The USDA have estimated that Honduras has a domestic consumption of approximately 354,000 bags of coffee per annum and thus one would foresee if this larger crop proves to be fact, that Honduras shall have the potential to export in excess of 5.7 million bags of coffee during the next October 2016 to September 2017 coffee year. A significant contribution to world fine washed arabica coffee supply, with Honduras now second only to Colombia in terms of quality arabica coffee supply to the consumer markets.

However the report does concede that there are significant volumes of Honduras coffee presently being exported informally into the neighbouring countries in Central America and to finally enter the consumer markets under a different banner, one might foresee that the official Honduras coffee exports for the coming coffee year might be somewhat lower than the crop estimates might suggest. The report suggests that these informal cross border exports might be as high as 700,000 bags per annum and by nature with many of these exports coming from unreported crop intakes shall both infer that the Honduras coffee crop is perhaps larger than is being indicated and that the official export potential might be a bit lower and closer to 5.4 million bags for the coming coffee year.

With the issues of Vietnam weather now behind as the country reports fair to good summer rainfall conditions and ground water retention levels growing within the main coffee districts of the country, the Vietnam Coffee and Cocoa Association continue to suggest that due to the hot and dry conditions during the first quarter of this year, the potential for the next year end Vietnam crop has been irreversibly damaged. In this respect the association talks in terms of a new crop that might be as much as 30% lower than the previous crop but these forecasts that are historically not uncommon and seen to be very much market manipulative in nature are disputed by many of the private trade and industry, but with some nevertheless talking in terms of the possibility that there might be some reality to the dry weather problems and therefore, a new crop that might perhaps be up to 10% lower than the previous crop that was seen to be approximately 27 million bags.

Vietnam did however enter the previous October to December 2015 harvest with record carryover stocks that were estimated to have been a minimum of 5 million bags of robusta coffees and with many talking as high as 8 million bags, but with less competition within the consumer markets from the lower Brazil conilon robusta crop and the lower Indonesian robusta crop this year, the countries farmers remain content to continue to show price resistance to the soft price dictates of the reference prices of the London market and to continue to steadily rather than aggressively sell their new crop coffee stocks. One might suggest that with the possibility of a modestly lower new crop to come that this shall further inspire the farmers and internal traders in Vietnam to remain price resistant and orderly sellers of their robusta coffee stocks, while they look towards a time in hand and limited competition for the medium term to market their coffee stocks.

The July on July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 46.83 usc/Lb., while this equates to a 38.57% 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 2,933 bags yesterday; to register these stocks at 1,352,304 bags. There was meanwhile a smaller in volume 669 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,843 bags.

The commodity markets had a mixed but relatively stable day yesterday, to see the overall macro commodity index showing a degree of buoyancy through the day. The Oil, Sugar, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets had a day of buoyancy, while the Natural Gas, Cocoa, Coffee, Cotton and Gold markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.86% higher; to see this Index registered at 406.99. The day starts with a steady U.S. Dollar which is trading at 1.470 to Sterling and 1.115 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at 49.75 per barrel.

The London market and New York markets started the day yesterday with some degree of hesitant buoyancy and with the markets moving higher, but this buoyancy was not sustained and with both markets falling back to below par in later trade. The London market continued to end the day on a modestly softer note and with 36.4% of the earlier losses of the day intact, while the New York market ended the day taking a likewise modestly negative stance and with 66.7% of the earlier losses of the day intact. The Brazilians are off the field of play for today as the country celebrates their Corpus Christi holiday and for many a long weekend and this might limit producer price fixation hedge selling into the New York market, to assist to the markets to take a steady track for early trade today against the prices set yesterday, as follows:

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

MAY 1616 – 4
JUL 1644 – 4                                          JUL 121.40 – 0.40
SEP 1660 unch                                       SEP 123.35 – 0.45
NOV 1671 + 1                                       DEC 126.10 – 0.45
JAN 1679 + 2                                       MAR 128.75 – 0.50
MAR 1688 + 2                                     MAY 130.50 – 0.50
MAY 1698 + 2                                       JUL 132.05 – 0.55
JUL 1708 + 1                                         SEP 133.40 – 0.60
SEP 1723 + 1                                        DEC 135.20 – 0.60
DEC 1742 + 1                                      MAR 136.90 – 0.60