27th. February, 2015.
The Vietnam customs authorities and with more specific data now at hand, have revised upwards their earlier forecasted January coffee exports number by 206,667 bags, to now register January coffee exports at 2,206,667 bags.   While with the export registrations already at hand and this short February Tet New Year holiday interrupted month near to its end, they have forecasted that coffee exports for the month and made up of mostly robusta coffees, shall be 40.8% lower than the same month last year, at a total of 1,820,000 bags.

This official forecasted February export figure is in fact remarkably higher than the 1.42 million bags to 1.67 million bags that has been suggested by the private trade and industry players within Vietnam and thus one would doubt that the February exports shall prove to be in excess of the Vietnam customs authorities number.  While if one is to apply this Vietnam customs export forecast to the coffee exports reported for the previous four months, it would indicate the potential exports for the first five months of the present October 2014 to September 2015 coffee year to be 11% lower than the same period in the previous coffee year, at a total of 8,943,333 bags.  

One might comment however that over the past few months and since the reference prices of the London market started to soften, that it has caused the internal market to show a significant degree of price resistance to the exporters offering prices.  This has resulted in relatively high asking export differentials from the exporters, which has resulted in declining interest on the part of the international trade to take on trade stocks and rather related sales to the direct roaster delivery requirements, which has impacted negatively upon the volumes of demand for new crop Vietnam robusta coffees.   Thus the dip in Vietnam robusta coffee exports that does not actually relate to any shortage of available coffees has no impact upon market sentiment towards the London market.

The Brazil weather conditions over the main coffee districts have dried up a bit this week, but with the odd scattered showers having been experienced during the week, to eliminate any fears of stress for the maturing new crop cherries.    There is however good rains forecast to move in from the south for the main arabica coffee districts in South East Brazil for next week, which shall presumably put the Brazil rain factor out of the picture for some weeks and leaving only the debate over the prospects for the new crop.   

Meanwhile with the dip in the reference prices of the New York market over the past couple of weeks and with farmers already well sold for the present, they are showing price resistance and the internal market selling activity has been lacklustre over the past week.    While with having to pay up higher prices relative to the reference prices of the New York market for new stocks, the exporter’s asking price differentials for new business is slowing the pace of new business.    

This is very much the case in most arabica and robusta coffee origins, where the disbelieving farmers and internal market traders are resisting the downside influences of the softening terminal markets and are forcing exporter asking differentials higher.    However the consumer markets are presently still holding good stocks and short term forward cover and are not aggressively chasing new business and this is resulting in slow physical coffee business for the present.

The arbitrage between the markets has narrowed yesterday to register this at 55.77 usc/Lb., while this equates to a relatively attractive 39.68% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   Especially so, as with the presently lower trading range within the New York market, the arabica coffee differentials relative to this market are tending to firm.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,255 bags yesterday, to register these stocks at 2,279,881 bags.   There was meanwhile a larger in volume 6,845 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,628 bags.

The commodity markets with a strong U.S. dollar in play were mixed yesterday, but with the macro commodity index once again tending softer for the day.   The Sugar, Cocoa, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy, while the Oil, Natural Gas, Coffee and Orange Juice markets having a softer day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.27% lower; to see this Index registered at 430.44.   The day starts with the U.S. Dollar once again showing its muscle and trading at 1.544 to Sterling and 1.122 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 61.25 per barrel.

The London market started the day yesterday on a near to steady note and followed by some very modest buoyancy for the New York market, but with both markets soon losing their way in thin and lacklustre trade, to enter the afternoon on a modestly softer to steady track.     This was however not sustained and as the afternoon progressed and with the entrance upon the field of play of the Americans the New York market started to come under renewed pressure but not in the volumes of the previous days, to see the New York market lose some more weight and with the London market likewise taking a soft stance.    The London market continued to end the day on a soft note and with 70.8% of the earlier losses of the day intact, while the New York market carried on to end the day on a soft note and with 92.1% of the earlier losses of the day intact.   This soft close does little to inspire confidence and one might expect to see little better than a near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1834 – 16                                               MAR     136.55 – 3.20
MAY     1869 – 17                                               MAY     140.55 – 2.90
JUL      1894 – 19                                                JUL      143.45 – 2.90
SEP      1919 – 18                                               SEP      146.20 – 2.90
NOV     1936 – 18                                                DEC     150.00 – 2.85
JAN      1949 – 19                                               MAR     153.25 – 2.70
MAR     1969 – 18                                               MAY     154.70 – 2.30
MAY     1991 – 16                                                JUL     154.95 – 2.30
JUL      2015 – 16                                                SEP     154.90 – 2.35
SEP      2027 – 16                                                DEC    154.80 – 2.50

26th. February, 2015.
The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of January were 8,263 bags or 2.59% lower than the same month last year, at a total of 310,829 bags.   The lower performance follows more restrained export volumes for the last quarter of last year and therefore the cumulative coffee exports for the first four months of the present October 2014 to September 2015 coffee year are 137,745 bags or 12.27% lower than the same period in the previous coffee year, at a total of 985,018 bags.

However in terms of value and despite the 12.27% dip in volume, the value of Uganda’s coffee exports for the first four months of the present coffee year is $ 16,188,362.00 or 14.27% higher than the same period in the previous coffee year, a total of $ 129,640,670.00.    This added value and in terms of US dollars that now have some more muscle, will do much to inspire the further growth within this already growing coffee industry that while being the second largest producer after Ethiopia in terms of exports, is tending to top the list as the largest coffee volume exporter in Africa.

This dip in export performance from Uganda has been forecasted to continue during the month of February, with some estimating that due to the negative effects of dry weather for the central and eastern districts on new crop volumes and deliveries, that there could be as much as a 30% dip for the month.     One might also presume that the negative effects of the reversal of the fortunes of the reference prices of the international coffee markets shall also have some negative effect upon coffee deliveries from Uganda, with exporters struggling to match the consumer market industry price dictates to the price demands of the internal market farmers and traders.

This factor of internal market price resistance is common to most producers and producer blocs for the present and with these demands forcing exporters of both arabica and robusta coffees to have raised their price differentials relative to the terminal market values, for new business.   This is tending to retard new business and the physical coffee trade is in many instances stalled, while relatively well stocked consumer market industry players stand back to play the waiting game, as they foresee that finally the producers shall be obliged to accept the price dictates of the fund dominated terminal markets.   Albeit that in terms of production for many producers, the present trading range of the markets is falling below cost of production, but this is a factor that has never been a concern of the chart influenced funds.

Well illustrating the negative effects upon export sales of the reversal in the fortunes of the coffee terminal markets is the report that the arabica coffee exports for the start of this year so far are approximately 50% lower than the same period last year, which is a factor that well exceeds the fact that this new arabica coffee crop might be marginally lower than the previous crops output.  The country is however forecasting a much larger new robusta crop which is presently starting to come to the market and one would think that these coffees might more easily come to the market, to see overall Indian export volumes start to pick up during the second quarter of the year.

The truckers strike in Brazil continues and with not success forthcoming from yesterday’s negotiations, but the Brazilian police did yesterday clear the truckers blockade of the routes into the leading port of Santos and for the present, there has not been any marked disruption of coffee shipments.    There are however concerns that if a solution is not soon agreed, that the truckers could escalate and broaden within the country their disruptive activities and cause hiccups to deliveries of grains, soybeans and coffee to the port.   

The arbitrage between the markets has narrowed yesterday to register this at 57.90 usc/Lb., while this equates to a relatively attractive 40.36% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 6,712 bags yesterday, to register these stocks at 2,277,626 bags.   There was meanwhile a larger in volume 11,815 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,473 bags.

The commodity markets were mixed yesterday, with the macro commodity index remaining relatively steady for the day.   The Oil, Cotton, Copper, Gold, Silver and Platinum markets showed buoyancy for the day, while the Natural Gas, Cocoa, Orange Juice, Wheat, Corn and Soybean markets had a softer day and the Coffee and Sugar markets and with Sugar hitting five year lows, experienced a significantly softer days trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.05% higher; to see this Index registered at 431.60.   The day starts with the U.S. Dollar marginally softer and trading at 1.554 to Sterling and 1.137 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 61.75 per barrel.

The London market started the day yesterday on a steady note and followed by some further corrective buoyancy for the New York market, which seemingly inspired some buoyancy for the London market and with both markets entering the afternoon on a positive track, with seemingly support coming from consumer market industry buying.   However as the afternoon progressed the New York market started to come under pressure and slipped back into positive territory, while the London market shed a little weight but retained its buoyancy for a little while.   The New York market started to trigger sell stops and extended its losses, with the London market following suit and finally moving back to join New York in in negative territory.  The London market continued to end the day on a very soft note and with 84.2% of the earlier losses of the day intact, while the New York market registered new one year lows and ended the day of a very soft note and with 84.5% of the earlier losses of the day intact.   This soft close and with selling pressure dominated by the fund and speculative sectors of the market rather than the producers and with no indication as to when the oversold funds might show exhaustion does little to inspire confidence, but one might expect to see a degree of opportunist roaster price fixation buying support coming in to provide a degree of buoyancy for the light early trade today, against the soft prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1850 – 34                                               MAR     139.75 – 5.60
MAY     1886 – 32                                               MAY     143.45 – 5.45
JUL      1913 – 32                                                JUL      146.35 – 5.45
SEP      1937 – 31                                               SEP      149.10 – 5.40
NOV     1954 – 30                                                DEC     152.85 – 5.25
JAN      1968 – 29                                               MAR     155.95 – 4.90
MAR     1987 – 29                                               MAY     157.00 – 4.70
MAY     2007 – 32                                                JUL      157.25 – 4.70
JUL      2031 – 32                                                SEP      157.25 – 4.50
SEP      2043 – 32                                                DEC     157.30 – 4.45

25th. February, 2015.
The internal market in Vietnam has yet to recover from last week’s Tet New Year holiday break, during which time the reference prices of the London robusta market impacted negatively upon internal market prices for the large stocks of new crop coffees.   This has resulted in relatively strong internal market price resistance, which is dampening selling activity within the country and likewise in terms of their influence upon asking differentials for new business on the part of the exporters, in slow sales for the beginning of this week.

The Brazil Coffee Industry Association has indicated that domestic coffee consumption dipped over the past year to 20.33 million bags, but that this year should see consumption recover to 21 million bags.   The steady nature of this the second largest individual country coffee market following the U.S.A. seemingly indicates that the Brazil domestic coffee market that has been steadily growing over the past fifteen years, is now hitting maturity.   Thus along with the growing market share of portion control single serve pods and capsules within the Brazil market, one would imagine that there is limited growth potential within this market over the coming years.

Thus in terms of the market share that Brazil holds within the consumer markets that accounts for approximately 33 million bags per annum, one would foresee demand for Brazil coffees to be approximately 54 million bags per annum.   This demand in terms of the previous 2014 crop of approximately 48 million bags and a follow on crop this year that many forecast to be around 49 million bags, shall potentially be supplemented by approximately 10 million to 11 million bags of carryover stocks of mostly arabica coffees, which were at hand at the start of the 2014 crop.

However with these Brazil coffee stocks being steadily liquidated, the country heads towards a somewhat critical situation in terms of the follow on 2016 crop as by then the carryover stocks shall be potentially minimal and unless this crop proves to be a surplus one, Brazil coffee supply shall most certainly tighten for the 2016/2017 coffee year.   Thus the new Brazil spring and summer rain season for the last quarter of this year and the first quarter of next year shall prove to be a matter of some considerable concern, as it has to be a good rain season if there is to be bumper new coffee crop in 2016.   With world weather conditions these days very erratic, this new rain season is not guaranteed and there is a potential for much speculation and volatility for the presently bearish coffee markets, during the last quarter of this year.

There are concerns in Brazil over the prevailing trucker’s strike that is demonstrating against what they see to be high fuel prices, which is disrupting deliveries of commodities to the port of Santos.  This strike if it continues might cause some hiccups for coffee shipments for the short term, but it has not so far had a noticeable negative influence upon coffee shipments.   While with the government in negotiations with the truckers, the strike is not having any real influence upon sentiment within the coffee markets.

There is little in the way of fundamental news forthcoming from the main producer countries and producer blocs, with such news that is in play being generally positive for longer term coffee supply and adding little support for the markets.   But there is in terms of consumer markets, many new developments within the dominant European market.

Mondelez International have announced that Lavazza who had been negotiating a price to take over the L’Or and Grand Mere coffee brands, now have exclusivity to rather take over the more substantial Carte Noire coffee brand.   The sale of the Carte Noire brand designed to satisfy the European Competitions Commission, in the bid for Mondelez International and D. E. Master Blenders 1753 to merge their dominant coffee companies.

This merger is seen to be something of the threat to the dominant market share of Nestle, who presently dominate the rapidly growing single serve coffee market share in Europe.   However it is not the only threat as the Nespresso patents have been overturned within many European countries and with the German courts this week in a case between the Ethical Coffee Company and Nespresso, having declared the Nespresso patent null and void.   Thus further opening the European markets to a price war in terms of coffee capsule sales that are expected to register a further 15% growth in market share, during this year.  

The arbitrage between the markets has broadened yesterday to register this at 61.90 usc/Lb., while this equates to a relatively attractive 41.57% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 3,671 bags yesterday, to register these stocks at 2,270,914 bags.   There was meanwhile a larger in volume 4,242 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 35,288 bags.

The commodity markets tended to steady yesterday and with the macro commodity index taking a sideways track for the day, following the soft start to the week.  The Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a day of buoyancy, while the London robusta Coffee, Orange Juice, Gold, Silver and Platinum markets had a softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower; to see this Index registered at 431.39.   The day starts with the U.S. Dollar marginally softer and trading at 1.547 to Sterling and 1.135 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 59.15 per barrel.

The London started the day yesterday on a modestly softer note, while the New York market started to show some corrective buoyancy and with both markets taking this mixed track through into the afternoon’s continued thin and lacklustre trade.    There was little change in direction through the day and the London market continued to shed more weight to end the day on a soft note and with 96.8% of the earlier losses of the day intact, while the New York market ended the day with buoyancy and with 44.8% of the earlier gains of the day intact.   This mixed close provides little in the way of direction and one might expect a cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1884 – 31                                               MAR     144.35 + 0.90
MAY     1918 – 30                                               MAY     148.90 + 0.65
JUL      1945 – 29                                                JUL      151.80 + 0.70
SEP      1968 – 28                                               SEP      154.50 + 0.70
NOV     1984 – 28                                                DEC     158.10 + 0.65
JAN      1997 – 27                                               MAR     160.85 + 0.75
MAR     2016 – 28                                               MAY     161.70 + 0.75
MAY     2039 – 28                                                JUL     161.95 + 0.75
JUL      2063 – 27                                                SEP     161.75 + 1.00
SEP      2075 – 27                                                DEC    161.75 + 1.10

24th. February, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market increase their net long position within this market by 36.79% in the week of trade leading up to Tuesday 17th. February, to see this long position turned into a net long that was registered at 21,763 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 3,627,167 bags has most likely been reduced during the period of overall negative trade that has since followed.

The Brazil weather factor has fallen for the present by the wayside, with fair to good rains having been reported for most of the main coffee districts within the country.   While in the meantime the more volatile and active New York arabica coffee market is under pressure from the combination of a lack of positive fundamental news, the negative influences of a depressed macro commodity index, the negative nature of the charts and the threat of significant volumes of price fixation selling to come from the building stocks of unsold new crop coffee stocks in Central America.   Thus with good volumes of consumer market coffee stocks at hand, these factors are presently countering the prospects for a deficit coffee supply due for this new coffee year.

There is however no certainty over longer term weather prospects for Brazil and with the less threatening Brazil frost season aside, one has to look to the presently erratic and often unstable world weather conditions and in this aspect, the next spring and summer rain season in Brazil that shall determine the size of the follow on 2016 new crop.   This crop with last years and this year’s deficit Brazil crops influencing a steady liquidation of the carryover coffee stocks that were inherited last year, shall dictate that the 2016 crop has to be a bumper one, if Brazil is not to experience tightening longer term supply.   

Thus the question is will the funds throw longer term uncertainty and caution to the wind and pressure the markets lower and to unprofitable levels for most producers to look to buy back profits from these fundamentally unrealistic lows, or shall they with the markets looking somewhat over sold soon step in to reverse the trend and profit from a higher value base.   Presently though and with nothing in the way of supportive fundamental news coming forth from any of the main producer blocs and including Brazil market sentiment is very bearish, but it is often the case that when everyone is bearish there is an unexpected corrective move on the horizon and it is not impossible to soon see a turn within the New York market and one that would likewise inspire the London market into a higher trading range.    

The European Competitions Commission has agreed to extend the deadline on the review on the proposed merger between Mondelez International and D. E. Master Blenders 1753 from the 13th. May to the 1st. June and thus, provided more time for the companies to provide supporting input for the merger.   This merger which most still believe shall take place, would result in significantly stronger competition for Nestle within the single serve coffee market.

However it would seem that the initial proposal by Mondelez to sell off the smaller L’Or and Grand Mere brands to reduce dominance in mainly the French market has not been acceptable to the European antitrust regulators, which has now seen Mondelez suggest to sell off the larger Carte Noire brand.   Thus adding to much speculation as to who it might be aside from Lavazza who have been in negotiations and attempting to raise cash to take over the L’Or and Grand Mere brands might be entering the field of play and have the financial resources in terms of the Carte Noire brand, to relieve the proposed merged company of its threat of dominance within some of the major European markets.

The arbitrage between the markets has broadened on Friday to register this at 59.89 usc/Lb., while this equates to a relatively attractive 40.40% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 6,779 bags yesterday, to register these stocks at 2,267,243 bags.   There was meanwhile a larger in volume 8,973 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 39,530 bags.

The Certified robusta coffee stocks held against the London exchange were seen to increase by 70,000 bags or 2.83% over the two weeks of trade leading up to Monday 16th. February, to see these stocks registered at 2,540,667 bags on the day.   These stock unlikely to seem much growth on the short term, due to the relatively high asking differentials for new crop robusta coffee sales out of Vietnam, which continue to inflate their prices relative to the price dictates of the London market.   

The commodity markets took a soft track yesterday, with most markets contributing to the negative nature of the macro commodity index for the day.   The Cocoa market nevertheless showed buoyancy, while the Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day and the Oil, Natural Gas, Sugar, Coffee and Orange Juice markets had a significantly softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.78% lower; to see this Index registered at 431.43.   The day starts with the U.S. Dollar maintaining its muscle and trading at 1.543 to Sterling and 1.132 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 59.00 per barrel.

The London started the day yesterday on a modestly softer note, while the New York market shrugged off a couple of early minutes of selling pressure, to show early buoyancy and with both markets taking this mixed track through into thin afternoon trade.   As the afternoon progressed however and with trade remaining thin, the New York market with the negative influences of the soft macro commodity index playing its part started to lose its way, to dip back through par and join the London market in lacklustre negative territory and despite trading relatively thin trading volumes, to further extend the losses as the afternoon progressed.   The London market continued to end the day on a soft note and with 72.2% of the earlier losses of the day intact, while the New York market hit new one year lows and ended the day on a very soft note and with 93% of the losses of the day intact.   This soft close and with no supportive fundamental news coming to the markets does little to inspire confidence which is unlikely to inspire little better than a near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1915 – 27                                               MAR     144.45 – 4.20
MAY     1948 – 26                                               MAY     148.25 – 4.65
JUL      1974 – 27                                                JUL      151.10 – 4.65
SEP      1996 – 26                                               SEP      153.80 – 4.60
NOV     2012 – 23                                                DEC     157.45 – 4.55
JAN      2024 – 23                                                MAR    160.10 – 4.55
MAR     2044 – 19                                                MAY    160.95 – 4.55
MAY     2067 – 17                                                 JUL     161.20 – 4.50
JUL      2090 – 15                                                 SEP     160.75 – 4.55
SEP      2102 – 15                                                 DEC    160.65 – 4.40

23rd. February, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 15.44% in the week of trade leading up to Tuesday 17th. February;  to register a net long position of 14,080 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 9.79%, to register a net long on the day of 25,548 Lots.
   
During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 17.12%, to register a net long of 8,847 lots on the day.   This net long position that is the equivalent of 2,508,085 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The big question has to be if the funds shall have the confidence to continue to follow the charts and further sell and liquidate their declining net longs within the New York arabica coffee market, or shall there be a degree of cautious corrective activity due for this week’s trade.   This is very much unclear for the present as the logic of fundamental news does not always play its part and with the funds holding the financial muscle to make a market and profit out of the similarly dictated reversals, one can only take a wait and see stance towards the markets.

The farmers and internal market traders within the Central American producers and with building levels of new crop coffee stocks at hand are apparently still in belief of the future support from a relatively modest new Brazil crop and continue to show varying levels of price resistance towards the dictates of the softer reference prices of the New York market, which continued to retard exporter selling aggression from the region last week.   As is there is likewise a degree of internal market price resistance developing within Colombia, but not sufficient to stall the markets and there remains slow and steady consumer market fill in new industry business being concluded and with roaster buying coming in under the New York market to counter the negative track that the market took during the afternoons trade on Friday.

The Vietnamese are starting to return to work today following a week of Tet New Year celebrations, but with little in the way of good news for the coffee sector of the country, as they see the results of last week’s softening of confidence in the coffee markets.  While the Brazilians who had returned to work on Thursday post the annual Carnival celebrations, had already had to absorb the disappointing news of a softer post-holiday market.   One would imagine that with the two largest producers who account for over 50% of world coffee production having returned to the field of play that this would be more negative than positive for trade, but with the Brazilians already well sold and the Vietnamese very experienced at playing the market, that this shall not be the case and that there shall not be any panic selling aggression due for the markets this week.  

The arbitrage between the markets has broadened on Friday to register this at 63.36 usc/Lb., while this equates to a relatively attractive 41.44% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 11,757 bags on Friday, to register these stocks at 2,260,464 bags.   There was meanwhile a larger in volume 12,623 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 48,503 bags.

