MARKET REPORT 8 April 2015

During this same week of trade the Non Commercial Speculative sector of the market increase their net short sold position within the market by 6.8%, to register a net short of position of 14,275 Lots. This net short sold position which is the equivalent of 4,046,899 bags has most likely been reduced over the period of mixed but overall more positive trade that has since followed and likewise, that of the Managed Money fund sector of the market.

The prevailing tight price resistance internal market in Vietnam where farmers and internal traders are holding back for higher value for their substantial stocks of new crop robusta coffee than what is being dictated by the reference prices of the London market, has traders predicting that the April export volumes might be from 15% to even as much as 53% lower than the exports last month, with estimates that vary between exports of 1 million to 1.83 million bags for the month. There is however a perception on the part of many traders that no matter how good the finance facilities that are presently available to the farmers, that there has to be a break at some time in the not too distant future, which shall see the internal market conditions become somewhat easier.

In this respect with early spring and summer rains having fallen within many of the main coffee districts and contrary to earlier state forecasts for dry weather into the middle of next month, that this might suppress the fears of drought. This being a factor that would be somewhat supportive for the many forecasts for a large new crop for the end of the year and by nature, might encourage farmers to become more willing sellers of their new crop stocks.

The new Brazil conilon robusta coffee crop has started to be harvested and is expected to be followed later on in May by the start of the new arabica coffee crop, with the conilon harvest from the farms within the state of Espirito Santo foreseen to be significantly lower due to the extended spell of dry weather during January and February this year. However with the conilon robusta coffee harvest within the North West state of Rondônia expected to fare much better.

A serious fire within the fuel storage depot in the leading Brazil port of Santos was in its sixth day yesterday, with the activities to counter the fire and to clean up where the fires have been contained, restricting many of the access roads to the port. This is causing delays to many of the deliveries of commodities to the port and with the exports of soybeans and sugar having been highlighted to be particularly affected, but it is not clear as of yet how much it might disrupt scheduled coffee exports.

The arbitrage between the markets has narrowed yesterday to register this at 61.71 usc/Lb., while this equates to a now less attractive 42.60% 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 2,840 bags yesterday; to register these stocks at 2,294,709 bags. There was meanwhile a larger in volume 9,415 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,494 bags.

The commodity markets saw many markets once again encounter the hurdle of a firming U.S. dollar yesterday, but with mixed fortunes within the markets the overall macro commodity index did nevertheless retain some buoyancy for the day. The Oil, Natural Gas, Sugar, London robusta Coffee, Cotton, Copper, Wheat and Platinum markets had a day of buoyancy, while the Cocoa, New York arabica Coffee, Corn, Soybean, 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 0.04% higher; to see this Index registered at 427.08. The day starts with the U.S. Dollar tending steady and trading at 1.484 to Sterling and 1.085 to the Euro, while North Sea Oil is steady in early trade and is selling at 57.25 per barrel.

The London market returned from a very long weekend Easter holiday and predictably opened with catch up buoyancy yesterday, while the New York market had a slightly softer start to the day. This remained the track into the afternoon, with the London market maintaining its new found muscle, while the New York market remained below par. As the afternoon progressed and with the U.S. dollar showing some renewed muscle the New York market attracted further selling pressure and moved into a steeper downside track, while the London market maintained a sideways track along its positive platform. The London market continued to end the day on a positive note and with 80.6% of the gains of the day intact, while the New York market ended the day on a negative note and with 84.2% of the losses of the day intact. The inability of the New York market to hold on to its six week high recovery of the previous day does little to inspire and one might expect to see at best a steady start for early trade today against the prices set yesterday, as follows: