MARKET REPORT 7 April 2015

The latest Commitment of Traders report from the London robusta coffee has reported that the more speculative Managed Money sector of this market decreased their net long position within this market by 1.77% in the week of trade leading up to Tuesday 31st. March, to see this long position registered at 11,362 Lots, on the day. This speculative net long position within the London market which is the equivalent of a relatively modest 1,893,667 bags has most likely been little changed, over the period of mixed but overall more positive trade that has since followed.

The National Coffee Institute of Honduras has reported that the countries coffee exports for the month of March were 285,736 bags or 46.42% higher than the same month last year, at a total of 901,311 bags. This positive performance which follows the preceding positive months of exports contributes to the countries cumulative exports for the first six months of the present October 2014 to September 2015 coffee year to be 710,707 bags or 35.88% higher than the same period in the previous coffee year, at a total of 2,691,670 bags.

This cumulative coffee export figure from Honduras is based on the month by month export figures reported over the past six months is marginally higher than the National Coffee Institute’s report, which talks in terms of a marginally more modest cumulative figure of 2.56 million bags. This is however nevertheless a very positive figure and illustrates both the fact that Honduras has just completed a much better new crop and that the farmers within the countries internal market have not been showing as much price resistance towards the negative nature of the reference prices of the New York market this year as has been experienced within their neighbouring Central American countries, which has assisted to buoy buying interest from the consumer market industries.

The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of March was 28,000 bags or 3.38% lower than the same month last year, at a total of 800,000 bags. This does however follow a string of positive months and therefore contributes to the countries cumulative production for the first six months of the present October 2014 to September 2015 coffee year to be 220,000 bags or 3.67% higher than the same period in the previous coffee year, a total of 6,219,000 bags.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of March were 156,000 bags or 16.81% lower than the same month last year, at a total of 772,000 bags. This dip in March exports being related more to the internal market transport strike during last month, which has disrupted the flow of exports for the month and contributed towards many late shipments. This dip in exports does however follow the preceding months of good volumes of exports and contributes to the countries cumulative exports for the first six months of the present October 2014 to September 2015 coffee year to still being 94,000 bags or 1.6% higher than the same period in the previous coffee year, at a total of 5,958,000 bags.

The arbitrage between the markets has broadened yesterday to register this at 67.02 usc/Lb., while this equates to a now less attractive 45.03% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices. Especially so as the price resistance within the majority of arabica producer countries, continues to buoy asking export differentials for new business.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 685 bags yesterday; to register these stocks at 2,291,869 bags. There was meanwhile a larger in volume 1,266 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 49,909 bags.

Some of the European based commodity markets were on holiday yesterday for Easter Monday, but many of the U.S. markets gained some support from the weaker nature of the U.S. dollar, which seemingly reacted to the slower growth in U.S. employment in March. The Oil, Natural Gas, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the Platinum market was steady, while the Sugar, Copper and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.63% higher; to see this Index registered at 426.91. The day starts with the softer U.S. Dollar tending steady and trading at 1.491 to Sterling and 1.094 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at 56.95 per barrel.

The London market was closed for the Easter holiday yesterday to see the New York market trade solo and start the day marginally softer, but to soon recover into positive territory. Meanwhile with the weaker dollar relative to the Brazil Real inspiring confidence and volumes that were mostly related to U.S.A. funds surprisingly building up during the afternoon, the market started to trigger buy stops and to accelerate the gains. The market did however hit a ceiling and attracted some selling pressure at the highs of what turned out to be a relatively high volume day’s trade and closed the day on a positive note, with 83.6% of the gains of the day intact. This positive close is perhaps supportive for some catch up buoyancy for the London market and for a steady start for the New York market for early trade today against the prices set in London on Thursday last week and New York yesterday, as follows: