Coffee Market Report
| There has been an amendment to the latest Commitment of Traders report from the London robusta coffee market which has seen the Speculative sector of this market increase their net long position within the market by 42.78% over the week of trade leading up to Tuesday 23rd. June; to register a net long of 21,114 Lots on the day. This net long that is the equivalent of 3,519,000 bags has most likely been little changed over the period of mixed but overall sideways trade, which has since followed.
The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of June were 237,357 bags or 46.87% higher than the same month last year, at a total of 743,803 bags. This number contributes to the countries cumulative exports for the first nine months of the present October 2014 to September 2015 coffee year to being 898,728 bags or 24.71% higher than the same month last year, at a total of 4,536,008 bags. This significantly improved performance from Honduras this year reflects not only the larger new crop that the country harvested over the last quarter of last year and the first quarter of this year, but also the comparatively affordable prices that the countries farmers have been demanding for their new crop coffees, relative to the reference prices of the New York market. This assisting to attract consumer market support and to see Honduras and Colombia who have likewise been relatively aggressive sellers, take market share away from the other Central American producers and Mexico, who have been showing various degrees of price resistance to the dictates of the softening New York market. The interesting factor about this cumulative export performance from Honduras of 4,536,008 bags is that it is now only 263,992 bags less than the forecasts from Honduras that they expected to export 4.8 million bags during the present October 2014 to September 2015 coffee year. Thus with forward contracts still to be shipped over the remaining three months of the coffee year, it is looking quite likely that the country shall well exceed the forecast and see exports for the coffee year perhaps top the 5 million bags mark. It is however evident that the country is now well sold, as offers for new business out of Honduras have dried up over the past couple of weeks. There is a cold front entering south east Brazil and bringing colder and wet weather to the main arabica coffee districts that are presently in full harvest, which shall interrupt the harvest activity for a couple of days. However there has been no comment from Brazil that this cold front shall be cold enough to be frost threatening and albeit that it is not an impossible factor and coming in at the traditionally more likely full moon period, there has been no speculative reaction to this news within the coffee markets. The prominent European coffee roaster Mondelez International who had promised the European Competitions Commission that they would shed themselves of their French brand Carte Noire in order to gain approval for the merger with D. E. Master Blenders 1753, have revealed that the sale of Carte Noir is no longer an exclusive negotiation with the Italian company Lavazza. Thus while D. E. Master Blenders 1753 have already sold their mostly Baltic States, Greenland and Iceland distributed brand Merrild to Lavazza to comply with the European Commission’s dictates on competiveness, there are other roasters who are in the pool to take over Carte Noire from Mondelez International. The arbitrage between the markets has broadened yesterday to register this at 48.25 usc/Lb., while this equates to a 37.87% price discount for the London robusta coffee market. This arbitrage remaining relatively to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,793 bags yesterday; to register these stocks at 2,147,452 bags. There was meanwhile a smaller in volume 2,351 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,410 bags. The commodity markets were buoyed in sentiment yesterday with the news of improve employment figures emerging from the U.S.A., while the U.S.A. based markets were rounding off ahead of the long weekend holiday in the U.S.A. which is closed today to take an early day of for their Independence day holiday that is due tomorrow. The Oil, Natural Gas, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybeans and Platinum markets had a day of buoyancy and the Cotton and Silver markets were steady, while the Sugar, Cocoa, London robusta Coffee, Copper and Gold markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.28% higher to see this Index registered at 432.71. The day starts with the U.S. Dollar steady and selling at 1.561 to Sterling and 1.109 to the Euro, while North Sea Oil is steady and is selling at 60.70 per barrel. The London market opened the day yesterday on a predictably softer note, while the New York market started the day with corrective buoyancy, following the previous day’s sell off. The markets continued on this mixed fortunes track into the afternoon trade but with the New York market starting to come under pressure and move back to par and from there on, the New York market and within an environment of thin and erratic trade bounced either side of par as the afternoon progressed, while the London market remained close to and mostly marginally below par. The London market continued to come under late in the day negative pressure and to end the day on a soft note and with 83.9% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with only 29.6% of the earlier gains of the day intact. With the London market due to trade solo today while the New York market takes a long weekend one might expect to see little excitement for this market and perhaps a steady start in thin trade against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1875 + 62 JUL 125.60 + 0.50 |
