively ready and steady competitive seller of their fine coffees and in competition that exports for this present coffee year might get close to 12 million bags.

This latest news follows the recent bout of trade related forecasts for a much better than initially forecasted new Brazil crop that rather than bringing forth a significant deficit new crop that might be close to 9 million bags below the combination of domestic and export market demand, shall now only be a modest 2 million to 4 million bags deficit. This would be a figure if correct, that shall be very easily countered by the reduced by still substantial carryover coffee stocks into the new crop, which shall support an uninterrupted steady flow of Brazil coffees to the consumer markets. Thus the latest report from Colombia albeit very much expected but the reality confirmed by the numbers, contributes to the bearish sentiment within the speculative sector of the volatile New York arabica coffee market and has its influence upon sentiment for the London robusta coffee market.

The question is that with the fall in coffee market prices what influence it might have upon farm inputs and future production for the Brazilian coffee farmers, as even with the recent decline in the value of the Brazil Real, the soft prices shall prove to be problem for many farmers. This problematic situation being enhanced by the presently faltering Brazil economy that has resulted in the Brazil government’s decision to cut back on agricultural subsidies and more directly farm credit programs, which shall remove the chances of significant financial support for the coffee farmers. Thus making one speculate that if the international coffee prices do not improve later in the year, it might have some impact upon farm inputs and possibly reduce the potential for the next 2016 Brazil crop.

Meanwhile the Brazil government has announced their next auction of Federal coffee stocks and with 18.300 bags of these aged arabica coffee stocks on offer, on Wednesday next week. This is however a relatively small number and with reserve prices being set, one might not expect too much excitement over this auction.

The arbitrage between the markets has narrowed yesterday to register this at 51.21 usc/Lb., while this equates to an attractive 39.41% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 20,620 bags yesterday; to register these stocks at 2,215,168 bags. There was meanwhile a smaller in volume 14,925 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,834 bags.

The commodity markets were mixed but many gained some support from a weaker U.S. dollar, which reacted to the relatively poor U.S.A. jobs data and the resulting renewed speculation that this shall delay the chances of a dollar interest hike. The Oil, Natural Gas, Sugar, Orange Juice, Wheat and Corn markets had a day of buoyancy and the Platinum market was steady, while the Cocoa, Coffee, Copper, 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 0.05% lower to see this Index registered at 431.32. The day starts with the U.S. Dollar near to steady in early trade and selling at 1.524 to Sterling and 1.136 to the Euro, while North Sea Oil is tending softer in early trade and is selling at 65.30 per barrel.

The London market and New York markets started the day yesterday with some modest buoyancy, but with both markets slipping below par into the afternoon trade. There was a short lived recovery experienced for the New York market while the London market continued on a relatively steady downside track, but once the New York market slipped back again and started to trigger stop loss sell orders, both markets and lacking any significant industry buying under the markets, headed towards their late in the day lows. The London market ended the day on a soft note and with 76.4% of the losses of the day intact, while the New York market ended the day on a very soft note and with 82.2% of the earlier losses of the day intact. This soft close and with prices breaking below the recent trading range does little to inspire and one might expect little better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1692 – 43 MAY 128.05 – 4.50

JUL 1736 – 42 JUL 129.95 – 3.70

SEP 1763 – 39 SEP 132.75 – 3.60

NOV 1781 – 37 DEC 136.65 – 3.60

JAN 1798 – 36 MAR 140.40 – 3.55

MAR 1817 – 34 MAY 142.65 – 3.50

MAY 1837 – 33 JUL 144.60 – 3.50

JUL 1860 – 31 SEP 146.30 – 3.30

SEP 1882 – 31 DEC 148.35 – 3.10

NOV 1895 – 31 MAR 150.65 – 2.90

Coffee Market Report

May 06 2015

The National Coffee Institute of Honduras has reported that the country’s coffee exports for the month of April were 191,877 bags or 38.21% higher than the same month last year, at a total of 694,037 bags. This improved performance follows improved performances since the start of this new coffee year and the cumulative coffee exports for the country for the first seven months of the present October 2014 to September 2015 coffee year are 902,584 bags or 36.35% higher than the same period in the previous coffee year, at a total of 3,385,707 bags.

