Thus for the present the Brazil news continues to be somewhat negative for market sentiment, while with the news of the larger new Vietnam crop that has just been completed and over and above record carryover stocks of past crop robusta coffees, likewise is supporting the many bears within the coffee markets. But there is nevertheless some caution on the part of the speculative sectors of the markets, as they remain relatively well sold and are likewise influenced by the direction taken by the overall macro commodity index and the fortunes of the related U.S. dollar, which might well limit the downside of the presently soft coffee terminal markets.

The El Nino while beneficial for Brazil does however have its negative impact upon the Pacific Rim countries and with lower crop being forecasted for the year for Colombia and Indonesia, but with both of these important producers seeing their potential dip in production being countered by the improved crops for Central America and Vietnam, respectively. Thus it would seem so far, that the El Nino phenomenon this time around, has not contributed significant supportive fundamental new for sentiment within the coffee markets. While with this phenomenon now on the wane and with history dictating only a 40% chance for the El Nino to be followed at the end of the year by a damaging La Nina phenomenon, the markets are apparently devoid of weather related supportive news for the present.

The March on March contracts arbitrage between the markets broadened yesterday, to register this at 55.56 usc/Lb., while this equates to a 46.63% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, with the good discount most likely due to remain in place for the foreseeable future, in line with steady robusta shipments out of Vietnam.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,225 bags yesterday; to register these stocks at 1,609,849 bags. There was meanwhile a smaller in volume 250 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 35,858 bags.

The Certified robusta coffee stocks held against the London market are reported to have declined by 121,333 bags since the 3rd. December, to see these stocks registered at 3,213,000 bags as at Wednesday 27th. January. While with speculation that the slower export volumes for conilon robusta coffees out of Brazil which are related to the internal market price resistance and increasing asking price, there is speculation that 83,000 to as much as 167,000 bags of conilon robusta coffees might well be taken out of these stocks by interested consumer market roasters.

The commodity markets were mixed but with many markets buoyed by the renewed muscle for the recently dismal energy markets and some weakening of the U.S. dollar, which assisted the overall macro commodity index to continue on an upside track yesterday. The Oil, Natural Gas, Cocoa, New York arabica Coffee, Cotton and Orange Juice markets had a day of buoyancy and the Gold market was steady for the day, while the Sugar, London robusta Coffee, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% higher; to see this Index registered at 368.21. The day starts with the U.S. Dollar near to steady in early trade and trading at 1.440 to Sterling and 1.091 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 33.30 per barrel.

The London market opened the day yesterday on a softer note and followed by the New York market posting modest buoyancy in early thin trade for the day. This start seemingly set the pace for the day and with both markets maintaining this stance of trading either side of par into the afternoon’s trade. As the afternoon progressed and with volumes picking up the New York market added some value but was continuously restrained by nearby selling pressure and while the New York market took and erratic positive sideways track for the rest of the day, so too did the London market remain south of par and take an erratic negative track through the day. The London market continued to end the day on a negative note and with 66.7% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 51.4% of the earlier gains of the day intact. This mixed close does little to inspire and one might think that with pre Tet New Year price fixation selling pressure hanging over the London market that this market might be only steady, while the New York market might attract some degree of hesitant support to remain steady to buoyant for early trade today against the prices set yesterday, as follows:

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

JAN 1368 + 1                                       MAR 119.15 + 0.95
MAR 1402 – 14                                   MAY 121.30 + 0.95
MAY 1432 – 9                                       JUL 123.00 + 0.95
JUL 1460 – 10                                       SEP 124.60 + 0.85
SEP 1485 – 10                                      DEC 126.65 + 0.70
NOV 1506 – 10                                   MAR 128.85 + 0.65
JAN 1527 – 9                                      MAY 129.95 + 0.70
MAR 1548 – 9                                       JUL 131.00 + 0.75
MAY 1570 – 9                                       SEP 132.00 + 0.85
JUL 1595 – 9                                         DEC 133.35 + 1.10