Coffee Market Report
| The Colombian Coffee Growers Federation has reported that the country’s coffee production for the month of June was 296,000 bags or 31.36% higher than the same month in the previous year, at a total of 1,240,000 bags. This higher performance follows many months of rising production levels and the cumulative production for the first nine months of the present October 2014 to September 2015 coffee year is now 723,000 bags or 8.19% higher than the same period in the previous coffee year, at a total of 9,548,000 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 June were 236,000 bags or 31% higher than the same month last year, at a total of 997,000 bags. This improved performance has contributed to the countries cumulative exports for the first nine months of the present coffee year to be 605,000 bags or 7.3% higher than the same period in the previous coffee year, at a total of 8,888,000 bags. All indications are now that with the mid-year Mitaca crop harvest in full progress 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. At the other end of the quality scale albeit something of a subjective comment but realistic in terms of value, the Asian robusta coffee market continues to be dampened in spirit by the continued price resistance that is being experienced within the internal market in Vietnam, which has resulted in relatively firm export prices and hand to mouth buying activity of Vietnam robusta coffees on the part of the main consumer market players. This has assisted to buoy robusta coffee export volumes out of Indonesia and mostly Sumatra, where the country is in the process of harvesting a larger new crop. But the big question is that with Vietnam now only three months away from the start of their potentially larger new crop and some estimating that internal market stocks might well exceed 9 million bags, when the pressure of the pending new crop shall start to influence a more aggressive selling stance within the internal market and a flood of catch up sales starting to impact upon the consumer market and likewise, the certified stocks and the fortunes of the related London robusta coffee market. The prominent European coffee roaster Mondelez International confirmed on Friday that they had completed the scheduled merger with D. E. Master Blenders 1753 and to see the merged company, now flying under the banner of Jacobs Douwe Egberts. There does however remain the issue of the sale of the Carte Noir brand that has to be completed, so as to satisfy the dictates of the European Competitions Commission and with Lavazza now joined in these negotiations by competitive bids, this might still take a little time to conclude. The arbitrage between the markets has narrowed on Friday to register this at 48.11 usc/Lb., while this equates to a 37.76% 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 on Thursday; 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 with the dominant U.S.A. markets on a long weekend Independence Day holiday on Friday mostly closed, are not a factor to report today. It is however difficult to read what influence there might be for the markets today, while many players are distracted by the uncertain economic issues that come with the news of the Greek referendum that has very clearly rejected the austerity program dictates of the European Union. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets remains unchanged: to see this Index registered at 432.71. The day starts with the U.S. Dollar showing a degree of buoyancy and selling at 1.559 to Sterling and 1.107 to the Euro, while North Sea Oil is tending softer in early trade and is selling at 58.20 per barrel. The London market opened the day on Friday and looking to a day of trading solo while the New York market takes its Independence Day holiday, on a quiet and softer note. The market maintained this thinly traded soft stance into the afternoon’s trade, but to start to recover as the afternoon progressed and to head back to par. The market continued to end the day and with trade remaining thin and lacklustre, on a modestly positive note and with 37.5% of the earlier gains of the day intact. This close provides little in the way of guidance for sentiment for trade today, but one might expect to see little better than a cautiously near to steady start for the markets against the closing levels on Friday in the London market and on Thursday in the New York market, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1853 – 22 JUL 125.60 + 0.50 |