There is however some question over the cumulative exports reported above which are calculated from the month by month coffee exports reported by the National Coffee Institute in Honduras, as they now report that the cumulative exports for the first seven months of the present coffee year are a lower figure of 3.12 million bags. This figure is however nevertheless 636,877 bags or 25.65% higher than the same period in the previous coffee year and whichever figure is correct, the country is still showing an impressive export performance for the present coffee year and is well on track to exceed its forecasted exports for the present coffee year of in excess of 4.8 million bags and therefore at least a 13.64% improvement over the performance during the previous coffee year.

This surge in coffee exports from Honduras that is related not only to an improved new crop but also to a lesser degree of internal market price resistance that has made coffees from Honduras very competitive against the prices being offered by their neighbours in Central America over the past seven months, has allowed Honduras to more than fill the gap within the consumer markets that has come with more modest dips in export volumes from Guatemala and Costa Rica. These exports from Honduras likewise being joined by a free flow of affordable new crop fine washed arabica coffees from Colombia and soon to be joined by the flow of new crop coffees from the larger new crop in Peru that is now starting to come to the market, to ensure a good medium to longer term supply of fine washed arabica coffees to the consumer markets.

Exporters are back at work in Vietnam post the combination of the 40th. Anniversary of the fall of Saigon and the unification of the country and the May Day holidays, to find that continued internal market price resistance to the price dictates of the reference prices of the London market likewise continues to inflate their asking differentials for new business. However most speculate that time is on the side of the consumers and with full summer rain season on the nearby horizon and farmers still holding large volumes of coffee stocks, the expectations are that there shall be more aggressive and relatively affordable selling coming into play by the third quarter of this year.

The National Cocoa and Coffee Board of the Cameroun have reported that the countries robusta coffee exports for the first four months of their December 2014 to November 2015 robusta coffee year were 1,866 bags or 4.05% lower than the same period in the previous robusta coffee year, at a total of 44,217 bags. While the countries arabica coffee exports for the first six months of their more conventional October 2014 to September 2015 arabica coffee year, are reported at a relatively modest 6,767 bags.

There has been progress in the plans for the amalgamation of Mondelez International and D.E. Master Blenders 1753, which would create a European coffee giant under the new name of Jacobs Douwe Egberts in that the European Commission have approved the deal, so long as both companies manage to conclude their deals to sell off some of their brands. In this respect that D. E. Master Blenders 1753 shall shed itself of its Merrild brand and licence its Senseo brand in Austria and Mondelez sells their Carte Noire brand, but in respect of the latter Lavazza have said that they shall only make a final decision on the purchase of Carte Noire late in June and the project still remains under some small degree of question.

The arbitrage between the markets has broadened yesterday to register this at 53.00 usc/Lb., while this equates to an attractive 39.66% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,270 bags yesterday; to register these stocks at 2,235,788 bags. There was meanwhile a smaller in volume 729 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,909 bags.

The commodity markets gained some support from the soft nature of the stock markets yesterday and likewise some softening of the U.S. dollar through the day, which brought more focus on commodities. The Oil, Sugar, Cocoa, Coffee, Copper, Orange Juice, Soybean, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Cotton, Wheat and Corn had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.56% higher to see this Index registered at 431.52. The day starts with the U.S. Dollar steady in early trade and selling at 1.521 to Sterling and 1.124 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at 66.00 per barrel.

The London market started the day yesterday tending softer, while the New York market opened on a hesitantly steady note and seemingly had some influence to see the London market steady at just below par and joined by the New York market at just below par into the early afternoon trade. Both markets did however recover as the afternoon progressed and with some assistance from the positive nature of the overall macro commodity index to move back into positive territory, with the London market tending to take a steady sideways track and the New York market a more erratic track for the rest of the day’s trade. The London market ended the day on a modestly positive note and with 46.2% of the gains of the day intact, while the New York market ended the day on a positive note and with 42.9% of the earlier gains of the day intact. This uncertain but nevertheless positive close combined with the softer nature of the U.S. dollar one would expect to inspire a steady to perhaps modestly buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1735 + 3 MAY 132.55 + 0.70

