This apparent 20.81% increase in cumulative exports is however based on the month by month export reports from El Salvador that were reported over the months of October 2013 to August 2014 and it is marginally higher than the 19% factor reported by the National Coffee Council in El Salvador, who have seemingly corrected some of their figures for this previous coffee year. It is nevertheless a much improved performance and reflects the slow by steady recovery of the El Salvador crop, from the devastating effects of their Roya or Leaf Rust infestation. One would expect in terms of the forthcoming new crop and with a large percentage of trees having been pruned and or replanted post the Roya problems, that this should contribute to a further improvement for the coming October 2015 to September 2016 coffee year.

There is however a problem for El Salvador and Guatemala as unlike their neighbours in Central America and likewise Colombia and Brazil who have seen their currencies weaken significantly over the past year against the value of the U.S. dollar, these two countries have their domestic currencies linked to the value of the dollar and therefore, income for coffee sales having fallen sharply along with the declining value of the reference prices of the New York arabica coffee market. This does little to inspire the El Salvador and Guatemala coffee farmers who struggle to break even with their coffee sales and by nature, limits the ability to finance farm inputs and to maintain yields within the coffee farms. Thus while one sees surging production volumes in neighbouring Honduras that is now the giant in terms of Central American coffee production, the lack of profitability is stunting post Roya recovery and coffee production growth for El Salvador and Guatemala.

The Coffee Exporters Association of Brazil Cecafe has reported that the countries arabica coffee exports for the month of August were approximately 10% lower than the same month last year, at a total of 2.15 million bags. While the country’s exports of conilon robusta coffees were 1% lower than the same month last year, at a total of 383,319 bags. Added to this they report that the exports for the month of value added soluble coffees were approximately 7% lower than the same month last year, at a total of 294,428 bags. This they extrapolate to total coffee exports for the month of August having been close to 8% lower than the same month last year, at a total of 2,831,000 bags.

Nevertheless and despite the relatively modest coffee export volumes from Brazil the value of these exports that have totalled 4.1 billion U.S. dollars for the first eleven months of the present October 2014 to September 2015 coffee year has benefited from the steady decline in the value of the Brazil Real. The Brazil which is presently trading at around 3.85 to the U.S. dollar and at 3.48 to the dollar in August this year, having been trading at around 2.26 to the U.S. dollar in August last year. Thus the exchange rate has been bringing improved farm gate value to the Brazilian coffee farmers over the past year, to assist them to make profits and finance inputs towards the next 2016 crop.

The respected Brazil analyst Safras e Mercado has reported yesterday that so far 95% of the new Brazil crop has been harvested and would indicate that the new crop shall very soon be completed, while they apply this harvest percentage to a new crop forecast of 50.4 million bags. One might expect though that the negative to sentiment effects of this relatively high new crop forecast shall soon be countered, by a dramatically lower official new crop forecast coming to the market. Albeit that most market players will view the official figure that is traditionally a conservative and discounted number, as not a true indication of reality of the size of the crop.

Meanwhile it has been raining over the south east Brazil arabica coffee districts and there are forecasts for continued rains to come in the coming week, which shall assist in post-harvest stress recovery for the coffee trees. With the prospects for the early in the spring and summer rainfall season to bring on early flowerings towards the new 2016 crop, that many are forecasting that unforeseen climatic conditions aside, shall be a large crop and one that shall bring with it surplus supply and a recovery in the declining coffee stock levels for the follow on 2016/2017 coffee year.

The arbitrage between the markets narrowed yesterday to register this at 45.37 usc/Lb., while this equates to a 38.98% 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 decrease by 3,201 bags yesterday; to register these stocks at 2,066,671 bags. There was meanwhile a smaller in volume 975 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 28,499 bags.

The commodity markets had a day of relative stability yesterday and with the overall macro commodity index showing a degree of buoyancy, which was supportive for sentiment within many markets. The Oil, Natural Gas, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Cocoa and Orange Juice markets had a softer day’s trade and the Coffee markets had a miserably soft day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.30% higher to see this Index registered at 395.96. The day starts with the U.S. Dollar tending softer and trading at 1.545 to Sterling and 1.129 to the Euro, while North Sea Oil is steady in early trade and is selling at 48.10 per barrel.

The London market started the day yesterday with modest losses, while the New York market started the day with a degree of buoyancy, but the muscle within the New York market was short lived and the market slipped back into negative territory for early afternoon trade and with the London market losing some more weight. The New York market came under further pressure with sentiment turning bearish with the news of Brazil rains and potential flowerings and the market started to trigger sell stops, to accentuate the losses and having an influence upon the London market that followed the negative track taken in New York. The London market continued to end the day on a soft note and with 79.2% of the losses of the day intact, while the New York market ended the day on a very soft note and with 96.9% of the earlier losses of the day intact. This soft close does little to inspire but one might expect a degree of caution and perhaps some industry opportunist buying cover to bring a degree of modest corrective buoyancy for early trade today against the prices set yesterday, as follows:

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

SEP 1557 – 38                                      SEP     113.05 – 4.75
NOV 1566 – 38                                    DEC    116.40 – 4.70
JAN 1581 – 37                                     MAR   119.90 – 4.65
MAR 1600 – 37                                   MAY   122.20 – 4.60
MAY 1620 – 38                                     JUL   124.30 – 4.60
JUL 1640 – 37                                       SEP   126.30 – 4.45
SEP 1660 – 37                                       DEC  129.25 – 4.30
NOV 1680 – 37                                    MAR  132.10 – 4.10
JAN 1700 – 38                                     MAY  134.15 – 3.80
MAR 1722 – 38                                     JUL  136.15 – 3.60