The commodity markets were mixed on Friday, but with the overall macro commodity index taking a softer track for the day.   The Brent Oil, Natural Gas, Cocoa and New York arabica Coffee had a day of buoyancy, while the U.S. Oil, Sugar, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.42% lower; to see this Index registered at 434.81.   The day starts with the U.S. Dollar maintaining its muscle and trading at 1.538 to Sterling and 1.138 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 60.55 per barrel.

The London started the day on Friday under some modest negative pressure in thin trade, while the New York market attracted early support in likewise thin trade to post some modest buoyancy and with both markets taking this mixed track into the afternoon’s trade.   The New York market did however come under some degree of negative pressure as the afternoon progressed to dip back and join the softer London market in negative territory but with the losses limited and bouts of corrective support dragging the market back towards par.    The London market continued on its softer track to end the day on a soft note and with 88.9% of the earlier losses of the day intact, while the New York market managed to end the day on a hesitantly positive note, but with only 10.7% of the earlier in the day’s gains intact.   This is a rather unconvincing close and one might think that it shall result in a cautious and hesitant slow start for early trade today for both markets, as players look to see where direction might be against the mixed close on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1942 – 15                                               MAR     148.65 – 0.55
MAY     1974 – 16                                               MAY     152.90 + 0.25
JUL      2001 – 17                                                JUL      155.75 + 0.30
SEP      2022 – 17                                                SEP     158.40 + 0.30
NOV     2035 – 18                                                 DEC    162.00 + 0.30
JAN      2047 – 19                                                MAR    164.65 + 0.35
MAR     2063 – 19                                                MAY     165.50 + 0.40
MAY     2084 – 19                                                 JUL     165.70 + 0.45
JUL      2105 – 19                                                 SEP     165.30 + 0.35
SEP      2117 – 19                                                 DEC    165.05 + 0.35

20th. February, 2015.
The National Export Centre in Nicaragua have reported that the countries coffee exports for the month of January were 774 bags or 0.86% higher than the same month last year, at a total of 90,324 bags.   This export performance has contributed to the countries cumulative exports for the first four months of the present October 2014 to September 2015 coffee year to be 79,423 bags or 42% higher than the same period in the previous coffee year, at a total of 268,534 bags.

This latest report and with the new crop harvest close to completion was accompanied by a positive new crop forecast, which the National Export Centre foresees to be a 7% larger new crop, which they expect to total 1.61 million bags.  This number is however somewhat conservative, as there are qualified trade and industry forecasts who have indicated a new crop for Nicaragua to be closer to 1.8 million bags.    Specifics aside however, there is no doubt that the combined new crops from the producer bloc of Mexico and Central America shall this year be approximately 1 million bags larger than the previous crop, with much of these new crops still to be sold and to a degree, these potential sales are dampening speculative spirits for the related New York market against which they shall trigger price fixation hedge selling.

Added to this rising new crop fine washed arabica coffee supply from Central is the rising coffee supply from neighbouring Colombia where in an interview yesterday, the National Coffee Federation of Colombia have forecasted that following the October 2013 to September 2014 coffee crop of 12,128,400 bags, the forecast that the coffee production for the present October 2014 to September 2015 coffee year shall rise to at least 12.5 million bags and possibly even exceed 13 million bags.   This ongoing with positive output from Colombia is expected to be followed by a much improved new crop from Peru which starts being harvested in April, which many foresee shall increase by approximately 500,000 bags to total 3.9 million bags.

The prospects of rising Central and South America coffee supply for the present coffee year has not however resulted in any degree of selling aggression from Central America and Colombia and rather with relatively strong internal market price resistance being shown to the negative dictates of the softening of the reference prices of the New York market, it is forcing exporters to have to continue to demand relatively positive and presently increasing asking differentials for new business.   These differentials well above the value of tendering and delivering surplus coffees to the New York market and likewise values that do not inspire consumer market traders to carry high differential trade stocks, which sees the certified coffee stocks of the New York market remaining modest and little potential for short term growth of fine washed arabica coffee stocks within the consumer markets.

The prominent coffee trade house ED&F Man and Volcafe coffee trade house forecasted that the new 2015 crop shall come in at 49.5 million bags and therefore 1 to 2 million bags higher than many other earlier forecasts and that despite this still relatively modest number, it shall contribute along with a 3.2 million bags larger end of this year new Vietnam crop of 30.6 million bags, to global coffee supply of 151.1 million bags for the next October 2015 to September 2016 coffee year.   The report does however indicate that global coffee demand for the next coffee year shall be 152.5 million bags and that despite this improved supply, that the next coffee year shall nevertheless experience a 1.4 million bags deficit supply.   Thus why the longer term coffee supply forecast might be seen to be neutral and perhaps even mildly supportive for the coffee markets, the shorter term assessment of the pending new crop in Brazil shall be much larger than many other forecasts have indicated, tended to be bearish for late in the day sentiment yesterday.

The arbitrage between the markets has narrowed yesterday to register this at 62.39 usc/Lb., while this equates to a relatively attractive 40.87% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 730 bags yesterday, to register these stocks at 2,248,707 bags.   There was meanwhile a larger in volume 1,835 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 61,126 bags.

The commodity markets were mixed yesterday, to see the overall macro commodity index taking a sideways track for the day.  The Natural Gas, Cotton, Copper, Wheat, Soybean, Gold and Silver markets showed buoyancy for the day, while the Oil, Sugar, London robusta Coffee, Cocoa, Orange Juice, Corn and Platinum markets had a softer days trade and the New York arabica Coffee market took another sharp late in the day beating.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.02% lower; to see this Index registered at 436.63.   The day starts with the U.S. Dollar maintain its muscle and trading at 1.542 to Sterling and 1.136 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 60.05 per barrel.

The London and New York markets both started the day yesterday with the London market steady and the New York market experiencing a degree of positive buoyancy, but while the New York market took a steady track into the afternoon’s trade, the London market had turned modestly softer.   As the afternoon progressed however the New York market started to come under pressure and moved back to join the London market in negative territory and finally with sell stops being triggered along with some post-holiday catch up price fixation selling from Brazil, the New York market overtook the London market and moved significantly lower.  The London market continued to end the day on a soft note and with 76% of the earlier losses of the day intact, while the New York market ended the day setting new one year lows and with 95.5% of the earlier losses of the day intact.  This was a very dismal performance for the markets and especially so with the more volatile New York market ending at the lows of the day, but one might think that there shall be a degree of exhaustion in play and that this may inspire a steady rather than soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1957 – 18                                               MAR     149.20 – 3.60
MAY     1990 – 19                                               MAY     152.65 – 4.30
JUL      2018 – 18                                                JUL      155.45 – 4.25
SEP      2039 – 18                                                SEP     158.10 – 4.20
NOV     2053 – 20                                                DEC     161.70 – 4.15
JAN      2066 – 21                                               MAR     164.30 – 3.90
MAR     2082 – 21                                               MAY     165.10 – 3.90
MAY     2103 – 21                                                JUL     165.25 – 4.05
JUL      2124 – 21                                                SEP     164.95 – 4.25
SEP      2136 – 21                                                DEC    164.70 – 4.30

19th. February, 2015.
The Ministry of Agriculture in El Salvador have reported that with the new crop harvest in progress the coffees produced so far are already 73,444 bags or 13.25% more than the previous full harvest, at a total of 627,747 bags.   This is a rather exact figure in terms of calculating what might have been processed in a good number of mills and with the Ministry of Agriculture forecasting that by the end of the harvest the country shall produce 690,000 bags as against most internal private trade and industry forecasts for something in the order of 900,000 bags, one might presume that the new crop harvest so far, shall have exceeded this relatively conservative figure that the ministry has reported.

The Brazil carnival is over and has been a relatively wet one for the south east of Brazil, but not sufficient to dampen celebratory spirits and the coffee industry players shall return to their offices today to view the negative track that the coffee markets have taken this week.   The rains have meanwhile been beneficial for the prospects for the developing new crop, but shall not change the scenario that this new crop shall be another relatively modest one and bring forth a potential 5 million to 6 million bags deficit crop.   Fortunately a situation that shall be adequately covered by the prospects for carryover stocks of a similar number, which shall assist Brazil to maintain a steady supply to the consumer markets through to next year’s new crop.

The concern is though and with the issues of the June and July frost season aside and now largely ignored since the last frost was twenty one years ago, is what shall be the prospects for the next 2016 Brazil crop.  If one is to presume that this year shall see normal weather conditions and with the spring and summer rain season coming into play in late September and to carry on through for the following six to seven months, one might expect a good recovery and a surplus new crop.   However should there be any hiccups for this rain season and with reserve stocks much depleted and due to be liquidated my mid next year, one might expect to see a sharp speculative positive rally for the coffee markets and the threat of this one would think shall prove to be a limiting factor for the bears who presently dominate direction within the volatile New York market.

This brings to question where the bottom of the present sell off shall be, as while the charts and the technical trade are directing the market lower, there has to be some degree of fundamental reason to be cautious about selling too short into the coffee markets ahead of a not impossible to encounter frost season and an uncertain in terms of the present erratic world weather conditions, new rain season.   Thus one might think that the negative charts aside, there is the possibility for the more cautious of the speculative short sold funds and traders to soon look to rising levels of the somewhat retarded new crop price fixation selling activity due from the larger new crop Central American producers, to buy into the New York and take some profits out of the recent liquidation.   This would make one think that the further downside of the market might be limited and that the New York market that hit one year lows yesterday, might well be close to its bottom.

The Coffee Board in the Philippines along with the Agricultural Ministry are looking to ways to inspire a recovery for the countries coffee production, which has fallen do relatively dismal levels for this once coffee exporter, that now imports 80% of its rising domestic market coffee requirements.  There have for many years been a good number of both state and private roasting industry support programs looking to promote coffee farming within this country that has the natural conditions conducive to large scale coffee farming, but so far these have not had any market effect.  There is however some more aggression on the part of the authorities in the Philippines developing and with not only farm support that agronomy extension services being provided for the farmers, but also some special low interest finance being provided.  Thus with the example of the successes of neighbouring Vietnam who are a leading supplier to the Philippine roasting companies, one would think that there is a good chance for the country to finally start on its track to one again become a significant coffee producer, albeit that it is most probably going to be more than a decade before the country might once again be a coffee exporter.

The arbitrage between the markets has narrowed yesterday to register this at 65.82 usc/Lb., while this equates to a relatively attractive 41.94% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 25 bags yesterday, to register these stocks at 2,247,952 bags.   There was meanwhile a larger in volume 2,966 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 59,291 bags.

The commodity markets were generally soft yesterday, with U.S. dollar showing some buoyancy and the macro commodity index tending softer for the day.   The Natural Gas, Cocoa, Cotton and Copper markets had a day of buoyancy, while the Oil, Sugar, Coffee, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.46% lower; to see this Index registered at 436.71.   The day starts with the U.S. Dollar marginally easier and trading at 1.545 to Sterling and 1.141 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.55 per barrel.