JUL 1778 + 6 JUL 133.65 + 0.75

SEP 1802 + 6 SEP 136.35 + 0.70

NOV 1818 + 5 DEC 140.25 + 0.75

JAN 1834 + 4 MAR 143.95 + 0.70

MAR 1851 + 1 MAY 146.15 + 0.70

MAY 1870 + 2 JUL 148.10 + 0.70

JUL 1891 + 5 SEP 149.60 + 0.60

SEP 1913 + 5 DEC 151.45 + 0.40

NOV 1926 + 5 MAR 153.55 + 0.25

Coffee Market Report

May 05 2015

The National Coffee Institute in Costa Rica has reported that the country’s coffee exports for the month of April were 15,542 bags or 9.49% lower than the same month last year, at a total of 148,171 bags. This more modest performance follows a slower price resistant start for the first five months of the present October 2014 to September 2015 coffee year and therefore, the cumulative coffee exports for the first seven months of the present coffee year are 57,302 bags or 8.16% below the same period in the previous coffee year, at a total of 644,723 bags.

The preliminary April coffee exports from Brazil have been reported to have been 48,900 bags or 1.71% lower than the same month last year, at a total of 2,814,950 bags. This relatively modest dip is however still a significant number and by nature, does not reflect any sign that farmers have been holding back stocks in anticipation of the forecasted more modest new crop, which would allow for controlled value added exports for the coming year.

Adding to the speculation over the prospects of the new Brazil crop and with the new conilon robusta harvest already in play and to be followed shortly in a few weeks’ time by the harvest of the new arabica crop, has been the new crop forecast by E D and F Man Volcafe yesterday. This forecast that this large coffee trading group have said is based on a detailed crop tour that took place over March and April and included 14,000 Kilometres of travel and approximately 3,000 farms, has seen them raise their earlier February 2015 forecast by 2.5 million bags to a new figure of 51.9 million bags.

This latest forecast that is based on their forecast for a new arabica coffee crop of 35.5 million bags and a conilon robusta crop of 16.4 million bags, would indicate that the new crop deficit shall prove to be a very modest 2 million to 3 million bags and one that shall be easily countered by the carryover stocks into this new crop. While with this forecast closely following the Mercon forecast at the end of last month for a new Brazil crop of 50.5 million bags, it shall undoubtedly have some influence upon speculative market sentiment. Thus limiting the short term upside potential for the more volatile New York market, which is already wallowing in doldrums of generally bearish sentiment.

Albeit early in the month and that internal market price resistance within Vietnam is inflating asking export differentials for robusta coffee export prices relative to the London robusta coffee market, traders in Vietnam are confident that the consumer market demand for robusta coffees shall not impact too severely upon the country’s export volumes for this month. In this respect and despite the competition from larger new robusta coffee crops from Indonesia and India, the early trade estimates are for exports of Vietnam coffees and mostly robusta coffee shall be between 1.67 million and 2 million bags.

The arbitrage between the markets has narrowed yesterday to register this at 52.52 usc/Lb., while this equates to an attractive 39.52% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 8,221 bags yesterday; to register these stocks at 2,234,518 bags. There was meanwhile a smaller in volume 3,188 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 19,638 bags.

The commodity markets were mixed yesterday, but with the steadier nature of the U.S. dollar tending to dampen spirits within many markets, as is the potential for still impressive by slower growth forecasted for China a potentially negative factor. However the Chinese growth factor is so far not having much impact as many speculate that the Chinese government in their bid to maintain growth over a targeted 7% factor would rather come forth with a stimulus program, than let growth slip to lower levels. The Wheat, Silver, Gold and Platinum markets had day of buoyancy and the Cocoa and Cotton markets were relatively steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Corn and Soybean markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.26% higher to see this Index registered at 429.13. The day starts with the U.S. Dollar steady in early trade and selling at 1.513 to Sterling and 1.113 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 64.55 per barrel.

