Brazils and the world’s largest coffee cooperative has reported that as at Friday last week that their members arabica coffee harvest was 17.3% completed, which is well ahead of the 11.3% harvest percentage at the same time last year, which might indicate that the unseasonal rains encountered in recent weeks have not been so significantly disruptive to the progress of the new arabica coffee crop harvest. There are however still some concerns over the effects of the rains that might have been damaging to the quality of the coffees being harvested, in terms of their influence over patio drying conditions for the harvested coffees and likewise, to the cherries that were collected from the ground due to rain influenced cherry drop.

There are further scattered rain showers being forecasted for today and tomorrow over some of the main Brazil arabica coffee districts, but these rains are not seen to be intense and are unlikely to be significantly damaging for the coffees being harvested. However with the subject of rain damage to quality still very much to the fore, one can expect that it has some degree of influence upon the speculative sentiment within the New York market.

There have been longer term concerns voiced by the agricultural sectors in Brazil in terms of the prevailing economic woes within the country, which is resulting in something of a credit crunch and were available the high cost of borrowing. This many farmers and including the countries coffee farming sector suggest, shall dampen investment spirits within the farming community and shall slow potential growth in production, for the Brazil coffee crop.

The Colombian Coffee Federation has reported that following the dry weather conditions of the El Nino phenomenon during the last quarter of last year and the first quarter of this year which had a marked effect on growing conditions for approximately half of the coffee districts in Colombia, that there are now concerns over the high potential for a follow on La Nina phenomenon for the last quarter of this year. The comment being that while the dry weather that came with the El Nino did not after all significantly damage the production yields albeit that it did have some impact upon quality for many farmers, that the potential for La Nina excessive rains could be in terms of the increase in Leaf Rust or Roya, be more significantly damaging for the October 2016 to September 2017 crop.

Such comments are of course not fact as there has yet to be a La Nina coming into play within the Pacific Ocean, but with weather forecasters worldwide presently voicing an approximate 75% chance for the La Nina to occur, it must provide for some degree of caution on the part of the speculative and fund sectors of the coffee markets. Particularly so as aside from its potential intense influence upon the prospects for coffee production in the Pacific Rim countries such as Colombia, Peru and Indonesia, it would also have some further afield influence for the very important South East Brazil arabica coffee districts. Therefore it could prove to be a short to medium term factor that might somewhat limit any aggressive downside potential, for recently recovered volatile New York market.

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 63.16 usc/Lb., while this equates to a 44.81% 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 3,083 yesterday; to register these stocks at 1,320,068 bags. There was meanwhile a larger in number 3,770 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,265 bags.

The U.S. dollar showed some renewed muscle yesterday and had a negative impact within many of the commodity markets, to see the overall macro commodity index take a softer track for the day. The Natural Gas, Cocoa, London robusta Coffee and Copper markets nevertheless had a day of buoyancy, while the Oil, Sugar, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.99% lower; to see this Index registered at 427.76. The day starts with the U.S. Dollar steady and trading at 1.469 to Sterling and 1.126 to the Euro, while North Sea Oil is steady in early trade and trading at 49.10 per barrel.

The London market started the day yesterday with a degree of buoyancy, while the New York market had a softer start for the day and with the markets retaining this stance into early afternoon trade when further losses for the New York market were followed by a softening for the London which nevertheless remained ahead of par. The London market did however start to build on its gains and likewise the New York market started upon a steady recovery track to shed most of its losses of the day, through to the close of the day. The London market ended the day on a positive note and with 73.3% of the earlier gains of the day intact, while the New York market ended the day on a modestly negative note, but having recovered 88.3% of the earlier losses of the day by the close. This close and with the New York market having shrugged off much of the negative pressure for the day might be seen to be somewhat constructive for 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.

JUL 1683 + 18                                     JUL 138.50 – 1.00
SEP 1715 + 22                                     SEP 140.95 – 0.35
NOV 1730 + 20                                   DEC 143.55 – 0.25
JAN 1740 + 17                                   MAR 146.00 – 0.20
MAR 1754 + 15                                 MAY 147.40 – 0.20
MAY 1769 + 12                                   JUL 148.60 – 0.30
JUL 1782 + 9                                        SEP 149.80 – 0.35
SEP 1796 + 9                                       DEC 151.35 – 0.45
DEC 1815 + 9                                     MAR 152.70 – 0.45
MAR 1811 + 9                                    MAY 153.55 – 0.45