The London and New York markets both started the day yesterday showing buoyancy and entered the afternoon on a positive track, but as the afternoon progressed the New York market started to come under renewed selling pressure and with the London market following suit, to see both markets once more in negative territory.   This was followed by a brief period of recovery for the New York market and followed by the London market but it was short lived and both markets moved back into negative territory and with relatively large volumes of trade, accompanying the selling activity.   The London market did however limit its losses and ended the day on a soft note but having recovered 73.8% of the earlier losses of the day, while the New York market ended the day on a soft note and with 73.1% of the earlier losses of the day intact.   This soft close does little to inspire confidence, but perhaps with thoughts of the possibility of a nearby correction on the horizon, there might be some buoyancy due for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1975 – 18                                               MAR     152.80 – 2.85
MAY     2009 – 11                                               MAY     156.95 – 1.90
JUL      2036 – 7                                                  JUL      159.70 – 1.85
SEP      2057 – 7                                                 SEP      162.30 – 1.80
NOV     2073 – 5                                                  DEC     165.85 – 1.70
JAN      2087 – 2                                                 MAR     168.20 – 1.50
MAR     2103 – 2                                                 MAY     169.00 – 1.35
MAY     2124 – 2                                                  JUL     169.30 – 1.35
JUL      2145 – 2                                                  SEP     169.20 – 1.50
SEP      2157 – 2                                                  DEC    169.00 – 1.65

18th. February, 2015.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 216,964 bags or 3.93% during the month of January, to register these stocks at 5,308,000 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.

Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6,308,000 bags, it would have equated to at least a very safe 12.9 weeks of roasting activity and still a safe reserve, ahead of the pending delivery of increasing volumes of new crop coffees from Mexico, Central America, Colombia and Vietnam.  These new crop coffees and however not expected to surge in supply, as the North American roasters alike the consumer industries worldwide, remain slow and steady buyers against what many predict to be a market that should the rains come in Brazil next week, might still lose some more weight.

The dip in these stocks during the month of January in North America which are stocks that are nevertheless higher than at the same time last year are no reflection of any shortage of coffee supply, but rather are related to the prevailing price resistance that is being shown within most producer countries, which is inflating export differentials and is retarding the growth of the relatively expensive trade stocks.   This is likewise transferring to a degree the weight of new crop stock holdings to the producer markets rather than the consumer markets and thus, is retarding the delivery of new crop coffees into consumer market trade stocks and the certified stocks of the New York and London markets.   But there is no doubt in the meantime, that there is more than sufficient short to medium term coffee supply on the horizon, for the consumer market industries.

Meanwhile in terms of consumer market demand the combined West and East European market consumption that accounts for close to 50% of world consumer market demand is looking flat to marginally negative, with the surging growth of the more parsimonious single serve pod and capsule sector of the market impacting upon consumption per cup, while the economic issues within the Mediterranean Rim countries and Eastern Europe are also having some impact upon consumption.   This is apparently not the case within the North American markets that account for approximately 26% of consumer market demand, where consumption growth is steady to buoyant and the economic circumstances unlike in Europe are more positive for consumption growth.  But alike the leading European market this market is well developed and somewhat saturated and therefore, limits the growth potential for the market.

There is however a steady growth in consumption within the Asian markets and including the Asian producer countries, which is perhaps at a guess adding approximately 2 million to 2.5 million bags in consumption per annum, but this is perhaps partially countered by the dip in overall European market volume rather than cup demand.   Thus while the deficit Brazil crop factor last year and potentially so again for this year is having some negative effect upon longer term world coffee stocks, they remain more than sufficient to satisfy demand through to mid next year and the next 2016 Brazil crop.   This follow on crop becoming the critical factor and the big question, which shall inspire a keen eye being kept upon the weather conditions in Brazil for the last quarter of this year, that shall dictate the countries next crop potential.    

The arbitrage between the markets has narrowed yesterday to register this at 67.22 usc/Lb., while this equates to a relatively attractive 42.32% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 9,097 bags yesterday, to register these stocks at 2,247,977 bags.   There was meanwhile a similar in volume 9,051 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 62,257 bags.

The commodity markets were mixed yesterday, but with the macro commodity index nevertheless tending negative for the day.   The Oil, Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas, Coffee, Copper, Gold, Silver and Platinum markets tended softer for the day and particularly so the New York arabica coffee market that suffered from a sharp negative correction.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.50% lower; to see this Index registered at 438.72.   The day starts with the U.S. Dollar marginally easier and trading at 1.536 to Sterling and 1.141 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 62.00 per barrel.

The London and New York markets post the long weekend for New York and the buoyancy shown the previous day from a solo trading London market, opened yesterday with both markets experiencing buoyancy.   The markets maintained their positive stance into the afternoon trade and with the London market ticking a two month high, but lost their way as the afternoon progressed and with sell stops being triggered to accentuate the losses, both markets suffered from a relative sharp reversal of fortunes.    The chart based sell stops within the New York market providing the most aggressive negative pressure factor, which countered any supportive advantageous buying that came into play within this more volatile of the markets.   The London market continued to end the day on a soft note and with 79.3% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 86% of the earlier losses of the day intact.   The sell off yesterday is potentially negative for both the charts and sentiment but one might expect to see some degree of caution and even a degree of buoyancy for early thin trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1993 – 48                                               MAR     155.65 – 7.55
MAY     2020 – 46                                               MAY     158.85 – 7.65
JUL      2043 – 42                                                JUL      161.55 – 7.60
SEP      2064 – 40                                                SEP     164.10 – 7.45
NOV     2078 – 38                                                 DEC    167.55 – 7.20
JAN      2089 – 38                                                MAR    169.70 – 7.00
MAR     2105 – 38                                                MAY    170.35 – 6.95
MAY     2126 – 38                                                 JUL     170.65 – 7.00
JUL      2147 – 38                                                 SEP     170.70 – 7.10
SEP      2159 – 38                                                 DEC    170.65 – 7.10

17th. February, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market increase their net long position within this market by 16.35% in the week of trade leading up to Tuesday 10th. February, to see this long position turned into a net long that was registered at 15,910 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,651,667 bags has most likely been further increased during the period of overall positive trade that has since followed.

This positive move within the London market over the past two weeks has been assisted by the relatively slow selling activity from Vietnam prior to this week’s Year of the Goat Tet New Year Holiday (Tết Nguyên Đán), which is related to the price resistance within the Vietnam internal market.   With further support coming forth from the speculative sector within the market, in reaction to the dry conditions that were experienced within the conilon robusta areas within the Espirito Santo district in Brazil, which has fueled speculation that the new Brazil conilon robusta crop might be up to 2 million bags lower than earlier forecasted.

However with the relative value of the London market having been further buoyed in solo trade yesterday and if this recovery is seen to hold or perhaps even extended post the Vietnam holiday season, there is the possibility that it might well inspire some degree of catch up selling aggression within the internal market in Vietnam next week.  This would if it happens bring into play increased volumes of exporter price fixation activity for the market, to impact negatively upon its fortunes.  It is though still a few days to the fore and one might still see some speculative profit taking coming into play within the London market and thus, it is difficult to forecast where it might be by Monday next week.

The National Coffee Council of El Salvador have reported that the countries coffee exports for the month of December were 16,699 bags or 70.1% higher than the same month in the previous year, at a total of 40,521 bags.  This they report has been followed by the countries coffee exports for the month of January having been 21,979 bags or 56.42% higher than the same month last year, at a total of 60,936 bags.

This much improved performance over the past two months has however been countered by a minimal export performance over October and November last year and therefore, El Salvador’s cumulative exports for the first four months of the present October 2014 to September 2015 coffee year are still 12,568 bags or 10.46% lower than the same period in the previous coffee year, at a total of 107,544 bags.   However with the new crop that many forecast to be in excess of 30% higher than the past crop now peaking, one might expect that export volumes shall steadily improve over the coming months and El Salvador to start reporting much improved export volumes for this present coffee year.

This improved export performance from El Salvador is expected to be mirrored albeit not the same degree by their neighbors in Central America, to see this leading fine coffee producer bloc add in excess of 1 million bags of fine washed arabica coffees to coffee supply for this new coffee year.    With this increase to be further inflated by increased supply from Colombia and followed during the last quarter of the present coffee year, by the impact of a larger new crop from Peru and thus for the present there are no concerns within the consumer bloc in terms of the supply of the better quality coffees.

But so far and with the majority of the world’s producers taking a wait and see stance towards the prospects for the new Brazil crop and therefore its impact to overall coffee supply, there remains price resistance within the internal markets of most producers that has resulted in relatively positive export price differentials for the first month and a half of this year.   These differentials in terms of the relatively well supplied washed arabica coffees might however start to come under some pressure within Central America in the coming months, as the new crop coffee stocks start to build and the farmers and internal market traders start to compete to liquidate some of their new crop coffee stocks.

The arbitrage between the markets has narrowed yesterday to register this at 72.79 usc/Lb., while this equates to a relatively attractive 43.72% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,000 bags yesterday, to register these stocks at 2,256,074 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 71,308 bags.

The commodity markets with the U.S.A. markets closed for the Presidents holiday yesterday, not able to forward an overall perspective of direction for the day, but it was a day of renewed muscle for the U.S. dollar that surprisingly did not impact negatively upon the active markets outside of the U.S.A.  The Brent Oil, Natural Gas, Sugar, London robusta Coffee, Cocoa, Copper and Gold Markets had a day of buoyancy and the Silver market was steady, while the Platinum market had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets with many markets off the field of play unchanged from Fridays 1.17% higher; to see this Index registered at 440.92.   The day starts with the U.S. Dollar steady and trading at 1.538 to Sterling and 1.136 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 61.80 per barrel.

The London market with the New York market closed for the holidays started the day yesterday with a degree of buoyancy and set a positive platform for further gains, in the afternoon’s trade.    The market continued to end the day on a very positive note and with 90.9% of the gains of the day intact, which is perhaps conducive to a follow through near to steady start for the London market and perhaps a degree of buoyancy for the New York market for early trade today, against Friday’s close in New York and yesterdays close in London, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     2041 + 32                                               MAR     163.20 – 1.35
MAY     2066 + 30                                               MAY     166.50 – 0.95
JUL      2085 + 28                                                JUL      169.15 – 0.90
SEP      2104 + 28                                               SEP      171.55 – 0.90
NOV     2116 + 28                                                DEC     174.75 – 0.95
JAN      2127 + 28                                               MAR     176.70 – 0.90
MAR     2143 + 24                                               MAY     177.30 – 0.95
MAY     2164 + 24                                                JUL     177.65 – 0.85
JUL      2185 + 24                                                SEP     177.80 – 0.95
SEP      2197 + 24                                                DEC    177.75 – 0.95

16th. February, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 4.81% in the week of trade leading up to Tuesday 10th. February;  to register a net long position of 16,651 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 9.85%, to register a net long on the day of 28,320 Lots.
   
During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 4.81%, to register a net long of 10,675 lots on the day.   This net long position that is the equivalent of 3,026,315 bags has most likely been marginally increased over the period of mixed but overall positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The Brazilian exporter Terra Forte announced on Friday that following farm visits and evaluation of the effects of the three to four weeks of dry weather that had been experienced over the month of January, that they forecast that the forthcoming new Brazil crop shall be 580,000 bags or 1.24% higher than the previous 2014 crop, at a total of 47.28 million bags.    This figure compiled from their forecast that the new arabica coffee crop shall be 2.75 million bags or 9.39% higher at 32.05 million bags, while the new conilon robusta crop shall be 2.2 million bags or 12.64% lower than the previous crop at 15.2 million bags.

