It is likewise slowing buying interest on the part of the consumer market trade house that are reluctant to commit to stocks that do not have the protection of being tenderable parity, which is likely if this scenario of soft terminal markets and relatively firm differentials continues to result in an erosion of consumer market trade stocks. This situation shall most likely reduce the volumes and variety of consumer industry protection in terms of their ability to easily source nearby short term fill in coffee stocks, from the consumer market trade and should by nature pressure consumer roasters to look to take some more origin forward cover.

Conversely within Brazil where farmers and cooperatives lacking the potential of state sponsored finance prior to the new crop harvest from their financially struggling government, they have been encouraged to look to relatively good volumes of forward sales of their forthcoming new crop. This assists to put value to a percentage of their new crop coffees and with the contracts in hand, some substance to support borrowing from the banks in order to finance the new harvest.

The potential is however that with a good percentage of the new crop already sold, that the farmers and cooperatives shall feel that they have taken sufficient forward sales cover to support short term finance and that this shall result in increased internal market price resistance within Brazil. Making one think that forward cover hedge selling out of Brazil might start to slow and by nature and thus, reduce the Brazil hedge selling activity into the terminal markets. This might assist in terms of this activity being mostly related to the potential for a much larger new Brazil arabica crop, to reduce the selling activity into the New York market that to likewise limit the downside for this presently soft market.

Meanwhile and with the farmers and internal traders in Vietnam evidently able to continue to raise finance from their banks and in many instances from the income from their alternative crops from multi cropping farms, the prospects are for internal market price resistance to continue for the foreseeable future. But with consumer industry demand for robusta coffees steady and lessening competition from the smaller crop that is due from Indonesia this year, one might think that consumer roasters shall continue to pay up for Vietnam coffees and that hedge selling volumes into the London robusta coffee market shall likewise remain steady.

The May on May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 54.81 usc/Lb., while this equates to a 46.85% 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 5,862 bags yesterday; to register these stocks at 1,555,039 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,689 bags.

The commodity markets lack much in the way of strong support from the influential Oil markets where producer negotiations are indicating no chance of production cuts and perhaps at best a freeze in volumes, which does little to counter an already over supplied oil market. Meanwhile the U.S. dollar continues to show some muscle and the overall macro commodity index took a somewhat sideways track for trade yesterday. The Oil, Cocoa, Wheat, Gold and Platinum markets had a day of buoyancy and the Natural Gas, Sugar, Copper, Corn and Soybean markets were relatively steady, while the Coffee and Orange Juice markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% higher; to see this Index registered at 368.27. The day starts with the U.S. Dollar steady in early trade and trading at 1.394 to Sterling and 1.103 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at 32.60 per barrel.

The London and New York markets had another soft of par start for the day yesterday and maintained this track into the afternoon trade, but with the markets attracting increased selling pressure later on in the afternoon and to see the losses extended as the afternoon progressed. There was however a degree of stability coming to the fore at the lows and while both markets are looking technically soft for the present, one might expect to see a cautious near to steady start for the markets for early trade today against the prices set yesterday, as follows:

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

MAR 1335 – 27                                        MAR 115.05 – 2.75
MAY 1371 – 26                                        MAY 117.00 – 2.25
JUL 1402 – 25                                             JUL 118.85 – 2.15
SEP 1429 – 24                                             SEP 120.50 – 2.00
NOV 1452 – 23                                          DEC 122.35 – 1.95
JAN 1475 – 22                                           MAR 124.35 – 1.80
MAR 1495 – 22                                         MAY 125.60 – 1.70
MAY 1516 – 22                                           JUL 126.75 – 1.55
JUL 1536 – 22                                             SEP 127.85 – 1.40
SEP 1564 – 22                                             DEC 129.25 – 1.30