The well-respected Brazilian analysts Safras & Mercado and with the new conilon robusta coffee crop in full harvest and the new arabica coffee crop cherries getting close to maturity, have forecasted that this new crop shall be 51.1 million bags. This forecast is based upon what they foresee to be 6.3 million bags or 13.72% lower new arabica coffee crop of 39.6 million bags and 1.9 million bags or 19.79% higher new conilon robusta coffee crop of 11.5 million bags.

This report is not unexpected as over the past few months there has been no noise out of Brazil, in terms of new crop scare stories and by the very nature of the silence, the indication that the anticipated smaller overall new Brazil crop would not be as dramatically lower as many had been forecasting late last year and early this year. This report does nevertheless indicate that there shall be a tightening of overall global arabica coffee supply for the next twelve months, but this with the prevailing good volumes of consumer arabica coffee stocks, is not really too much of a threat to medium to longer term consumer market arabica coffee supply.

While with the report tending to confirm some other recent reports that the new conilon robusta coffee crop shall be larger than many had been forecasting early this year and against dry weather for the state of Espirito Santo, it tends to confirm that there is now some relief due for the domestic roasting industry in Brazil. Albeit that even with an improved new conilon robusta coffee crop, that it shall only really get close to the demands of the domestic roasting industry in Brazil and does not indicate much potential for Brazil to export significant volumes of conilon coffee for the next twelve months.

One might speculate thought that with a larger new conilon robusta coffee crop due to come into play and with the domestic roasting industry in Brazil having competed over the last twelve months for the lower quality arabica coffees, that there is likely to be less demand from the soluble coffee roasters for these coffees for the next twelve months. Thus, allowing for more of these coffees to be utilised by the countries roast and ground domestic roasters and by nature, lessening the impact of a smaller arabica coffee crop upon the arabica coffees that shall be available for export through to next year’s potentially larger 2018 crop.

Reports from Colombia indicate that many coffee districts have been receiving somewhat unseasonal rains and that this is impacting upon the middle year Mitaca crop, which is being delayed by four to six weeks within these districts. So far, these reports do not really indicate any potential significant dip in medium term production volumes, but more so a delay in the impact of the Mitaca crop volumes. While one would suggest that with good volumes of Central American coffees still coming to the market, that the delay shall not cause much concern over medium term fine washed arabica coffee supply.

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 45.30 usc/Lb., while this equates to 33.15% price discount for the London robusta coffee market. This still relatively low arbitrage, remains not such an attractive factor for the many price sensitive roast and ground 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 increase by 5,960 bags yesterday; to register these stocks at 1,420,061 bags. There were meanwhile a larger in number 6,417 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,837 bags.

The commodity markets were mixed in trade yesterday but with the influential Oil markets posting a recovery, it assisted to buoy the fortunes of the overall macro commodity index for the day. The Oil, Natural Gas, Sugar, New York arabica Coffee, Wheat, Corn, Gold and Silver markets had a day of buoyancy, while the Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice and Soybean markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.58% higher, to see this Index registered at 406.23. The day starts with the U.S. Dollar steady and trading at 1.294 to Sterling and at 1.087 to the Euro, while North Sea Oil is steady and is selling at $ 48.50 per barrel.

The London market ended the day on a marginally negative note, while the New York market started the day trading around par. The New York market did however start to pick up support and the markets entered the early afternoon trade with the London market remaining south of par and the New York market, maintaining its buoyancy. As the afternoon progressed the London market took a pip up into positive territory but quickly fell back into modest negative territory and to take an erratic sideways negative track for the rest of the day, while the New York market continued on a steady upside track for the day.

The London market ended the day on a modestly negative note and with 42.9% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 90.9% of the earlier gains of the day intact. The soft nature of the London market for the day was not very dramatic and countered by the relatively positive nature of the New York market which assists to paint something of a positive technical picture for the markets and one might think that the markets might be due for something of a close to steady start for early trade today, against the prices set yesterday, as follows:

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

MAY 1981 – 10                                               MAY 134.30 + 1.50
JUL 2014 – 6                                                     JUL 136.65 + 1.50
SEP 2032 – 7                                                     SEP 139.00 + 1.50
NOV 2041 – 7                                                  DEC 142.30 + 1.45
JAN 2044 – 8                                                  MAR 145.65 + 1.40
MAR 2045 – 8                                                MAY 147.85 + 1.40
MAY 2048 – 8                                                  JUL 149.90 + 1.45
JUL 2063 – 6                                                    SEP 151.80 + 1.45
SEP 2071 – 6                                                   DEC 154.20 + 1.45
NOV 2078 – 6                                                 MAR 156.50 + 1.45