The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks increased by 66,627 bags or 1.06% during the month of January, to register these stocks at 6,322,767 bags at the end of the month. These stocks do not of course include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of 560,000 bags per week, would conservatively have been at least 1.1 million bags.

Therefore, if one is to consider the additional unreported stocks and look to end November stocks in North America of approximately 7.42 million bags, it would have equated to something in the order of at least 13 weeks of roasting activity. This number would look to be a very safe reserve, in terms of the steady flow of new crop arabica coffees from Brazil, Colombia, Central America and Vietnam that are now coming to the market.

With the Brazil, Agricultural Ministry already supportive for the granting of a concession to allow the countries domestic roasting industry and in particular the soluble coffee producers to import up to 1 million bags of robusta coffees and awaiting the approval of the Foreign Trade Chamber, there has been further support for the approval of imports coming to the market yesterday. In this respect the technical body linked to the Brazil Foreign Trade Chamber CAMEX is reported to be supportive of the importation of robusta coffees, so as to supplement the deficit supply of Brazil conilon robusta coffees and it is looking to be ever more likely that the approval shall be confirmed by early next week.

The question might now be and presuming that the approval for the importation of 1 million bags of robusta coffees and at a minimal import duty of 2% is approved, if this shall open the door for Brazils domestic roasting industry to look to further volumes of imports of robusta coffees. Presently and following the reports of dismal rainfall for most of the present October to April rainfall season for the state of Espiritu Santo that is the main conilon robusta growing state of the country, most forecasts indicate that this year’s conilon robusta crop shall be little better than last year’s crop.

Thus, one must presume that should the approval for importation of robusta coffees to supplement the dismal 2016 conilon harvest be approved, that it shall set a precedent and make it easier for further robusta import concessions to be granted. If this proves to be the case and with global robusta coffee supply already in deficit and contributing to only matching supply and demand global coffee supply for the present and a small new overall Brazil new crop being forecasted, it is likely to be something of a supportive factor for the medium to longer term market prices.

The May to May contracts arbitrage between the London and New York markets broadened yesterday, to register this at 49.52 usc/Lb., while this equates to 33.7% price discount for the London robusta coffee market. This relatively narrow arbitrage is now becoming less of an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday; to register these stocks at 1,317,067 bags. There were meanwhile 2,605 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 44,022 bags.

The commodity markets were mixed in trade yesterday but despite the settling back of the influential oil markets with most markets tending positive, the overall macro commodity index took a positive track for the day. The Natural Gas, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil and Cotton markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.69% higher, to see this Index registered at 432.61. The day starts with the U.S. Dollar tending softer and trading at 1.247 to Sterling and at 1.062 to the Euro, while North Sea Oil is steady and is selling at $ 54.40 per barrel.

The London and New York markets started the day yesterday on a near to steady note and with both markets trading mostly marginally south of par into the early afternoon trade, which was a track that continued for a couple of more hours. However, as the afternoon progressed there was a recovery triggered within both markets and a move up into positive territory which created some short-term excitement for the London market, where buy stops were triggered to accentuate the gains. The London market did however soon attract selling pressure and both markets took a modest positive track, through to the close. The London market ended the day on a positive note and with 62.5% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 66.7% of the earlier gains of the day intact. This positive close albeit relatively modest might nevertheless prove to be mildly supportive for confidence and one might think that there shall be a follow through steady start for early trade today against the prices set yesterday, as follows:

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

MAR 2116 + 20                                            MAR 144.50 + 0.85
MAY 2148 + 20                                            MAY 146.95 + 1.00
JUL 2158 + 15                                                JUL 149.20 + 0.95
SEP 2166 + 14                                                SEP 151.50 + 1.05
NOV 2170 + 13                                             DEC 154.65 + 1.10
JAN 2175 + 13                                             MAR 157.60 + 1.10
MAR 2178 + 14                                            MAY 159.30 + 1.10
MAY 2177 + 14                                              JUL 160.85 + 1.10
JUL 2177 + 14                                                SEP 162.30 + 1.05
SEP 2186 + 14                                               DEC 164.50 + 1.05