The London market was closed yesterday for the May bank holiday in the UK and the New York market started the day on a modestly softer note, but did manage to recover during the early afternoon to take a brief visit into positive territory. This was however short lived and the market was soon back into negative territory and proceeded for the rest of the day to take an erratic negative track, but with the market nevertheless managing to shrug off the bearish news yet another 50 million bags new Brazil crop forecast and a weakening of the Brazil real that is now back to 3.08 to the U.S. dollar and limit its losses by the end of the day. The New York market nevertheless ended the day on a softer note, but having recovered 50.9% of the earlier losses of the day. This softer close for the New York market is likely to impact negatively upon the fortunes of the post-holiday London market for early trade today, while the late in the day partial recovery might prove to be a steading factor for early trade for the New York market, against the prices set in the London market on Friday and the New York market yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1732 – 20 MAY 131.85 – 1.60

JUL 1772 – 20 JUL 132.90 – 1.30

SEP 1796 – 22 SEP 135.65 – 1.25

NOV 1813 – 22 DEC 139.50 – 1.30

JAN 1830 – 22 MAR 143.25 – 1.35

MAR 1850 – 21 MAY 145.45 – 1.40

MAY 1868 – 21 JUL 147.40 – 1.30

JUL 1886 – 21 SEP 149.00 – 1.15

SEP 1908 – 21 DEC 151.05 – 0.85

NOV 1921 – 21 MAR 153.30 – 0.55

Coffee Market Report

May 04 2015

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non Commercial Speculative sector of this market increase their net short sold position within the market by 7.11% during the week of trade leading up to Tuesday 28th. April; to register a net short sold position of 9,734 Lots, this net short sold position which is the equivalent of 2,759,546 bags has most likely been further increased over the period of mixed but overall softer trade that has since followed.

With the month of April passed the Government trade authorities within Indonesia’s main robusta producing island of Sumatra have reported that the islands robusta coffee exports for the month of April were 171,335 bags or 99.63% higher than the same month last year, at a total of 343,312 bags. This improved performance that rising robusta export volumes for the previous three months does not however in terms of the present coffee year, counter the relatively modest export volumes of the last quarter of last year. Therefore the cumulative robusta coffee exports from Sumatra for the first seven months of the present October 2014 to September 2015 coffee year are 516,322 bags or 18.38% lower than the same period in the previous coffee year, at a total of 2,292,368 bags.

All indications are however that with Sumatra forecasting a much improved 20% to perhaps even 25% larger new robusta crop now starting to be harvested, that export volumes shall steadily increase in the coming months and shall by the third quarter of this year see Sumatran robusta coffee exports start to catch up and even overtake the cumulative coffee year volumes of the previous coffee year. Albeit that with the prevailing soft nature of the reference prices of the London robusta coffee market, there can be expected to be some degree of internal market price resistance that might retard the volumes of new crop export sales.

The big question remains how the competition to sell Asian robusta coffees might develop in terms of robusta exports from Indonesia, as with internal market price resistance within Vietnam having resulted in large unsold stocks of robusta coffees from the last October 2014 to January 2015 harvest, these stocks still have to come to the market. One might suspect that with the next and so far weather conditions permitting larger new crop due to start being harvested in only six months’ time, that normal summer rainfall conditions would start to impact upon internal market sentiment within Vietnam and start to inspire farmers and internal traders to lose some hope and start to liquidate stocks. Thus with light showers already starting over the main robusta coffee districts within Vietnam, one might expect some stiff competition starting to impact between exporters in Vietnam and Indonesia as they chase mostly calm and restrained consumer market industry buyers for new business.

But this factor might not impact upon the presently relatively firm asking robusta coffee export differentials relative to the London market that the internal markets dictate for the exporters in both countries for a month or two, as it shall take time for the security of a good rain season in Vietnam and for new crop stocks to start building in Indonesia to start to have their influence. Thus one might expect to see little better than slow and steady Asian robusta coffee export volumes for the next month or two, with the lack of export competition from a smaller new conilon robusta coffee crop in Brazil assisting to maintain some degree of price and differential buoyancy for these Asian coffees.

The arbitrage between the markets has narrowed on Friday to register this at 53.82 usc/Lb., while this equates to an attractive 40.10% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,794 bags on Friday; to register these stocks at 2,242,739 bags. There was meanwhile a larger in volume 5,190 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,450 bags.

