The preliminary export figures for the month of June from Brazil have been announced and with coffee exports for the month reported to have been 235,905 bags or 9% lower than the same month last year, at a total of 2.386,264 bags. This modest dip not really seen to be that significant as it most probably reflects some degree of consumer market price resistance to the relatively higher differentials that have prevailed over the recent months, which came with the internal market arabica coffee farmer’s price resistance to the dictates of the falling value of the reference prices of the New York market.

One might comment that with the general perspective within the consumer markets and within most of the private trade in Brazil that the new crop that is now heading towards the peak harvest period for the arabica coffees later this month that the overall new crop shall be in excess of 51 million bags, the consumer market buyers are holding back for more aggressive selling and potentially softer export differentials to increase their volumes of Brazil arabica coffee purchases. Meanwhile the majority of buyers within the main northern hemisphere consumer markets are tending to rather concentrate upon the summer holidays, while they await the potential for more aggressive selling of producer stocks post the holiday season.

With one of the leading coffee companies in the U.S.A. J. M. Smucker announcing that it is going to reduce the prices for most of their Folgers and Dunkin’ Donuts branded coffees by 6%, it contributed to a degree of bearishness to the market yesterday. This move by J. M. Smucker is undoubtedly going to be followed by the other major industry players, as they bid to retain their market share within this competitive market. The inference being that if the wholesale prices for coffee are lower, it limits how much roasters shall be prepared to pay up for green coffee stocks.

An interesting report is that China is going to export containers of coffee from the south east province of Yunnan to Europe by train that shall transit from China via Kazakhstan, Russia, Belarus, Poland and Germany, on its way to ETA Rotterdam. This estimated fifteen day trip that is faster than the longer route by sea is taking 34,167 bags of Chinese arabica coffee and is the start of a targeted 400,000 bags of coffee, which shall be exported to Europe this year in this manner. The same report and with the steady expansion of coffee production in Yunnan in progress, has ambitiously forecasted that following last year’s coffee export performance of 1.12 million bags, that they foresee exports increasing to over 2 million bags per annum in the coming year or two.

The arbitrage between the markets has narrowed yesterday to register this at 46.67 usc/Lb., while this equates to a 36.75% price discount for the London robusta coffee market. This arbitrage now becoming less attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen again 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 increase by 1,137 bags yesterday; to register these stocks at 2,151,245 bags. There was meanwhile a larger in volume 2,264 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,761 bags.

The commodity markets remained mixed but with many coming under some degree of pressure, from the negative influences of a firming U.S. dollar. The Cocoa, Copper, Orange Juice and Platinum markets had a day of buoyancy and the Silver market was steady, while the Oil, Natural Gas, Sugar, Coffee, Cotton, Wheat, Corn, Soybean and Gold markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.45% lower to see this Index registered at 431.49. The day starts with the U.S. Dollar steady and selling at 1.561 to Sterling and 1.068 to the Euro, while North Sea Oil is steady and is selling at 60.90 per barrel.

The London market opened the day yesterday on a near to steady note, while the New York market started the day taking an immediate softer track and with both markets heading into the afternoon maintaining a steady stance for the London market and a softer track for the New York market. As the afternoon progressed the New York market lost some more weight and seemingly had some influence upon the London market, which drifted back into modest negative territory. The New York market came under further pressure as the afternoon progressed and with firmer U.S. dollar adding to its demise and with fund sell stops being triggered to accentuate the downside track, which was followed by a further but much less aggressive softening for the London market. The London market continued to end the day on a soft note but having recovered 55.2% of the earlier losses of the day by the close, while the New York market ended the day on a very soft note and with 95.6% of the earlier losses of the day intact. This dismal close for the New York market is most likely to inspire a soft opening for the London market but perhaps a degree of corrective buoyancy for the New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.

JUL 1813 – 72                               JUL   125.10 – 5.55
SEP 1771 – 13                               SEP   127.00 – 5.40
NOV 1780 – 11                            DEC   130.75 – 5.25
JAN 1791 – 11                              MAR 134.40 – 5.20
MAR 1808 – 8                              MAY 136.60 – 5.15
MAY 1828 – 5                               JUL  138.50 – 5.10
JUL 1847 – 5                                 SEP   140.25 – 5.00
SEP 1866 – 5                                DEC   142.75 – 4.90
NOV 1885 – 5                              MAR  145.15 – 4.80
JAN 1908 – 5                               MAY  146.70 – 4.65