The Brazil National Statistics Institute (IBGE) has reported on Friday that they have lowered their new crop figure for the just completed new crop by approximately 2%, to now report a new crop at a very modest 42.8 million bags. This dip they relate to the fact that the land under coffee for this new crop had decreased by 0.7% over the past year, while with the factor of overall smaller bean yields from the new crop from within the main arabica coffee producing districts, the overall yield from this has contributed to their lowering their new crop assessment.

There is no doubt from the evidence of bolder bean arabica coffee supply from Brazil over the recent weeks that there has been a negative effect upon overall bean size within the new arabica coffee crop this year, which is mostly related to the interruption in cherry development that came with the dry start to the year. But this latest modest assessment of the new crop by the IBGE is dramatically lower than that of the major international players within the Brazil coffee industry who not only traders but are are mostly hands on millers of the incoming coffee crop, that one has to see it to be overly conservative as is historically the case with this Institute and is unlikely to contribute to market panic.

There have however been some concerns starting to be voiced over the hesitant start to the Brazil rain season which had seen above normal early rains for the main south east Brazil coffee districts in September, but a relatively dry start for the month of October so far. This is apparently fuelling a degree of speculative caution and coming to the fore at the same time of overall modest buoyancy for commodities in general, assisted to buoy the coffee markets on Friday.

This buoyancy is not only reflected within the more volatile and speculative New York arabica coffee market but has also buoyed spirits within the London robusta coffee market, which is bringing value closer to levels at which it might trigger reduced internal market price resistance on the part of the farmers and internal traders who still hold considerable quantities of past crop robusta coffee stocks. Thus some Vietnam traders are already speculating that the London market is perhaps only $ 30.00 to $ 50.00 per metric ton in value away from more aggressive internal market of coffee stocks, which would by nature trigger increased price fixation selling against the London market and tend to soften the upside potential of this market, while possibly further broadening the arbitrage between this market and the New York market.

There are some concerns being voiced over the growth in world coffee consumption in that already there has been clear evidence that the surge in the market share of the parsimonious single serve capsule and pod coffee offerings has retarded and often reduced over all coffee demand within the developed markets, which is now being joined by the economic problems being encountered within most of the developing new markets. This is fuelling speculation that overall world coffee consumption growth is now a very modest factor, which might unless there are any climate related problems developing for the main producer blocs, limit the upside potential for the market that might come with overall flat world coffee supply for this new October 2015 to September 2016 coffee year.

The second month arbitrage between the markets broadened on Friday, to register this at 60.78 usc/Lb., while this equates to a 45.06% 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 8,665 bags on Friday; to register these stocks at 1,931,057 bags. There was meanwhile a similar in volume 9,323 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 60,530 bags.

The commodity markets were selectively buoyed on Friday, with a cautiously renewed interest in commodity investments prevailing. The U.S. Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Brent Oil, Cocoa and Corn markets had s softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.78% higher to see this Index registered at 405.93. The day starts with the U.S. Dollar near to steady and trading at 1.533 to Sterling and 1.137 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at 53.20 per barrel.

The London and New York markets started the day on Friday with some modest follow through buoyancy and with this setting a positive track for the markets into the afternoon trade, where fund and speculative short covering buy stops and accompanied by consumer industry buy stops started to be triggered within the New York market, with the London market following suit. There was further support seen for sentiment with the renewed stability of the Brazil real which is now trading at 3,76 to the U.S. dollar and both markets took an overall positive track for the rest of the day’s trade, albeit that some selling came into play within the New York market and possibly assisted by pre long weekend selling from Brazil, to take it back from its highs. The London market continued to end the day on a very positive note and with 92.7% of the gains of the day intact, while the New York market ended the day on a positive note and with 56.1% of the gains of the day intact. This positive close and its positive influence upon the charts for the markets, along with the majority of the U.S.A. on their Columbus Day holidays today and Brazilian Selling of the field of play with the countries Lady of Aparecida (Holy Mary) holiday today, is likely to trigger a near to steady start for the London market in early trade today. This against the prices set on Friday, as follows:

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

NOV 1623 + 41                                     DEC    131.60 + 3.15
JAN 1634 + 38                                      MAR   134.90 + 3.20
MAR 1646 + 35                                    MAY   136.95 + 3.25
MAY 1665 + 34                                      JUL   138.65 + 3.20
JUL 1685 + 34                                        SEP    140.30 + 3.10
SEP 1704 + 33                                       DEC    142.40 + 3.00
NOV 1723 + 32                                     MAR   144.50 + 2.95
JAN 1743 + 32                                      MAY   146.05 + 2.95
MAR 1761 + 32                                      JUL    147.45 + 3.00
MAY 1777 + 32                                      SEP    148.35 + 2.95