The commodity markets lacked participation from the majority of the European market players on Friday, as the May Day workers holiday was broadly celebrated. Nevertheless with the U.S.A. and Great Britain hosting the majority of the markets at work, there was a full day of trade and within some markets and including the coffee markets, surprisingly good volumes traded. The overall macro commodity index was however negative for the day, in line with renewed speculation for an interest rate hike in the U.S.A. and the resulting renewed muscle for the U.S. dollar. The Natural Gas, Copper and Orange Juice markets had a day of buoyancy, while the Oil, Sugar, Cocoa, Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.19% lower to see this Index registered at 428.00. The day starts with the U.S. Dollar tending softer in early trade and selling at 1.516 to Sterling and 1.121 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 64.50 per barrel.

The London and New York markets started the day on Friday on a near to steady note and with the New York market tending steady, but with both markets moving quietly into the afternoon trade on a modestly softer track. There was however negative pressure coming to the fore within the New York market once the North Americans came to work and the dollar started to gain ground and with volumes picking up and sell stops being triggered, to accentuate the unexpected losses, while the London market followed suit to extend its losses. There was however a degree of support coming to the fore at the lows and the markets continued on a relatively steady track, through to the close. The London market which shall be closed today for the May bank holiday ended the day on a softer note and with 76.9% of the losses of the day intact, while the New York market ended the day on a soft note and with 65.7% of the earlier losses of the day intact. With the London market closed for the day today and the New York market due to trade solo for the day and against a seemingly more settled value for the dollar, one might expect to see some degree of buoyancy for early trade within the New York market against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1732 – 20 MAY 133.45 – 3.10

JUL 1772 – 20 JUL 134.20 – 3.25

SEP 1796 – 22 SEP 136.90 – 3.25

NOV 1813 – 22 DEC 140.80 – 3.25

JAN 1830 – 22 MAR 144.60 – 3.00

MAR 1850 – 21 MAY 146.85 – 3.00

MAY 1868 – 21 JUL 148.70 – 2.80

JUL 1886 – 21 SEP 150.15 – 2.65

SEP 1908 – 21 DEC 151.90 – 2.50

NOV 1921 – 21 MAR 153.85 – 2.45

Coffee Market Report

May 01 2015

The International Coffee Organisation has reported that global coffee exports for the month of March were 270,000 bags or 2.63% lower than the same month last year, at a total of 9.98 million bags. This contributing to the cumulative global coffee exports for the first six months of the present October 2014 to September 2015 coffee year to be 3.3% lower than the same period in the previous coffee year, at a total of 53.08 million bags.

This decline in global exports is in terms of the prevailing price resistance that is being shown within most of the producer blocs is a relatively modest dip, while the declining exports are coming into well stocked consumer markets. Therefore with some degree of modest consumption growth being experienced within the North American market as against relatively flat overall consumption figures from the European market, one would expect only a relatively modest dip within the main consumer market stock levels.

The Brazil government held its first successful auction of the federal retention stocks of aged arabica coffees yesterday; with the sale of 28,602 bags of these arabica coffees, with these coffees only accounting for 70.1% of the coffees that were offered up in the auction and with the balance of the coffees apparently not attracting prices that matched their reserve price levels. This leaves the government with approximately 1 million bags of federal stocks and one might expect to see more of these auctions that are targeting the price sensitive domestic market, in the coming weeks.

The autumn weather is now starting to impact within the main Brazil coffee districts and while there have been some scattered showers; the chilly dry autumn weather is starting to impact. Likewise and while the new conilon robusta coffee harvest is already picking up pace, the start of the new arabica coffee crop harvest is due to start in a few weeks’ time. This will no doubt bring with it the early hulling outturn results and some more qualified speculation as to the prospects of this new crop during the month of June, but one might expect that some of these reports shall bring with them a degree of market manipulative low outturn percentages.

The Brazil real has meanwhile slipped back in value to above 3 Reais to the U.S. dollar, but this modest weaker currency has not influenced internal market selling activity and for the present, there remains a degree of price resistance on the part of the farmers in terms of their selling activity of there now much depleted stock coffees. Thus one might expect to see Brazil sales and exports start to slow for the next couple of months and until such time as the new crop coffees start to impact upon the market, in increased volumes.

