This rather dramatic liquidation of the speculative short sold position within the New York market that has seen this position at its lowest in over two months reflects the renewed developing concerns over the medium term coffee supply from Brazil, following a host of lower new crop forecasts, with some side-line concerns over what impact the relatively dry summer weather in Central America might have upon the prospects for the forecasted larger new crop that has been forecasted for this important fine arabica coffee producer bloc.

The Vietnam Customs authorities have reported on Friday that the countries coffee exports of mostly robusta coffees during the month of July were 2.8% higher and the previous month, with coffee exports for the month registered at 1,785,667 bags. This number being in the middle of the earlier trade forecasts of exports for the month at between 1.34 million bags and 2.2 million bags, while marginally lower than the government forecast of 1.9 million bags.

More significant perhaps is the fact that this number pegs coffee exports for the first seven months of this year to be 6.84 million bags or 34.3% lower than the same period last year, at a total of 13,108,333 bags. It is a figure that clearly supports the many reports of the price resistant holding back of stocks within the internal market in Vietnam, which with the new crop harvest and what is forecasted to larger new crop that is due to start in only eight to nine weeks’ time, is likely to soon start bringing lager volumes of Vietnam robusta coffee stocks to the market. This being a factor that would limit the upside for the related London robusta coffee market, which is finally the home for surplus robusta coffees stocks, within its certified stocks.

The Ethiopian Governments Privatisation and Public Supervising Department has sold its 73.32% share within the relatively large farming operation Tepi Green Coffee State Share company to its private partners Green Coffee Agro Industry Private Limited Company, which confirms that there is a slow and steady move on the part of the authorities in Ethiopia to encourage privatisation of agriculture in order to buoy production. In this respect, the former minority partners and now full owners of this extensive farming company having already voiced their intent to replace aged trees and to start looking to the application of supplementary irrigation schemes, to assist in improved coffee yields for the future.

The arbitrage between the markets broadened on Friday to register this at 62.86 usc/Lb., while this equates to a 44.53% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to post no change on Friday; to register these stocks at 2,084,361 bags. There was meanwhile a 10,725 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,655 bags.

The commodity markets had a slower and mixed day’s trade on Friday, with the overall macro commodity index tending to take a sideways track for the day. The U.S. Oil, Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Wheat and Corn markets had a day of buoyancy and the Cocoa market had a steady day, while the Brent Oil, Copper, Soybean, Gold, Silver and Platinum 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 401.86. The day starts with the U.S. Dollar steady and selling at 1.567 to Sterling and 1.110 to the Euro, while North Sea Oil is steady in early trade and is selling at 47.75 per barrel.

The London and New York markets started the day on Friday with modest buoyancy, but with the New York market soon falling back below par and with the markets taking this track into the afternoon trade. As the afternoon progressed however the New York market recovered and joined the London market within modest positive territory, but there was renewed pressure upon the New York market for the rest of the day’s trade and with the market trading either side of par for the rest of the day. The London market which has been taking a steadier track and mostly remaining above par for the day, continued to end the day on a modestly positive note and with 38.9% of the earlier gains of the day intact, while the New York Market likewise ended the day on a modestly positive note and with 27.5% of the earlier gains of the day intact. This close and with evidence of the significant liquidation of the speculative short position within the New York market as a Tuesday last week might not inspire confidence and one might expect to see little better than a steady to softer start for the markets in early trade today, against the prices set on Friday, as follows:

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

SEP 1713 + 9                                     SEP    137.50 + 0.45
NOV 1726 + 7                                   DEC   141.15 + 0.55
JAN 1743 + 8                                    MAR  144.50 + 0.60
MAR 1763 + 7                                  MAY  146.55 + 0.60
MAY 1784 + 8                                    JUL  148.45 + 0.60
JUL 1803 + 8                                      SEP  150.10 + 0.55
SEP 1819 + 7                                     DEC  152.50 + 0.35
NOV 1837 + 7                                   MAR 154.85 + 0.35
JAN 1856 + 7                                    MAY 156.30 + 0.45
MAR 1871 + 7                                    JUL 157.85 + 0.60