Conversely the new Brazil arabica coffee crop is in its early stages and all indications from these early coffees is that in line with the many positive forecasts, this shall be a significantly larger new arabica coffee crop. But also what is important is that the quality of coffee beans from these early harvested coffees is proving to be very good, with over 30% of the beans proving to be nice bold screen 17 plus coffees, which are in demand from the many consumer markets where bold bean Brazil arabica coffees are favoured for the roast bean blends.

The Climate Prediction Centre of the U.S.A. government weather services has further forecasted that there is now a 75% chance that following the seven months long El Nino weather phenomenon that is now quietly disappearing within the Pacific Ocean, there shall be a new La Nina phenomenon developing by the last quarter of this year. This La Nina would be likely to bring with it in terms of coffee increased rainfall for the Pacific Rim producers such as Colombia, Peru and Indonesia, while it would most likely bring dryer weather for South East Brazil.

One might comment however that should the forecasts for a new La Nina phenomenon prove to be true that so long as it is a mild La Nina and bring with it a little bit more or less rains depending on the individual countries, that it should not have any marked influence on global coffee production for the coming year. But if it is a severe La Nina and there are good memories of what happened in Colombia and Indonesia during the last La Nina when there were sharp dips in production, it could have a somewhat dramatic effect upon sentiment and prices within the New York and London terminal markets.

Particularly so as with the Brazil coffee stocks having been mostly liquidated over the past two years of deficit Brazil crops, the world producer coffee stocks would be tight in supply and would struggle to counter a La Nina influenced dip in global coffee production. Thus while the frost season in Brazil that is soon to start is with no real frosts having been encountered over the past twenty two years is being ignored, there is no doubt going to be much focus in the coming months upon the possibility of a new La Nina within the Pacific Ocean.

The July on July contracts arbitrage between the London and New York markets was steady yesterday, to register this at 53.94 usc/Lb., while this equates to a 41.48% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,157 bags yesterday; to register these stocks at 1,371,287 bags. There was meanwhile a smaller in volume 1,235 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,260 bags.

The commodity markets were mixed and with many markets taking a relatively flat stance during yesterday’s somewhat lacklustre trade, with the overall macro commodity index likewise taking something of a flat track for the day. The Sugar, Coffee, Orange Juice, Wheat and Corn markets had a day of buoyancy and the Cotton market was steady for the day, while the Oil, Natural Gas, Cocoa, Copper, Soybean, Gold and Silver markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.08% higher; to see this Index registered at 410.55. The day starts with a steady U.S. Dollar which is trading at 1.448 to Sterling and 1.138 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 47.05 per barrel.

The London and New York markets started the day yesterday with a degree of hesitant buoyancy and maintained a positive steady into the afternoon trade, but with the markets coming under some selling pressure as the afternoon progressed, to briefly move south of par for a short spell before moving back to par and taking a something of a sideways track in thin trade either side of par, for the rest of the day. The London market ended the day taking a modestly positive stance and with 53.8% of the earlier gains of the day intact, while the New York market likewise ended the day taking a modestly positive stance and with 31.6% of the earlier gains of the day intact. This close provides little indication of direction but with the markets managing to hold on to their positive stance of the week and contributing towards positive charts, one might expect to see a near to steady start for early trade today against the prices set yesterday, as follows:

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

MAY 1649 + 7                                      MAY 128.20 + 0.30
JUL 1678 + 7                                           JUL 130.05 + 0.30
SEP 1690 + 5                                           SEP 131.90 + 0.40
NOV 1702 + 2                                        DEC 134.35 + 0.45
JAN 1714 + 2                                        MAR 137.00 + 0.55
MAR 1727 + 1                                      MAY 138.50 + 0.60
MAY 1742 + 2                                        JUL 139.75 + 0.55
JUL 1757 + 6                                          SEP 140.85 + 0.50
SEP 1771 + 6                                         DEC 142.60 + 0.50
DEC 1790 + 6                                       MAR 144.20 + 0.50