The U.S. Department of Agriculture Foreign Agricultural Service have forecasted that the next October 2015 to March 2016 harvest in Honduras shall be 500,000 bags or 9.26% higher than their last crop, at 5.9 million bags. This report adds weight to the perspective that unless there are any unforeseen weather problems for Central America in the coming months that overall Mexican and Central American fine washed arabica coffee production for the next harvest shall be approximately 1.5 million bags larger than the past harvest, to contribute approximately 18.4 million bags to world coffee supply for the next October 2015 to September 2016 coffee year.

Added to the rising supply of fine washed arabica coffee supply from Mexico and Central America, there are many forecasting a further increase in fine washed arabica coffee supply for the coming coffee year from Colombia, with forecasts that this might increase by approximately 900,000 bags or 7%, to total approximately 13.8 million bags. One might think that added to this, there shall also be some degree of increasing supply coming forth from neighbouring Peru. All of these forecasts are of course related to fair weather conditions for the rest of the year and can only perhaps be threatened if the prevailing mild El Nino phenomenon were to strengthen, but the present indications are that this shall not be the case.

One might comment that these increases in coffee supply from Mexico, Central America and Colombia and with the added potential for increases of similar high quality coffees from Peru shall be needed to cater for steadily increasing global consumption, but most of this rise in world consumption is mostly related to price sensitive new markets and producer markets and therefore, the increasing demand more related to robusta coffees or lower grade arabica coffees. Thus indicating something of a surplus supply of fine washed arabica coffees for the coming coffee year, which are likely in time, to buoy the levels of the certified arabica coffee stocks held against the New York market.

Cooxupe the largest coffee cooperative in Brazil and the world has reported that so far their arabica coffee members have completed 7.8% of their new crop harvest, which is very much on track in terms of the harvest for this time of the year. This new arabica coffee harvest can be expected to pick up steam in the coming weeks and to start peaking during the second half of July, so long as weather conditions remain mostly dry to assist with steady progress of the harvest. Albeit that this week has experienced a cold front for the main arabica coffee districts in south east Brazil, that has brought with it harvest disruptive scattered showers.

The arbitrage between the markets has broadened yesterday to register this at 51.21 usc/Lb., while this equates to an attractive 38.81% price discount for the London robusta coffee market. This arbitrage continues to inspire some degree of consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,528 bags yesterday; to register these stocks at 2,128,740 bags. There was meanwhile a larger in volume 9,313 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 63,826 bags.

The commodity markets were mostly steady to buoyant in yesterday’s trade, with the post Federal Reserve report weaker U.S. dollar tending to provide a degree of support and to buoy the overall macro commodity index for the day. There remained however in terms of the Euro some degree of concern over the uncertainty over the financial problems for Greece, which limited the recovery for the currency for the day. The Oil, Cocoa, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Natural Gas, Sugar and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.16% higher to see this Index registered at 420.85. The day starts with the U.S. Dollar showing a degree of buoyancy and selling at 1.587 to Sterling and 1.135 to the Euro, while North Sea Oil is steady in early trade and is selling at 61.15 per barrel.

The London and New York markets started the day yesterday with early buoyancy, within an environment of thin trade. The markets retained this buoyancy into the afternoon trade and with the added influences of the positive nature of the macro commodity index assisting to support confidence for the more volatile New York market, started to build upon their gains as the afternoon progressed. The London market continued on its steady upside track and to end the day on a positive note and with 78.9% of the earlier gains of the day intact, while the New York market that dipped in value in late trade nevertheless ended the day on a positive note and with 63.7% of the earlier gains of the day intact. This positive close is perhaps mildly supportive for sentiment and one might think that the markets shall experience a degree of cautious buoyancy and a steady start for early trade today against the prices set yesterday, as follows:

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

JUL 1888 + 82                              JUL   128.70 + 2.05
SEP 1780 + 30                              SEP   131.95 + 2.55
NOV 1791 + 26                            DEC  135.70 + 2.60
JAN 1803 + 24                             MAR 139.35 + 2.60
MAR 1822 + 23                           MAY 141.55 + 2.55
MAY 1839 + 22                            JUL  143.40 + 2.50
JUL 1858 + 23                              SEP  144.85 + 2.45
SEP 1877 + 21                             DEC  146.85 + 2.50
NOV 1896 + 21                            MAR 148.90 + 2.45
JAN 1919 + 21                             MAY 150.25 + 2.35