This forecast is perhaps very much in line with many other early private trade and industry forecasts, albeit that they are more positive than many in terms of the potential for the new arabica coffee crop, while being a bit more conservative than many in terms of the new conilon robusta crop.   But one might say that in terms of their assessment of the previous 2014 crop having been at least 1 million bags lower than many other previous crop reports and up to 3 million bags lower than a number of other private trade and industry forecasts, that one might adjudge the Terra Forte forecast to be leaning towards the conservative side of forecasts.   Therefore to firstly appropriate some degree of reality to their forecast, this might even indicate a slightly higher potential for the size of the new crop.

The general assessment of carryover stocks into the new 2014 crop for Brazil was a number of approximately 12 million bags of mostly arabica coffees, which would see in terms of the combination of export and domestic market demand approximately 6 million bags having been absorbed by the start of this year’s new crop and therefore, a potential carry over stock of 6 million bags into the new 2015 crop.   Thus if one is to look to this year’s new crop at being around 47 million to 48 million bags and an export and domestic market demand of approximately 54 million bags, only negligible carryover stocks into the next 2016 crop that shall need to well exceed 56 million bags if there is not to be a severe tightening up of internal market coffee supply to the countries exporters.

Thus there shall not only be concentration upon the short term weather reports from Brazil towards the further development of this year’s new crop, but also keen interest on the prospects for the new spring and summer rainfall reports from Brazil over the last quarter of the year and into the new year and one can foresee speculative volatility due for the markets due for the rest of the year, while one might think that this uncertainty shall continue to provide for a degree of speculative support under the markets for the foreseeable future.

Meanwhile post the dry period over south eastern Brazil for the first three weeks of the year, there have been fair rains experienced for the end of January and the first half of February and with further rains being forecasted for this week.   This eliminating for the present the stress upon the majority of the coffee farms and assisting in the expansion and development of the new crop cherries, albeit that the combined effects of the partial drought in south eastern Brazil for early 2014, the late start to the 2014 new rain season and the dry spell early this year contributes to the prospects for a relatively modest deficit crop for this year.  

The arbitrage between the markets has narrowed on Friday to register this at 74.15 usc/Lb., while this equates to a relatively attractive 44.53% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,225 bags on Friday, to register these stocks at 2,257,074 bags.   There was meanwhile a larger in volume 58,558 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 71,308 bags.

The commodity markets were generally positive in nature ahead of the Presidents Day holiday for North America today and the long weekend, with the macro commodity index showing overall buoyancy.  The Oil, Natural Gas, Cocoa, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, New York arabica Coffee and Copper markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.17% higher; to see this Index registered at 440.92.   The day starts with the U.S. Dollar tending softer and trading at 1.544 to Sterling and 1.142 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 60.35 per barrel.

The London and New York markets started the day on Friday with a degree of buoyancy and taking a positive track into the afternoon’s trade, but to see both markets taking a dip back into negative territory as the afternoon progressed and followed by a recovery for the markets that was sustained by the London market for the rest of the day, while the New York market once again came under negative pressure.   However with the two largest players in terms of physical coffee starting to step back from the market as the Brazilians celebrate Carnival and the Year of the Goat Tet New Year Holiday (Tết Nguyên Đán) has started in Vietnam, there is now a slowing physical trade activity over both markets.    The London market continued to end the day on a positive note and with 72.7% of the gains of the day intact, while the New York market ended the day on a softer note but having recovered 60.4% of the earlier in the day’s losses on the close.  The New York market is closed for the day and with Vietnam on holiday one cannot expect much activity within the London market that shall trade solo for the day, which is likely to experience a near to steady start for early thin trade against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     2009 + 21                                               MAR     163.20 – 1.35
MAY     2036 + 16                                               MAY     166.50 – 0.95
JUL      2057 + 15                                                JUL      169.15 – 0.90
SEP      2076 + 13                                               SEP      171.55 – 0.90
NOV     2088 + 13                                                DEC     174.75 – 0.95
JAN      2099 + 12                                               MAR     176.70 – 0.90
MAR     2119 + 12                                               MAY     177.30 – 0.95
MAY     2140 + 10                                                JUL     177.65 – 0.85
JUL      2161 + 6                                                  SEP     177.80 – 0.95
SEP      2173 + 6                                                  DEC    177.75 – 0.95

13th February, 2015.

Preliminary data released by the Vietnam Customs Authorities reports coffee exports for the month of January to have reached a total at 2,206,667 bags for the month, a decline of 5.6% on that of the same time last year. This would bring cumulative exports from Vietnam for the first four months of their new October 2014 to September 2015 coffee year, to a total 7,126,667 bags, or 2% above that of the same four months last year.

The institute of Geography and Statistics in Brazil released their forecast estimate for the 2015 coffee crop yesterday, which they foresee as due to drop 2.7% from the current 2014 production, to a figure of 43.90 million bags. This decline they note is mainly due to their lower forecast of Conilon robusta coffee year on year, which has been affected by a lack of sufficient rains during crop development. The forecast for arabica coffee production is meanwhile set to increase marginally year on year by 0.80% to 32.20 million bags, whereas the Conilon robusta production is anticipated to be lower than that of their figure for the 2014 crop robusta coffee crop and is put at a potential 11.70 million bags in this coming crop year.  These figures will likely received as understated while this forecast is close to the traditionally conservative Brazil government official National Crop Supply agency that has lately provided their forecast for the new 2015 Conilon crop to be between 11.60 million bags and 12.20 million bags, which may already be viewed by trade and industry to be at the lower end of estimates of this dry weather affected Conilon robusta crop to come. 

The well respected local crop analysts Safras e Mercado have meanwhile estimated that Brazilian producers have sold 79% of the estimated 48.90 million bags harvest in 2014 by the end of last week.  The improved value attained from the New York arabica markets and assisted by the weaker Brazil Real against the US Dollar to provide impetus to these sales and overall 79% of the estimated 33.40 million bags of arabica coffee and 77% of the estimated 15.50 million bags of Conilon robusta coffees had been sold. 

The arbitrage between the markets widened yesterday to register at 75.82 usc/Lb., while this equates to a relatively attractive 45.28% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire 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 decrease by 1,270 bags yesterday, to register these stocks at 2,259,299 bags. The number of bags pending grading for this exchange was unchanged on the day, at a total 12,750 bags yesterday.

It was overall a positive day for the commodity markets yesterday, although sentiment remains tenuous surrounding the economic discussions on Greece and the Eurozone, mildly negative jobless numbers from the States influenced a weaker US Dollar and the influential Oil markets gained in positive support. It was a stronger close for Oil, Coffee, a positive day for Gold, Silver, Platinum, Palladium, Cocoa, Cotton, Copper and a steady day for Sugar, Soybean and Orange Juice markets yesterday.  It was a softer day for Corn and Wheat. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.08% higher to see this Index registered at 435.827. The day starts with the US Dollar softer and trading at 1.5414 to Sterling and 1.1438 to the Euro, while the Brazil Real is trading at 2.82 and North Sea Oil is firmer in early trade selling at $ 57.74 per barrel. 

The day started on a positive note in the coffee markets yesterday and with good volume to setting the pace at the outset, both markets in modestly positive territory and an upward attempt in New York met with sellers at the top where levels moved back toward unchanged.  The arrival of the America’s later in the session as their business day began, met with a weaker US Dollar, a recovering Brazil Real and later reaction to a report from the Brazilian Institute of Geography and Statists released during the trading day.  The added volume of spreads from the prompt month in New York and a continuation in speculative options activity all contributed toward an upward surge as the New York market launched into positive territory with stops triggering along the way and similarly the London robusta market to set a new firmer trading range in both markets for the rest of the session with producer selling activity noted at the top with measured activity assisting to maintain the new higher range. 

Looking ahead, New York heads into a long weekend and will be closed on Monday to observe Presidents Day while London will be trading as usual.  The Brazil Carnival gets underway this weekend and stretches into next week, as does Vietnam’s week long Tet New Year holiday from 14th February, with the countries commercial activities due to close for nine days thereafter. This will see the entry into the new week on Monday with London trading alone and New York arabica market open again on Tuesday with first notice day and the two leading coffee producer countries distracted with internal festivities. 

It was meanwhile, another heavy volume day for both markets yesterday, with New York steadying out into the rest of the afternoon in a narrow band and a close just off the highs of the day, London had a similarly positive end to the day holding on to the gains to the end and finished the day near to the highs in this market, to set the close yesterday in positive territory as follows:  

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

MAR   1988 + 46 MAR 164.55 + 5.10
MAY   2020 + 46 MAY 167.45 + 5.15
JUL    2042 + 43 JUL 170.05 + 5.20 
SEP    2063 + 40 SEP 172.45 + 5.10
NOV   2075 + 38 DEC 175.70 + 5.05
JAN    2087 + 38         MAR     177.60 + 4.90
MAR   2107 + 38 MAY     178.25 + 4.85
MAY   2130 + 38 JUL      178.50 + 4.85
JUL    2155 + 38 SEP     178.75 + 4.95
SEP    2167 + 38 DEC     178.70 + 5.05

12th February, 2015.

The International Coffee Organisation have come forth with their annual calendar year exports report, to confirm that world coffee exports in calendar year 2014 to be the highest on record, at a total 111.70 million bags.  The increase in world export performance was fuelled by an increase of 15.23% in exports from Brazil in the year, to a total 36.3 million bags in 2014.  It was a positive export year for the leading robusta producer Vietnam and likewise the leading washed arabica coffee producer Colombia, which continues to recover from earlier weather related adversely affected coffee crops and rejuvenation programs, to post an increase in 2014 by 13.40% on that of calendar year 2013, to register exports for 2014 at 11 million bags.  

The arbitrage between the markets narrowed yesterday to register at 72.76 usc/Lb., while this equates to a relatively attractive 44.83% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 3,918 bags yesterday, to register these stocks at 2,260,569 bags. The number of bags pending grading for this exchange was unchanged on the day, at a total 12,750 bags yesterday.

It was a mixed day on the commodity markets yesterday, as the political and economic developments in Greece continue to raise concerns with Eurozone meetings underway this week. The situation in Ukraine similarly added to market uncertainty.  The US Dollar meanwhile recovered some ground during the day, while new and higher than expected Oil stocks being held in the leading consumer market, USA, weighed in on sentiment in the Oil markets yesterday.  It was a softer day for Oil, Corn, Cotton, Orange Juice, Gold, Silver, Palladium and Platinum, a steadier day for Sugar, Wheat, Soybean, Coffee, Copper and a firmer day for Cocoa, Cotton, Copper and Orange Juice.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.49% lower to see this Index registered at 431.158. The day starts with the US Dollar steady and trading at 1.5238 to Sterling and 1.1326 to the Euro, Brazil Real is trading at 2.8692, while North Sea Oil is firmer in early trade and is selling at $ 54.21 per barrel. 

