Coffee Market Report
The Colombian Coffee Growers Federation has reported that the country’s coffee production for the month of August was 113,000 bags or 9.82% higher than the same month in the previous year, at a total of 1,264,000 bags. This higher performance follows many months of rising production levels and the cumulative production for the first eleven months of the present October 2014 to September 2015 coffee year is now 1,063,000 bags or 9.48% higher than the same period in the previous coffee year, at a total of 12,275,000 bags. Thus with the tail end of the mid-year Mitaca crop coming to the market and production over September likely to be close to 1 million bags, Colombia is on track for the present coffee year to register production of close to 13 million 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 August were 206,000 bags or 23.17% higher than the same month last year, at a total of 1,095,000 bags. This improved performance has contributed to the countries cumulative exports for the first eleven months of the present coffee year to be 1,064,000 bags or 10.50% higher than the same period in the previous coffee year, at a total of 11,198,000 bags. With Colombia a relatively ready and steady competitive seller of their fine coffees and the present October 2014 to September 2015 coffee year with only one month to go, likely that exports for this present coffee year will get close to 12 million bags.
There is news of rain meanwhile in Brazil and reports that the southern areas and into Sao Paulo have seen good downpours already, while there are only limited reports of showers in Minas Gerais and the main coffee growing areas thus far. This within the environment of the tail end of the current harvest is that is being wound up and the Brazil rain season due to start within the next few weeks, to trigger flowerings towards the development of next year’s new crop. In this respect and with a mild El Nino phenomenon presently in play within the Pacific ocean and anticipated to bring increased rainfall for south east Brazil, there is presently little concern and that the new Brazil spring and summer rain season could follow a more regular rainfall pattern for the coming season and potentially fuel a large new crop of perhaps in excess of 60 million bags for next year.
The arbitrage between the markets widened yesterday to register this at 48.79 usc/Lb., while this equates to a 40.32% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, even in relation to the prevailing softer market reference prices.
The Certified washed Arabica coffee stocks held against the New York exchange registered a decrease of 10,220 bags yesterday; to see these stocks at 2,065,962 bags. The number of bags pending grading to the exchange posted an increase at 11,040 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 36,143 bags.
It was a more positive day in the commodity markets yesterday, and the U.S.A. markets open for the first day of trade for the week. The prospect for additional stimulus measures to be made in China added buoyancy to the day, to overshadow for the moment the discussions around a prospective interest rate hike and the ongoing speculation around this topic, with a softer US Dollar on the day. It was a firmer day for the Oil markets, Gold, Silver, Platinum, Palladium and Copper markets, Cocoa, Coffee, Cotton, Corn, Wheat, Soybean markets similarly firm, with Sugar and Orange Juice in negative territory on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.61% lower to see this Index registered at 397.69 yesterday. The day starts with the U.S. Dollar at 1.537 to Sterling and 1.115 to the Euro, while North Sea Oil is tending firmer in early trade and is selling at 48.89 per barrel.
The London and New York markets started the day yesterday on a relatively slow and steady note and with the New York market experiencing some modest buoyancy, with London following a similar trend in a limited volume morning. The momentary higher levels touched soon attracted sellers back to the floor however and the day, while positive continued near to unchanged in mid-session, to briefly touch negative trade in New York. The latter days’ reaction within the macro environment in the markets of a softer US Dollar spilled into the coffee markets, with a firmer Brazil Real which at one point moved back to 3.7962 to the US Dollar to stave off seller pressure from this producer. London remained buoyant within a narrow range and New York bounced back into positive territory in response in what was overall a relatively restricted trading range and limited volume day. Both markets finished the day with gains intact and in London, near to the days’ high, while a close set in New York in the middle of the days’ trading range, and in positive territory, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 1586 + 11 SEP 117.70 + 1.85
NOV 1592 + 11 DEC 121.00 + 1.85
JAN 1607 + 12 MAR 124.45 + 1.85
MAR 1626 + 13 MAY 126.70 + 1.80
MAY 1648 + 14 JUL 128.80 + 1.75
JUL 1668 + 14 SEP 130.75 + 1.75
SEP 1689 + 15 DEC 133.50 + 1.65
NOV 1710 + 15 MAR 136.05 + 1.40
JAN 1730 + 15 MAY 137.75 + 1.15
MAR 1752 + 15 JUL 139.50 + 1.05
