Coffee Market Report
| 5th. August, 2015. With the month of July passed the National Coffee Institute of Costa Rica has reported that the country’s coffee exports for the month of July were 15,058 bags or 14.02% lower than the same month last year, at a total of 97,214 bags. This lower performance follows relatively slow exports for most of the preceding months and therefore, the cumulative coffee exports for the first ten months of the present October 2014 to September 2015 coffee year are approximately 101,453 bags or 8.77% lower than the same period in the previous coffee year, at a total of approximately 1,054,947. We note the comment approximately, as there would appear to have been some adjustments made to the volumes of some of the earlier monthly export reports. The Finance Ministry in Colombia have reported that the country expects to produce 13 million bags of coffee this year, which is a figure that very much agrees with the production reports for the year so far and likewise, with the estimates from many local industry players. This includes the Colombian Coffee Growers Federation, which had earlier forecasted production for the year at between 12.5 and 13 million bags. Noting that coffee production for the first six months of this year was already 6,246,000 bags and to the fore, there is still the new main crop due to be harvested over the last quarter of this year. Meanwhile the Finance Ministry in Colombia have noted that while production levels are much improved over the past couple of years and are likely to increase further, they do not have confidence in the prices and are budgeting for the industry on the basis of the reference prices of the New York market at around 120.00 usc/Lb. Noting that while this is a relatively dismal price, it has been somewhat countered by the steady devaluation of the Colombian Peso which at the start of the year was trading at 2373 Peso to the U.S. dollar and is today, trading at 2,924 to the dollar and thus adding 22.2% more Pesos to every dollar of coffee sales income. The Brazilian Coffee Research Foundation Procafe have reported yesterday that contrary to the recent host of new crop forecasts for the presently peaking new Brazil crop that peg this crop well in excess of 50 million bags, that they are of the opinion that the new crop shall rather be much smaller than these forecasts and that the true figure shall only be evident by the end of September. They support this this this pessimistic view on the size of the new crop on the basis of the apparent damage caused by the dry weather in the beginning of the year, which has sharply reduced the bold bean percentage and by nature the relative weight, which is coming out of the harvested arabica coffee cherries. They note within this report that in their opinion that so far only 8% to 12% of the beans are above Screen 17 in size, as opposed to the more normal 20% to 30% bold bean factor. Meanwhile the weather conditions are forecasted mostly clear and dry for the coming week and perfect conditions for the continuing harvest of the new Brazil arabica coffee crop, which shall bring in large volumes of new crop coffees and should by the end of this month, provide a better indication as to the overall bold bean percentages due from this crop. In this respect one might suggest that perhaps the later harvested cherries that have taken longer to reach harvest maturity might well prove to provide an improved percentage of bolder bean coffee from these cherries, but perhaps not sufficient in volume to provide a good percentage of bold beans from the overall new arabica coffee crop, which shall result in higher than normal price premiums for the coming year for screen 17 plus Brazil arabica coffees. Internal market trade in Vietnam remains slow and with exporters having to pay up to secure coffees to cover their short sold positions, but with such sales in hand the exporters are suggesting that exports of mostly robusta coffees for the month of August shall be between 1.67 million and 2 million bags. While in the meantime there are estimates of farmers and internal market traders still holding in excess of 7 million bags of past crop stocks and with exporter stocks added approximately 9 million bags of stock within the country, which with the new crop harvest due to start in less than ten weeks’ time, is an excessive number and has to be negative for the longer term fortunes of the London robusta coffee market. The arbitrage between the markets narrowed yesterday to register this at 52.85 usc/Lb., while this equates to a 41.27% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive 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 1,125 bags yesterday; to register these stocks at 2,101,560 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,680 bags. The commodity markets showed more buoyancy yesterday and with the overall macro commodity index taking a positive track, to assist to inspire muted confidence in the markets for the day. The Oil, Natural Gas, Sugar, Coffee, Copper, Orange Juice, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Cocoa, Cotton, Wheat and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.59% higher to see this Index registered at 400.79. The day starts with the U.S. Dollar showing renewed muscle and selling at 1.554 to Sterling and 1.087 to the Euro, while North Sea Oil is steady in early trade and is selling at 49.40 per barrel. The London and New York markets opened the day yesterday with modest buoyancy and maintained this stance and with added value into the afternoon trade, to shrug off a short term downside pressure within both markets and to maintain a steady positive track for the rest of the day. The London market ended the day on a positive note and with 65% of the gains of the day intact, while the New York market likewise ended the day on a positive note and with 41.9% of the earlier gains of the day intact. LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. SEP 1639 + 14 SEP 124.90 + 0.95 |