The coffee markets began the day on a softer note in light volume in London and a positive start in New York which fell under some early pressure but with a rebound back to positive territory in the morning session.  It was a relatively narrow range day for New York and another heavy volume day.  With first notice day approaching, speculative and fund activity providing much of the volume and spreads active, much of the day was in positive albeit range bound territory.  The gains of the day were met with late in the day sellers and as the market moved toward the close, these gains were eroded to see New York finish the day and settle, hardly changed on last. The New York market remains volatile however, guided by the speculative sector and lacking fundamental news presently to guide direction, the weather in Brazil remains a factor and for now, there are reports of rains across the key coffee growing areas this week.  It was a similarly narrow range day in London, with good volume on the day remained in negative territory for much of the session but with underlying buyer support present to set the floor, with a recovery back to the positive on the close of the day, to set the close in both markets yesterday, as follows: 

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

MAR   1942 + 5                                                MAR    159.45 + 0.05
MAY   1974 + 3                                                 MAY     162.30 + 0.05
JUL    1999 Unch                                             JUL      164.85 + 0.05 
SEP    2023 – 2                                                 SEP     167.35 + 0.05
NOV   2037 – 2                                                 DEC     170.65 + 0.10
JAN    2049 – 2                                                 MAR    172.70 + 0.15
MAR   2069 + 2                                                MAY    173.40 + 0.20
MAY   2092 Unch                                             JUL     173.65 + 0.15
JUL    2117 – 4                                                 SEP     173.80 + 0.20
SEP    2129 – 4                                                 DEC    173.65 + 0.10

11th February, 2015.

Following on from the news of a positive export report of coffees from Brazil in January, to include value added soluble exports in green coffee equivalent and total exports in January, at 2.97 million bags; the overall value of the exports reported for the month of January, are related to relatively good value price fixed coffees when compared to the same month last year.  In this respect export performance for the month of January related to relatively good value price fixed coffees, reflect the January exports were 205.40 million US Dollars or 34.78% higher than the same month last year, at a total of 590.60 million US Dollars.  The Brazil Real has continued its slide against the US Dollar and is trading at 2.8343 to the US Dollar today, having touched upon 2.8393 during trade yesterday. There is meanwhile a degree of internal market price resistance on the part of arabica coffee farmers on their remaining stocks relative to the dictates of the softer nature of the New York market and the slipping exchange rate is likely to provide some short term assistance to act as a buffer to maintain sales.  The Carnival holidays are due to begin at the end of this week and will continue to mid next week when traditionally commercial activity can be expected to be muted and the Brazil stock exchange closed over the period.

The news from Vietnam is similarly for an anticipated slowdown in commercial activity ahead of the Tet New Year Holiday which is due to start at the end of this week.  Ahead of this week long holiday internal activity which was already slow in response to the lower London robusta market, has become restrained and internal price resistance on the part of relatively well financed farmers for their current harvest stocks, prevails. 

The National Cocoa and Coffee Board of the Cameroon who run a conventional October to September arabica coffee year and a separate December to November coffee year for their more prominent robusta coffee crop, have reported that during the completed 2013 to 2014 coffee year the countries coffee combined arabica and robusta coffee production was 269,050 bags or 96.87% higher than the production during the previous coffee year, at a total of 547,160 bags. This much improved 2013 to 2014 production that they related to the combination of 47,843 bags of arabica coffee and 499,317 bags of robusta coffee assisted to fuel exports of approximately 36,083 bags of arabica coffee and 364,483 bags of robusta coffee over the same period.  These exports which can also relate to carry over stocks from the previous crops and not the entire present crop that is being immediately exported are still significantly 182,317 bags or 33.32% lower than the estimated production. 

There is however a steady stream of coffee being smuggled into the neighbouring Nigerian market and thus one might not generally expect to see accuracy from production figures and likewise, exactly calculate not only the unofficial export figures and the unofficial domestic consumption and thus one might think, the figures are more significant in terms of apparent recovery for this once more prominent coffee supplier, than the precise figures being quoted.    With hopefully the country that was registering production levels of between 1.7 million bags and in excess of 2 million bags per annum twenty to twenty five years ago, having the chance to post a further recover in the coming years, albeit that now one is suggesting that there will be anything like a full recovery even in the medium term. 

The arbitrage between the markets narrowed yesterday to register at 72.85 usc/Lb., while this equates to a relatively attractive 44.90% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,100 bags yesterday, to register these stocks at 2,264,487 bags. The number of bags pending grading for this exchange registered an increase of 10,900 bags to a total 12,750 bags yesterday.

It was a softer day for the commodity markets yesterday, as uncertainty concerning Greece in the euro zone and political upheaval surrounding the situation in Ukraine weighed in on investor confidence across the board.  It was a softer day for the Oil markets, Sugar, Cocoa, Corn, Soybean, Wheat, Coffee, Cotton, Copper and Orange Juice.  The metals markets came under pressure and a lower day for Gold, Silver, Platinum and Palladium markets, while the US Dollar regained some lost ground on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.17% lower to see this Index registered at 433.28. The day starts with the U.S. Dollar steady and trading at 1.5238 to Sterling and 1.13 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 55.72 per barrel. 

The coffee markets started the day on a mildly positive note in London and in marginally softer territory in New York.  The early light trade in London picked up pace during the session with this robusta market holding in positive territory within a relatively narrow range for the better part of the day.  The New York market turned mildly positive in early trade but met with scale down selling, with underlying buyer support returning to meet the early lows. The weight turned in favour of selling activity however and as the volume in New York picked up pace, the session turned softer within speculative sellers leading the way, to be joined by origin sellers and triggered stops along the way. The volatility seemed to stem from the prompt month for which options expiration and spread activity came to the fore ahead of first notice day next week.  Thus, after a hefty volume day in New York, with March and May positions posting a total combined 56,536 lots traded, the arabica market lost the gains of the past week and settled at a close near to the day lows. The London robusta market meanwhile posted a higher volume day while remaining positive though the session, slipped into negative territory toward the end of the day, to set the close in both markets yesterday, as follows: 

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

MAR     1937 – 7 MAR 159.40 – 8.20
MAY     1971 – 6 MAY 162.25 – 8.15 
JUL      1999 – 4 JUL 164.90 – 8.15 
SEP      2025 – 3 SEP 167.30 – 8.05
NOV     2039 – 3 DEC 170.55 – 7.95
JAN      2051 – 3 MAR    172.55 – 7.90
MAR     2067 – 3 MAY    173.20 – 7.90
MAY     2092 – 3 JUL     173.50 – 7.65
JUL      2121 – 3 SEP     173.55 – 7.80
SEP      2133 – 3 DEC    173.55 – 7.80

10th February, 2015.

The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decreased their net long position within this market in the week of trade leading up to Tuesday 23rd February, to see this long position cut by 582 lots to a net long that was registered at 13,674 Lots, on the day.  This speculative net long position within the London market is the equivalent of a relatively modest 2,279,000 bags has most likely been little changed in the period of overall steady to softer trade that has since followed.

The Brazilian Coffee Exporters Association have come forth with their more detailed coffee export figures for the month of January, to report that the green coffee exports for the month were altogether 290,000 bags or 11.69% higher than the same month last year, at a total of 2,770,000 bags.  While arabica posted a 2% increase on that of last year, or 50,000 bags more at 2.42 million bags, the bulk of the increase was seen in green robusta exports, which posted a 199% increase when compared to the same month last year, at a total 344,574 bags in January 2015.  Added to this were the value added exports of soluble coffee calculated in terms of their green coffee equivalent at a lower 31.62% and a total at 203,835 bags.  This leading up to a total for the overall coffee exports for the month of January, at 6.39% above that of the same time last year and a total 2.97 million bags. 

The arbitrage between the markets has broadened yesterday to register this at 80.72 usc/Lb., while this equates to a relatively attractive 47.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 550 bags on yesterday, to register these stocks at 2,265,587 bags. The number of bags pending grading or this exchange remained unchanged at 1,850 bags.

It was a mostly positive day for the commodity markets yesterday, while economic data released out of China reported lower than anticipated imports and exports weighed in on sentiment, the US Dollar posted a weaker day, making US Dollar traded commodities more affordable in other major currencies, while Oil rose for a third straight session. It was a positive day for Oil, Sugar, Cocoa, Corn, Soybean, Wheat, Coffee, Cotton and Orange Juice.  It was a similarly positive day for Gold, Silver and a softer day for the Platinum, Palladium and Copper markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.97% higher to see this Index registered at 438.43.   The day starts with the U.S. Dollar steady and trading at 1.5242 to Sterling and 1.134 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 56.22 per barrel. 

It was a relatively heavy volume day in the coffee markets yesterday, although in New York lighter than the volumes traded on Friday.  The speculative sector continued to set the pace, lacking fresh fundamental news apart from the weekend rains received in Brazil, to guide direction ahead of first notice day in the prompt month in New York next week.  The Brazil Real slipped back against the US Dollar yesterday to touch on 2.7967 before a recovery to 2.78 and is trading at 2.769 this morning.  The London market opened on a softer note but recovered back to steady as underlying buyer activity returned to the floor.  The latter day session in this market following through on the recovery seen in New York toward the latter half of that session, to see London finish in positive territory, although off of the days’ highs.  New York opened the day on a mildly softer note and traded within a narrow range toward midsession. The market pushed lower to encourage underlying buyers to return to floor, which additionally boosted the morning and by the later part of the day, New York regained ground back to positive territory.  The generally positive move in commodities on the day perhaps lending an influence and with London in positive territory, New York regained ground during the session to finish the day close to unchanged in positive territory, to see the close yesterday in both markets, as follows;  

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

MAR     1944 + 11 MAR 167.60 + 0.75
MAY     1977 + 12 MAY 170.40 + 0.80 
JUL      2003 + 14 JUL 173.05 + 0.80 
SEP      2028 + 14 SEP 175.35 + 0.75
NOV     2042 + 15 DEC 178.50 + 0.80
JAN      2054 + 17 MAR    180.45 + 0.80
MAR     2070 + 17 MAY    181.10 + 0.70
MAY     2095 + 17 JUL     181.35 + 0.65
JUL      2124 + 17 SEP     181.45 + 0.70
SEP      2136 + 17 DEC    181.35 + 0.70

9th. February, 2015.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 18.07% in the week of trade leading up to Tuesday 3rd. February;  to register a net long position of 15,887 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.94%, to register a net long on the day of 25,781 Lots.
   
During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 25.29%, to register a net long of 10,185 lots on the day.   This net long position that is the equivalent of 2,887,402 bags has most likely been increased once more over the period of mixed but overall positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

There was minimal fundamental news coming to the coffee markets on Friday, which aside from the questions over the prospects for rains for the remaining three months of the summer rain season in south east Brazil, presently have very little to be concerned about.    The clarity over the outcome of these rains and despite the forecasts for a relatively wet first half of February, only really due to start registering some more defining statistical data, by the end of March and by when the February and March rainfall reports shall be at hand and there might be some reasonably accurate forecasts for the traditionally more modest rainfall in April.

In the meantime many farmers and internal traders within the main producer blocs other than Brazil apparently disbelieve the lower trading range that is being experienced within the New York market and mirrored to a degree by the London market, to maintain relatively firm internal market prices for the majority of the producers.  Thus forcing exporters in general to have to apply relatively firm asking differentials for new business and likewise slowing the buying interest on the part of the international coffee trade, who are reluctant to carry new crop stocks at relatively high and potentially uncompetitive on the longer term differentials.