The arbitrage between the markets has narrowed yesterday to register this at 56.17 usc/Lb., while this equates to an attractive 40.87% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 12,423 bags yesterday; to register these stocks at 2,245,533 bags. There was meanwhile a smaller in volume 825 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,640 bags.

The Certified Robusta coffee stocks held against the London market were seen to increase by 53,667 bags or 1.87% in the two weeks of trade leading up to Monday 27th. April; to register these stocks at 2,924,833 bags. The potential growth in these stocks is however being somewhat retarded by the prevailing price resistance within the internal market in Vietnam, which is likewise impacting upon the volumes of new crop exports from the country.

The commodity markets had a mixed day yesterday, with many players within the European markets already closing down for today’s May Day workers day holiday and the long weekend that is not in play, for much of the world. The softer U.S. dollar was however supportive within many markets, albeit that the overall macro commodity index was relatively flat. The Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton and Copper markets had a day of buoyancy, while the New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% lower to see this Index registered at 428.81. The day starts with the U.S. Dollar tending to steady at its softer levels and trading at 1.533 to Sterling and 1.125 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 64.50 per barrel.

The London and New York markets started the day yesterday on a slow and steady note, but with the markets starting to pick up some value into the afternoons trade. This seemingly set a good pre long weekend base for many of the players and both markets started to pick up value as the afternoon progressed, but to see the New York market come under pressure as the afternoon progressed and slip back into negative territory. The London market shrugged off negative pressure and maintained a positive sideways track, while the New York market attracted sell stops to increase its losses but hit a nearby support level and to take a sideways softer track for the rest of the day. The London market ended the day on a positive note and with 57.1% of the gains of the day intact, while the New York market ended the day on a softer note and with 52.5% of the earlier losses of the day intact. This has resulted in a near to steady start for early trade today, but one might not expect with the main producers and many of the consumer markets on holiday today, too much excitement and movement against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1752 + 13 MAY 136.55 – 1.80

JUL 1792 + 16 JUL 137.45 – 1.55

SEP 1818 + 18 SEP 140.15 – 1.65

NOV 1835 + 17 DEC 144.05 – 1.60

JAN 1852 + 17 MAR 147.60 – 1.70

MAR 1871 + 17 MAY 149.85 – 1.65

MAY 1889 + 17 JUL 151.50 – 1.60

JUL 1907 + 17 SEP 152.80 – 1.65

SEP 1929 + 17 DEC 154.40 – 1.65

NOV 1942 + 17 MAR 156.30 – 1.70

Coffee Market Report

April 30 2015

The coffee markets were devoid of fundamental news yesterday, with no striking comments coming from any of the main producer blocs and by nature, confirming that it is business as usual and that there are no threats to medium to long term coffee supply. Albeit that there is no question that there shall be another modest deficit crop this year from Brazil, but one that shall be supported by the carryover stocks coming into this crop, which are foreseen by the market to be sufficient to ensure steady Brazil coffee supply through to the next 2016 crop.

Meanwhile with Brazil aside and the markets seemingly ignoring the constant new Brazil crop forecasts that lean towards the higher and more modest deficit crop factor, there are no concerns over longer term washed arabica coffee supply from Central America, Colombia, Peru, Africa and Asia, as weather has been kind to the coffee farmers and supply is steadily on the increase. But there is nevertheless a wait and see stance in terms of the quality of the new summer rain season for Vietnam, which presuming that this rain season shall be a normal one, is forecasting a larger new crop that is due to be harvested during the last quarter of this year.

Vietnam is focused today on the celebrations related to the fortieth anniversary of the capture of Saigon by the northern forces and the resulting end of the war and the unification of the country, which shall be followed on with tomorrows May Day workers day holiday. This holiday is broadly celebrated and including the majority of the coffee producing countries, albeit that the home of the two leading coffee futures markets in New York and London shall be trading quietly tomorrow. Lacking the participation of not only the majority of the coffee producers but also most of the European countries, who make up the largest consumer bloc and followed by the North American market. Thus it shall be surprising if there is anything better than a relatively thin and lacklustre day for the coffee markets for today, following yesterday’s hesitant and often directionless trade.

