A La Nina weather occurrence would traditionally, depending on the timing and strength of the phenomenon, bring with it excessive rains for the Pacific Rim countries, which could impact upon climatic conditions within Colombia, Indonesia, Central America and Peru. This weather phenomenon has in the past influenced dry conditions for the Arabica coffee districts in South East Brazil. The strength and potential effect of a prospective La Nina weather phenomenon is uncertain however, as coupled events affecting tropical oceans and atmosphere vary and it cannot be precisely predicted when and whether such a phenomenon will occur. In general terms, this would be expected to bring the opposite in weather patterns to that of El Nino and such an occurrence may be greeted positively in coffee producer countries that have been hit by the dry and or drought conditions brought about by the prevailing El Nino, although excessive rainfall carries with it the risk of an increase in Roya infestations. Whereas, for other producer countries Brazil included, the prospects of a La Nina weather phenomenon to develop in the latter half of the year may result in unwelcome dry weather within Brazil over the seasonal spring and summer crop development and is a factor to that is to be closely monitored ahead of the development of the Brazil 2017 crop to come.

The July on July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 56.91 Usc/Lb., while this equates to a 44.49% price discount for the London robusta coffee market. This arbitrage remains 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 4,283 bags yesterday; to register these stocks at 1,403,384 bags. The number of bags pending grading to the exchange remained unchanged on the day, to see these pending grading stocks at 7,961 bags on the day.

The commodity markets had a positive day yesterday, the leading in influence oil markets taking a positive track with news of a workers strike in Kuwait that is anticipated to cut production from that country by more than half in March. Sentiment on the day was similarly assisted by the release of U.S. housing data perceived negatively by the markets and a lower day for the US Dollar which extended losses against other major currencies on the day. It was a positive day for commodities across the board, with precious metals and particularly Silver and Platinum markets posting strong gains on the day, and the only minus on the board, for Sugar, which softened on the news of conducive and dry harvesting weather within the Brazil sugar belt. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.927% higher to see this Index registered at 398.85. The day starts with a softer U.S. Dollar at 1.435 to Sterling and 1.1357 to the Euro, while North Sea Oil is steady in early trade and is selling at 41.92 per barrel.

It was a positive start for the coffee markets yesterday, with both markets maintaining this stance into the afternoon session and with the New York market showing some buoyancy as the America’s opened their business day and volume of trade into these markets improve. It was overall a relatively muted day within London, which seemed to struggle to maintain a positive trend, despite the latter day surge in New York., and this market remained steady within a narrow trading range throughout the day, with news coming to the markets of rain in the key coffee producing area in Vietnam and a finish close to the day high after a comparatively modest volume session as has been seen over the recent days. The New York market continued to build upon the gains of the afternoon, in tandem with the overall firmer sentiment across the commodities board. The latter day took a softer turn in New York however, while the Brazil Real which had opened the day at a softer 3.61 to the US Dollar subsequent to the Brazil’s central bank intervention, gained strength during the session and posted a recovery at 3.55 by the end of the day. The New York market finished the day having lost some of the earlier ground gained and close near to the middle of the days’ trading range, to set the finish in both markets yesterday in positive territory, as follows:

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

MAY  1535 + 5                           MAY 125.85 + 1.85
JUL    1565 + 10                         JUL   127.90 + 1.95
SEP    1586 + 11                         SEP   129.60 + 1.95
NOV  1604 + 10                         DEC  131.85 + 2.00
JAN    1621 + 9                          MAR 134.00 + 2.10
MAR  1634 + 10                        MAY 135.50 + 2.10
MAY  1651 + 10                        JUL   136.95 + 2.20
JUL    1669 + 10                        SEP   138.15 + 2.25
SEP    1687 + 10                        DEC  139.85 + 2.30
DEC   1707 + 10                       MAR  141.40 + 2.40