This is resulting in a relatively lacklustre physical coffee market and having some influence upon a steady build-up of producer stocks, which shall finally have to be cashed in and come to a cash market.  The question is what price levels shall the reference prices of the New York and London markets be, when producers shall eventually become more aggressive buyers and need to chase not only the steady industry buying requirements, but also the trade to take on the short term surplus stocks.   This one would think shall be a factor that might start to influence selling patters by the second quarter of this year, by when there shall be much more clarity over the prospects for the new Brazil crop, which shall in turn have an influence as to what levels the funds and speculative sectors of the market shall dictate as a safe trading range.  

The arbitrage between the markets has broadened on Friday to register this at 80.47 usc/Lb., while this equates to a relatively attractive 47.45% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,794 bags on Friday, to register these stocks at 2,266,137 bags.   There was meanwhile a smaller in volume decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,850 bags.

The commodity markets were mixed but mostly all about Oil again on Friday, as the Oil markets were experiencing a follow through and relatively strong corrective rally and despite some renewed muscle that was being experienced by the U.S. Dollar, which impacted negatively within many markets.     The Oil, Sugar, Cocoa and Coffee markets had a positive day’s trade and the Wheat market was steady, while the Natural Gas, Cotton, Copper, Orange Juice, Corn, 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 0.12% higher; to see this Index registered at 434.24.   The day starts with the U.S. Dollar steady and trading at 1.525 to Sterling and 1.135 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 56.20 per barrel.

The London and New York markets started the day yesterday on a steady note and with the markets very quickly showing some buoyancy and adding value, as the morning progressed and into thin early afternoon trade.   As the afternoon progressed and with trade thin, the New York markets started to build on its value and with volumes picking up the New York market started to take a firmer track, while the London market maintained its relatively modest buoyancy.   The New York market started to trigger buy stops that accelerated its gains before returning to more modest positive buoyancy, which remained the track for the rest of the day for both markets, ahead of the weekend.  The relatively thinly London market continued to end the day on a positive note and with 64.7% of the earlier gains of the day intact, while the more active New York market likewise ended the day on a positive note and with only 42% of the earlier gains of the day intact.   The inability to end the day with a good percentage of the earlier gains intact within the more volatile and influential New York market might not inspire too much confidence for early trade today and one might think that the markets shall be in for only a cautious near to steady start for early thin and lacklustre trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1933 + 11                                               MAR     166.85 + 2.10
MAY     1965 + 11                                               MAY     169.60 + 2.05
JUL      1989 + 12                                                JUL      172.25 + 2.05
SEP      2014 + 14                                               SEP      174.60 + 1.95
NOV     2027 + 13                                                DEC     177.70 + 1.85
JAN      2037 + 13                                               MAR     179.65 + 1.60
MAR     2053 + 13                                               MAY     180.40 + 1.60
MAY     2078 + 13                                                JUL     180.70 + 1.65
JUL      2107 + 13                                                SEP     180.75 + 1.90
SEP      2119 + 13                                                DEC    180.60 + 2.05

6th. February, 2015.
The U.S. based Climate Protection Centre has maintained its forecast for a 50% to 60% chance for a mild El Nino phenomenon to develop within the south Pacific ocean in the coming weeks and into the second quarter of this year, but the severity of this would be negligible in terms of its influence upon the pacific rim coffee producing countries.   In reality a mild El Nino being somewhat positive for these countries, as it would with the marginally drier conditions for Colombia and Peru, assist to limit the threat of Roya or Leaf Rust and in turn and on its influence in more distant countries, assist to buoy the rainfall levels in south east Brazil.  

Meanwhile within the critical arabica coffee districts in Brazil there have been rains over the past two weeks and this has been beneficial for the development of the new crop coffee, but has not been sufficient in volume to buoy the reservoir levels for the general water reserves for the area ahead of the forthcoming dry winter season.   Thus while there are concerns within the urban centres in these districts with more rains on the horizon, the coffee farmers are for the present no longer talking of potential drought damage for this new crop.

Internal market coffee trade in Brazil is slow and steady for the present, but with the Brazil Real weaker and now trading at 2.74 to the U.S. dollar, there are sufficient volumes still coming to the exporters to cover their short to medium term export commitments.   Thus it is very much business as usual out of Brazil, albeit that modest internal market price resistance is tending to firm up the asking differentials for new arabica coffee business.

There continues to be a degree of price resistance within Central America in general, where the slightly delayed and overall larger new crop is presently building up internal market stocks, with this resistance keeping asking export differentials relatively firm and likewise slowing new business, which is limiting the price fixation selling activity into the related New York market.   The question is with stocks rising how long the farmers and internal traders in Vietnam can continue to show resistance and one might guess that if the rains in Brazil continue in good order into March that confidence in a Brazil weather related crop disaster support for the reference prices of the New York market might start to wane and thus, trigger some degree of increased selling aggression within Central America.  

Meanwhile the consumer market industries remain slow and steady cautious buyers and only paying up for need to have new crop coffees from Central America at the relatively firm asking differentials that are being dictated to the exporters by the internal market price resistance, with the prospect for much higher volumes of new trade related business on the cards once there is more clarity to the medium to longer term market during the post Brazil rain reason in the second quarter of the year.   Such activity and with the resulting price fixation selling into the New York market is potentially negative for the market, unless the follow on weather in south eastern Brazil proves to be threatening for the new crop, which would bring back the funds as aggressive buyers of the market.   This uncertainty as the world awaits the oncome of the next eight weeks of weather in Brazil, tending to side-line many players from the coffee markets.  

The arbitrage between the markets has broadened yesterday to register this at 77.57 usc/Lb., while this equates to a relatively attractive 47.08% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 1,480 bags yesterday, to register these stocks at 2,267,931 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,170 bags.

The Certified Robusta coffee stocks held against the London market were seen to increase by 7,980 bags or 5.69% over the two weeks of trade leading up to Monday 2nd. February, to see these stocks registered at 2,470,667 bags.   These stocks lacking significant growth, as the strong price resistance within the internal market in Vietnam is forcing export differentials higher and limiting the volumes of affordable coffee that can be taken into trade stocks, for purposes of tendering to this exchange.

The commodity markets were mostly all about Oil yesterday, as these markets were once again experiencing a strong corrective rally.  The Cocoa, Cotton, Copper, Wheat, Corn and Soybean markets had a day of buoyancy and the Oil markets surged for the day, while the New York arabica Coffee market was close to steady and the Natural Gas, Sugar, London robusta Coffee, Orange Juice, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.38% higher; to see this Index registered at 433.70.   The day starts with the U.S. Dollar steady and trading at 1.534 to Sterling and 1.147 to the Euro, while North Sea Oil is showing follow through buoyancy in early trade and is selling at $ 56.20 per barrel.

The London and New York markets started the day yesterday on a steady note and with the markets very quickly showing some buoyancy and adding value, as the morning progressed and into thin early afternoon trade.   As the afternoon progressed and with trade thin, the markets came under a little pressure to head back to par and with the markets picking up in volume and moving into modest negative territory.  The markets stuttered on within an environment of thin and lacklustre trade for the rest of the day, with producers mostly withdrawn from any selling aggression and the consumer industries mostly side-lined from the market.   The London market continued to end the day on a softer note and with 69.2% of the losses of the day intact, while the New York market ended the day close to steady and having recovered 90.6% of the earlier losses of the day by the close.   The apparent stability of the New York market that continues to resist downside pressure over the past couple of weeks is perhaps supportive for sentiment and one might expect to see a slow and steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1922 – 9                                                 MAR     164.75 – 0.15
MAY     1954 – 7                                                 MAY     167.55 – 0.15
JUL      1977 – 8                                                  JUL      170.20 – 0.10
SEP      2000 – 9                                                  SEP     172.65 – 0.10
NOV     2014 – 7                                                  DEC     175.85 – 0.10
JAN      2024 – 7                                                  MAR    178.05 – 0.15
MAR     2040 – 7                                                  MAY    178.80 – 0.10
MAY     2065 – 7                                                   JUL     179.05 – 0.05
JUL      2094 – 7                                                   SEP     178.85 – 0.10
SEP      2106 – 7                                                  DEC     178.55 – 0.15

5th. February, 2015.
The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of January was 77,000 bags or 7.62% higher than the same month last year, at a total of 1,088,000 bags.   This contributes to the countries cumulative production for the first four months of the present October 2014 to September 2015 coffee year to be 93,000 bags or 2.16% higher than the same period in the previous coffee year, a total of 4,390,000 bags.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of January were 98,000 bags or 10.13% higher than the same month last year, at a total of 1,065,000 bags.    This contributes to the countries cumulative exports for the first four months of the present October 2014 to September 2015 coffee year to being 154,000 bags or 3.89% higher than the same period in the previous coffee year, at a total of 4,114,000 bags.

These very positive figures from Colombia and with the climatic conditions presently very positive for the farmers and more and more of the recently planted new trees that are related to the countries rejuvenation program coming into full yielding maturity, would indicate that both production volumes and export volumes shall continue to steadily increase.    In this respect to see production and export volumes for this present coffee year to most likely top the 12,128,400 bags produced during the previous October 2013 to September 2014 coffee year and an export performance of 10,960,000 bags.

The Coffee Exporters Association of India have made a statement that due to a relatively modest new arabica coffee crop, that the countries coffee exports for the October 2014 to September 2015 coffee year shall experience a 10% decline.  This is however a somewhat questionable statement and while there is no question that the countries arabica coffee crop has been coming in a little lower; the perspective is that there will be a much larger new robusta coffee crop which shall be approximately 10% higher than the past robusta crop.  Thus with the robusta coffees dominating overall production with an approximate 70% of overall coffee production, one might not see reason to believe in a lower export potential from India for this present coffee year.

The European Coffee Federation port warehouse stocks were seen to decrease by a modest 17,589 bags or 0.15% during the month of December, to end the month with stocks reported at 11,490,771 bags.    These stocks do not however include the onsite roaster inventory, bulk container transit and unreported private warehouse stocks which with the combination of west and east European consumption of around 980,000 bags per week, would most likely have been at least 2.5 million bags and therefore at a guess, total stocks as at the end of December of approximately 14 million bags.   Thus stocks that would exceed 14 weeks of the presently flat to often marginally lower roasting activity, which is a very safe level and allow for the European industries to be cautious rather than aggressive buyers.

There has been a report in the Vietnam Economic Times journal that many coffee farmers in Vietnam might be inspired to look to start planting macadamia trees within their aging coffee farms, to remove their coffee trees and switch to more reliably profitable macadamia farming once the trees start to come into production in seven to eight years’ time.   This would mirror the similar and economically very successful steps that were taken within the commercial coffee farms in Malawi in the 1990’s, which saw most coffee farms move out of the coffee industry and become what is now a good volume macadamia nut exporter.    While noting that with one of the leading high volume importers of macadamia nuts being China, that Vietnam is geographically in an ideal position to produce nuts for this good value market and is likely to provide further inspiration for the countries very efficient and innovative farmers to consider moving into macadamia production.