The arbitrage between the markets has broadened yesterday to register this at 58.44 usc/Lb., while this equates to an attractive 42.04% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 335 bags yesterday; to register these stocks at 2,257,956 bags. There was meanwhile a larger in volume 1,655 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,465 bags.

These relatively modest and flat certified washed arabica coffee stocks held against the New York market which are dominated by 1,158,724 bags or 51.32% share held by Mexico and the Central American countries along with 330,284 bags or 14.63% Colombian coffees and 397,555 bags or 17.61% Peru coffees, do not really provide any indication of world coffee supply. The lack of growth of these stocks not being related in any way to tight washed arabica coffee supply, but to the continued price resistance within the internal markets of all of the producers, which does not bring new coffees to the market at prices that encourage tendering stocks to the exchange.

One might question though how long the prevailing price resistance shall continue as unless Brazil brings any market supportive news into play and the spring and summer rains for Brazil prove to be good at the end of the third quarter and start of the last quarter of the year and support forecasts for a larger new 2016 crop for Brazil, it is likely that coffee farmers worldwide shall start to lose confidence in the prospects for a market recovery. Thus eliminating any emotive reason to hold back from the market and possibly even more so for the Mexicans and Central Americans who would need to liquidate any remaining coffee stocks, with the start of their new and potentially larger new harvest during the last quarter of the year.

The commodity markets were generally buoyed again yesterday, by the softer nature of the U.S. dollar that has reacted in value to the unexpected modest 0.2% GNP growth figures reported by the U.S.A. for the first quarter of this year. It is however noted that this GNP growth factor was reduced mostly by falling exports during the first quarter of the year and with this decline not only effected by the firm value of the dollar, but by exports reduced by the combination of harsh winter weather and long port strikes that took place at the time. Nevertheless and while it remains uncertain that softer growth is due for the U.S.A. for the second quarter, it is a factor that has increased speculation that there shall not be any short term rising of the U.S. interest rates and thus, the dollar is on a back foot for the present. The Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Silver and Platinum markets had a day of buoyancy, while the Sugar, Orange Juice and Gold markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.76% higher to see this Index registered at 429.55. The day starts with the U.S. Dollar showing some degree of buoyancy against yesterday’s softer levels and trading at 1.541 to Sterling and 1.108 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 64.00 per barrel.

The London market started the day yesterday with follow through buoyancy, while the New York market started off on a softer note and with both market maintaining this mixed track into the quiet and lacklustre afternoon trade. The London market continued to maintain its positive stance and with the New York market clawing its way back up to par and back into modest positive territory, but with the London market tending to falter late in the day. The London market ended the day on a modestly positive note and with only 16.7% of the earlier gains of the day intact, while the New York market ended the day on a likewise modestly positive note and with 56.2% of the earlier in the day’s gains intact. This close does little to inspire and one might think that with the dollar tending to steady that the markets are due for little better than a steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1739 + 2 MAY 138.35 + 0.20

JUL 1776 + 4 JUL 139.00 + 0.45

SEP 1800 + 3 SEP 141.80 + 0.45

NOV 1818 + 3 DEC 145.65 + 0.35

JAN 1835 + 3 MAR 149.30 + 0.30

MAR 1854 + 2 MAY 151.50 + 0.35

MAY 1872 + 2 JUL 153.10 + 0.35

JUL 1890 + 2 SEP 154.45 + 0.35

SEP 1912 + 2 DEC 156.05 + 0.25

NOV 1925 + 2 MAR 158.00 + 0.25

Coffee Market Report

April 29 2015

The government in El Salvador following the examples of Colombia and Honduras, has announced its intent to finance the distribution of 15 million new higher yielding and disease resistant varieties of coffee seedlings to its coffee farmers over the coming year, with the intent that these trees shall replace aged coffee trees within approximately 30% of the country’s coffee farms. Similar farm renovation programs that have taken place within Colombia and Honduras over the past few years have most definitely, and has been proved by the rising production levels for both countries, proven this to be a very worthwhile concept of farm support.

