This new crop is however coming forth into an environment of soft international coffee prices and even with the assistance of a weak Brazil real that has hit a four month low yesterday and is presently trading at 3.285 to the vibrant U.S. dollar, is not forwarding favourable internal market prices to the farmers. Thus one might expect to see a degree of internal market price resistance developing for new crop coffees, but with the pressure of the cost of the harvest forcing many farmers to have to bite the bullet and accept the reality of the uncontrollable international market forces.

However for the short term the internal market price resistance within Brazil is forcing exporters to start demanding higher differentials for new business, but into a relatively slow and lacklustre consumer market that is within the summer holiday season for the main northern hemisphere markets. Thus for the present, it is slowing selling activity out of Brazil, while the new crop stocks steadily build.

Following earlier forecasts for a larger new coffee crop from India for the forthcoming October 2015 to September 2016 coffee year of approximately 5.92 million bags, that Indian Exporters Association have forecast that they foresee a 10% increase in the countries coffee exports for the coming coffee year. In this respect, making mention of a number of around 4.77 million bags and is news one would suggest, that assists to underline the prevailing bearish nature of the international coffee markets.

The trade in Asian robusta coffees is for the present somewhat stalled, as with the reference prices of the London market becoming softer, the continued internal market price resistance within Vietnam forces exporter asking differentials higher. While similarly the new crop robusta offers out of Indonesia are likewise relatively firmer, as the internal market price dictates force exporters to demand firmer differentials for new business.

The arbitrage between the markets narrowed yesterday to register this at 46.21 usc/Lb., while this equates to a 38.02% 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 13,740 bags yesterday; to register these stocks at 2,124,731 bags. There was meanwhile no change to the modest number of bags pending grading for this exchange; to register these pending grading stocks at 320 bags.

The commodity markets mostly continued to react negatively to the steady muscle of the U.S. dollar yesterday, which gained further support from the report of lower U.S.A. jobless claims and its indication of steady growth for the U.S. economy. The Sugar, Cotton, Wheat and Gold markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Coffee, Copper, Orange Juice, Corn, Soybean and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.74% lower; to see this Index registered at 407.27. The day starts with the U.S. Dollar steady and trading at 1.551 to Sterling and 1.097 to the Euro, while North Sea Oil is steady in early trade and is selling at 55.10 per barrel.

The London market opened the day on a near to steady note and with the New York market starting the day with modest buoyancy and with both markets retaining this stance, into the afternoon trade and with the New York market having added to its positive value. However as the afternoon progressed and with the Americans coming to work and entering the field of play, the New York market started to come under pressure and with sell stops being triggered, moved deep into negative territory. This had some influence upon the London market which added to its losses of the day, but not to the same extent as the soft New York market. The New York market reacting to the combination of the negative nature of the soft overall macro commodity index and the threat of increased Brazilian selling activity that would be expected with the weaker nature of the Brazil real took a flat track for the rest of the day’s trade that set new one and half year lows for the market, while the London market managed to bounce back partially from the lows. The London market continued to end the day on a softer note and with 66.7% of the losses of the day intact, while the New York market ended the day on a very soft note and with 88.6% of the earlier losses of the day intact. This close does little to inspire and likewise its effect upon the charts that remain negative for the New York market and barely steady for the London market, but one might perhaps expect an indecisive cautiously steady start for the markets for early trade today against the prices set yesterday, as follows:

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

JUL 1800 + 20
SEP 1661 + 20                              SEP    121.55 – 3.50
NOV 1677 + 18                            DEC   125.05 – 3.50
JAN 1694 + 17                             MAR  128.70 – 3.50
MAR 1714 + 17                           MAY  130.90 – 3.50
MAY 1736 + 18                             JUL  133.05 – 3.40
JUL 1758 + 18                               SEP   135.10 – 3.45
SEP 1779 + 18                              DEC   138.10 – 3.40
NOV 1801 + 18                            MAR  141.00 – 3.20
JAN 1823 + 18                              MAY 142.70 – 3.05