Coffee Market Report
| The National Coffee Council in El Salvador has reported that the countries coffee exports for the month of July were 10,561 bags or 52.22% higher than the figure we have for the same month last year, at a total of 30,782 bags. This has contributed to the countries cumulative exports for the first ten months of the present October 2014 to September 2015 coffee year to be 93,099 bags or 19.52% higher than the same period in the previous coffee year, at a total of 570,057 bags.
The Brazilian coffee exporter Terra Forte has reported that with the new crop now over 60% complete that due to the overall smaller bean size from the new arabica crop that they remain with their earlier new crop forecast at 47.3 million bags, which would indicate a possible 5 million deficit supply from this new crop if arabica coffee export demand should remain the same as has been the case over the past twelve months. Added to this they have estimated that the combination of aged government stocks and farm and trade stocks carried over into this new crop is a relatively low 4,656,341 bags. The same report did however anticipate and presumably in terms of the lower conilon robusta crop this year that with the prospects for lower volumes of advantageous exports of conilon robusta coffee exports that have so far this year been filling in for the price resistance being shown from Vietnam, that the overall Brazil coffee exports for the year thought to the next crop, shall be between 27 million and 30 million bags. The former figure would indicate the new crop shall just about match demand, while the latter figure would indicate a modest deficit and one that would deplete the stocks by the time of the new crop next year. It is a report that is modestly market supportive in terms of its indications of tighter Brazil coffee supply in the coming months, but does not indicate a severe shortage for dedicated Brazil arabica coffee consumer buyers through to the next crop. The Climate Prediction Centre of the National Weather Service of the U.S.A. has forecasted yesterday that the prevailing modest El Nino phenomenon with the Pacific Ocean has a 85% chance to continue to the end of the first quarter of next year and perhaps even into early in the second quarter of next year, which is a somewhat positive factor for the next 2016 Brazil crop. The further afield effects of the El Nino in the pacific traditionally brings increased rains to south east Brazil and in this respect, including the eastern conilon robusta coffee districts and all of the main arabica coffee districts, which would indicate the prospects for good flowerings in October and the follow on rains, to set the new crop and to ensure good cherry development for the first quarter of next year. On the short term the improved reference prices of the New York market and the continued weakness of the Brazil Real against the U.S. dollar has over the past days eased to a degree the internal market price resistance for sales of new crop arabica coffees, which has allowed exporters to more easily cover purchases to support their forward sold export commitments. But the issue of the much lower percentage of bolder screen 17 plus beans from this new crop continues to force exporters to pay up for these beans and likewise, for the asking export differentials to remain relatively firm. The weather in the meantime remains dry and with low humidity over south east Brazil, which shall accelerate the progress of the tail end of the new crop, which one would think shall be close to complete by early next month. A factor that shall make it easy for the next official crop report that is due in the middle of next month, but these reports are traditionally conservative and one can expect that this report shall come out with a number that shall most probably only be a market supportive number of close to 45 million bags. The arbitrage between the markets broadened yesterday to register this at 62.63 usc/Lb., while this equates to a 44.54% 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 post no change yesterday; to register these stocks at 2,084,361 bags. There was meanwhile also no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,930 bags. The commodity markets were mixed in trade yesterday, with energy sector once again tending softer for the day. The Coffee, Cocoa, Cotton, Copper, Wheat, Corn, Soybean and Platinum markets having a day of buoyancy, while the Oil, Natural Gas, Sugar, 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 0.23% higher to see this Index registered at 401.54. The day starts with the U.S. Dollar steady and selling at 1.560 to Sterling and 1.114 to the Euro, while North Sea Oil is showing modest buoyancy in early trade and is selling at 48.00 per barrel. The London market somewhat predictably opened the day yesterday on a softer track, while following the previous day’s selloff, the New York market started the day with a degree of buoyancy. Both markets continued on this track into the afternoon trade and with the Americans coming into work and limited volumes of producer price fixation selling over the market, the New York market started to extend its gains, while the London market reduced its earlier losses. The positive nature of the New York market further started to trigger buy stops and another day of significant volume and an additional step up in value, to inspire the London market to likewise add volume and finally moving north of par, to post some modest gains. The markets continued within this trading range for the rest of the day and with the New York market showing a recovery from the previous day’s losses, while the London market struggled to remain above par. The London market continued to end the day on a modestly positive note and with only 23.5% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 84.3% of the gains of the day intact. This close and its positive influence upon the charts is perhaps supportive for positive start for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. SEP 1704 + 5 SEP 137.05 + 5.20 |