It shall however take at least three years before the results of the program in El Salvador can be quantified, but one might think that it shall add significantly to the El Salvador coffee export volumes by the 2020/2021 coffee year. While similar ongoing programs within Honduras the leading producer within the Central American producer bloc, are likely to see the countries production and exports continue to rise in the coming years.

The government in the Cameroon has announced that with the assistance of EU aid, it plans to invest the equivalent of 21 million US dollars in a program to produce and distribute coffee and cocoa seedlings and targeting 425,000 farmers for this aid. The focus of the project in terms of coffee is to inspire young farmers to the coffee and cocoa industry and in terms of coffee where there has already been some recovery and is presently close to 600,000 bags per annum, to try to recover towards 1.65 million bags of coffee per annum.

This target of in excess of 1.5 million bags of coffee is attracting sceptical comment from the existing coffee farmers, but the country did produce a relatively impressive 2.4 million bag coffee crop twenty five years ago. Thus one might comment that if enough effort and finance were to be put into the inspiration of the resuscitation of the Cameroon coffee industry, it is not an impossible target. Albeit in terms of the negative aspects of variable and often soft prices it is a difficult mission and is most probably, one would need to view it as a relatively long term target.

There was no comment emanating from Brazil yesterday to the latest new crop forecasts that have been coming to the market, which have contributed to the dampening of speculative spirits with the market for early this week. But with the slightly softer U.S. dollar in play and some opportunist industry support coming into play, the markets did manage to steady and maintain some degree of buoyancy at the lower side of the recent trading range.

With the major players in terms of production and including the top four Brazil, Vietnam, Colombia and Indonesia along with some other prominent producers such as India and Mexico taking the Friday 1st. May Labour Day holiday, as shall most of the Western European consumer countries, one might expect to see physical coffee trade starting to slow down for the last two days of this short week for many within the industry. The New York and London markets shall however continue to operate on Friday and one can never determine what the funds might do while the industry is at rest, but this long weekend shall be followed by the delayed long weekend for the London market, which shall close for the UK bank holiday on Monday next week.

The arbitrage between the markets has broadened yesterday to register this at 58.17 usc/Lb., while this equates to an attractive 41.98% price discount for the London robusta coffee market. This arbitrage continues to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,129 bags yesterday; to register these stocks at 2,257,162 bags. There was meanwhile a larger in volume 1,733 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,120 bags.

The commodity markets were mixed yesterday, but with the rising speculation that there shall be no short term raising of U.S. interest rates and the resulting weakening of the U.S. dollar, it assisted for a degree of buoyancy within many markets and further buoyancy for the overall macro commodity index. The Oil, Natural Gas, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Cocoa and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.31% higher to see this Index registered at 426.30. The day starts with the U.S. Dollar steady and trading at 1.535 to Sterling and 1.097 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 62.20 per barrel.

The London and New York markets started the day yesterday on a hesitantly steady to buoyant note and maintained a steady track into the afternoon trade, but while the London market added to its modest gains, the New York market in continued thin and lacklustre trade, slipped back briefly below par and recovered once again into modestly positive territory. Both markets continued through the rest of the on something of a thinly traded sideways track, with the softer U.S. dollar contributing to the support. The London market ended the day on a positive note and with 60% of the gains of the day intact, while the New York market likewise ended the day on an even more positive note and with 93.7% of the earlier gains of the day intact. The steady to positive nature of the close yesterday is perhaps supportive for a degree of confidence and one might expect to see a steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

MAY 1741 + 11 MAY 138.15 + 2.05

JUL 1772 + 12 JUL 138.55 + 1.50

SEP 1797 + 12 SEP 141.35 + 1.55

NOV 1815 + 13 DEC 145.30 + 1.55

JAN 1832 + 13 MAR 149.00 + 1.60

MAR 1852 + 13 MAY 151.15 + 1.70

MAY 1870 + 13 JUL 152.75 + 1.80

JUL 1888 + 13 SEP 154.10 + 1.85

SEP 1910 + 13 DEC 155.80 + 1.90

NOV 1923 + 13 MAR 157.75 + 1.95