Such developments would have little impact upon the volumes of robusta coffee presently being produced by this leading world producer for the next six years or so, but might dent the growth potential of the Vietnam crop on the longer term.   However one would think that on the longer term that while Vietnam might be hitting a ceiling in terms of annual coffee crops, there is significant growth potential in terms of coffee production due from the neighbouring countries in Asia and with Vietnamese investors already actively looking into coffee production in Laos, Cambodia and Myanmar or Burma.   Thus seemingly little risk, in terms of the move into macadamia nuts.

The arbitrage between the markets has broadened yesterday to register this at 77.31 usc/Lb., while this equates to a relatively attractive 46.88% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,551 bags yesterday, to register these stocks at 2,266,451 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,170 bags.

The commodity markets mostly suffered a late in the day reversal of fortunes yesterday, which saw the overall macro commodity index likewise suffer a reversal and take a softer track to the close.  The Cocoa, Coffee, Copper, Gold, Silver and Platinum markets nevertheless had a day of buoyancy and the Cotton market was steady, while the Oil, Natural Gas, Sugar, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.19% lower; to see this Index registered at 432.08.   The day starts with the U.S. Dollar steady and trading at 1.520 to Sterling and 1.134 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 52.30 per barrel.

The London and New York markets started the day yesterday on a steady note and with the markets showing some buoyancy and adding value, as they moved into the afternoon’s trade.   As the afternoon progressed however the New York market took a sudden surge and triggering buy stops, experienced a relatively strong rally and with the London market following suit.   The markets then took a bit of a breather and with trade slow, to come off from the highs but to nevertheless hold on to a good percentage of the gains and take lightly trade sideways positive track for the rest of the day.  The London market ended the day on a positive note and with 57.1% of the gains of the day intact, while the New York market that is seemingly lacking negative producer selling pressure for the present, ended the day on a positive note and with 66.4% of the earlier gains of the day intact.   This overall positive close is most likely to inspire a slow and cautious steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1931 + 24                                               MAR     164.90 + 4.15
MAY     1961 + 22                                               MAY     167.70 + 4.10
JUL      1985 + 21                                                JUL      170.30 + 4.10
SEP      2009 + 19                                               SEP      172.75 + 4.05
NOV     2021 + 18                                                DEC     175.95 + 4.05
JAN      2031 + 18                                               MAR     178.20 + 4.00
MAR     2047 + 18                                               MAY     178.90 + 4.00
MAY     2072 + 18                                                JUL     179.10 + 4.10
JUL      2101 + 18                                                SEP     178.95 + 4.15
SEP      2113 + 18                                                DEC    178.70 + 4.20

4th. February, 2015.
The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of January were 8,658 bags or 8.5% lower than the same month in the previous year, at a total of 93,144 bags.   This slow start to the new coffee year has contributed to the countries cumulative exports for the first four months of the present October 2014 to September 2015 coffee year to being 31,829 bags or 13.27% lower than the same period in the previous coffee year, at a total of 208,044 bags.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of January were 21,626 bags or 4.26% higher than the same month in the previous year, at a total of 529,499 bags.   This follows a positive start for the previous months and the cumulative coffee exports for the first four months of the present October 2014 to September 2015 coffee year are 238,664 bags or 28.34% higher than the same period in the previous coffee year, at a total of 1,080,689 bags.

Meanwhile the National Coffee Institute of Honduras are forecasting that on the basis of their larger new crop that is presently in harvest, that they can expect to report coffee exports for the present October 2014 to September 2015 coffee year to be 14% higher than the previous coffee year, at approximately 4.8 million bags.   This positive performance is expected to be mirrored but perhaps not to the same impressive degree as is expected within Honduras, from their neighbours in Central America and with combined coffee exports from Mexico and Central America for the present coffee year generally expected to increase by approximately 1 million to 1.2 million bags for this coffee year and therefore significantly adding to the supply of fine washed arabica coffees to the consumer markets.

The leading Brazilian coffee cooperative Cooxupe have come forth yesterday with a market supportive forecast that due to the dry and hot weather during most of January, that they are reducing their cooperatives forecasted output from the forthcoming new crop by approximately 13.6% and a figure from their southern Minas Gerais farms of a relatively dismal 3.8 million bags.   Adding to the impact of this forecast they have also reported that they have forward sales commitment of approximately 5 million bags of new crop coffees and therefore, they shall need to go to the internal market and the arabica coffee farmers outside of their cooperative members, to cover the approximately 1.2 million bags shortfall.

This report is a rather dramatic one and might well in terms of the number quoted have some influence upon market sentiment but to what degree is difficult to foresee, but it most certainly might result in a degree of caution on the part of the speculative bears within the market, who have been fuelling the downside track of the New York market this year.   But perhaps the inclusion of the dry weather being related to being a drought rather than a three to four week spell of dry weather that has since broken and with fair rains coming to most coffee farms and more to follow, shall likewise influence a degree of caution within the speculative bullish sector of the market who know for sure that there has not been a full on drought.   

The National Coffee Association of Mexico have noted that with good domestic demand for robusta coffees to fuel the soluble coffee factories within the country that presently import robusta coffees, that many lower altitude arabica coffee farmers and farmers in general are not planting out lower maintenance and higher yielding robusta coffee trees.   These developments some are predicting shall see the present Mexican robusta coffee production of close to 500,000 bags per annum, double over the next four to five years.   How these developments might impact upon the countries arabica coffee production that has seen many farmers suffering with the higher control costs and losses in yield from Roya or Coffee Rust remains unclear, but there is no doubt that there are prospects for a recovery in overall coffee production for Mexico in the coming years.   

The arbitrage between the markets has narrowed yesterday to register this at 74.25 usc/Lb., while this equates to a relatively attractive 46.19% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 125 bags yesterday, to register these stocks at 2,268,002 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,170 bags.

The commodity markets were mostly positive yesterday, with the weaker U.S. dollar providing for support within many markets, while the further corrective gains for the Oil markets contributed to the buoyancy of the overall macro commodity index.  The Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat, Corn, Soybean, Silver and Platinum markets had a day of buoyancy and the Orange Juice market was steady, while the Coffee and Gold markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.91% higher; to see this Index registered at 437.29.   The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.515 to Sterling and 1.147 to the Euro, while North Sea Oil is marginally softer in early trade and is selling at $ 55.50 per barrel.

The London and New York markets started the day yesterday on a steady note and with the markets showing some buoyancy and adding value, as they moved into the afternoon’s trade.   As the afternoon progressed however the New York market started to come under pressure and moved back to par and followed by the London market, to start attracting further selling pressure within both markets and move back into negative territory.  There was however relatively thin producer selling activity over the markets and with opportunist consumer industry buying coming into play the markets managed to bounce of the lows, as the afternoon progressed.  The London market continued to end the day on a softer note and with 71.4% of the earlier in the day’s losses intact, while the New York market likewise ended the day on a softer note, but having recovered 58% of the earlier losses of the day.    This degree of resistance to the downside pressure in New York and the latest forecasts from Cooxupe in Brazil might well inspire some further industry support and a degree of buoyancy for the usual thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
MAR     1907 – 10                                               MAR    160.75 – 1.70
MAY     1939 – 9                                                 MAY    163.60 – 1.65
JUL      1964 – 9                                                  JUL     166.20 – 1.65
SEP      1990 – 8                                                 SEP     168.70 – 1.70
NOV     2003 – 8                                                 DEC     171.90 – 1.70
JAN      2013 – 8                                                 MAR    174.20 – 1.65
MAR     2029 – 6                                                 MAY    174.90 – 1.65
MAY     2054 – 3                                                  JUL     175.00 – 1.65
JUL      2083 unch                                              SEP     174.80 – 1.60
SEP      2095 unch                                              DEC    174.50 – 1.55

3rd. February, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market increase their net long position within this market by 2.00% in the week of trade leading up to Tuesday 27th. January, to see this long position turned into a net long that was registered at 14,256 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,376,000 bags has most likely been little changed to marginally decrease during the period of mixed but overall steady to softer trade that has since followed.

With the month of January over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported some significant changes to their export robusta coffee figures reported earlier yesterday, with amendments made to many of the months previously reported figures.   Therefore we now report that the islands robusta coffee exports for the month of December were 98,135 bags or 39.28% lower than the same month last year, at a total of 151,690 bags.   This follows a relatively dismal performance over the previous three months and therefore the cumulative robusta exports from Sumatra for the first four months of the present new October 2014 to September 2015 coffee year are 983,058 bags or 44.25% lower than the same period in the previous coffee year, at a total of 1,238,452 bags.

The preliminary coffee exports for the month of January from Brazil are seen to have been 319,900 bags or 10.51% lower than the same month last year, at a total of 2,724,800 bags.     This dip in exports having followed many months of very active coffee export activity, which has both confirmed the perception of significant carryover stocks of arabica coffees into the relatively modest new 2014 crop and the fact that farmers while believing that the new 2015 arabica coffee crop might be another modest one, it shall not be so modest as to justify the carry of excessive stocks to take profit out of a miserable new crop and its influence upon international coffee prices.

The Brazil Real is however once again on the back foot and is trading at 2.726 to the U.S. dollar and while there is a degree of internal market price resistance on the part of arabica coffee farmers in terms of their remaining stocks to the dictates of the softer nature of the New York market, the exchange rate is likely to nevertheless inspire slower but steady sales.   Sales do however require a market and while exporters in Brazil might see reason to take on some stocks to cover for forward export sales commitments, the consumer markets are not seen to be very aggressive at the present and one might expect to see only steady rather than aggressive selling activity out of Brazil for the coming weeks.

With the week-long Tet New Year Holiday (Tết Nguyên Đán) in Vietnam due to start at the end of next week to interrupt an already short month, the assessment of the traders in Vietnam is that coffee exports of mostly robusta coffees for the month of February shall be a relatively modest 1.42 million to 1.67 million bags, with these export volumes further retarded by last month’s relatively slow export selling activity.   This slow selling activity has been retarded by the internal market price resistance, which has seen exporters struggle to conclude all but the very necessary new business with the consumer market buyers.

The big question is how long shall the internal market continue to show such resistance, as post the Tet holidays farmers and internal traders shall still be holding large new crop stocks and with the need to raise further post-holiday funding for the finance of farm irrigation and fertilizer inputs during the last two and half months of the present dry winter season, there might be some added pressure to liquidate more stocks.   This factor might well result in increased selling aggression and some added price fixation selling pressure for the presently steady London market, for the end of the month and into the coming month.

The arbitrage between the markets has broadened yesterday to register this at 75.50 usc/Lb., while this equates to a relatively attractive 46.48% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 441 bags yesterday, to register these stocks at 2,268,127 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,170 bags.

The commodity markets were mixed again yesterday with the reversal of the fortunes of the much battered Oil markets and the sharp dip for the Sugar markets, being very much the feature for the day.   The New York arabica Coffee, Cotton, Corn, Soybean and Silver markets had a day of buoyancy and the Oil markets posted good gains for the day, while the Natural Gas, Cocoa, London robusta Coffee, Copper, Orange Juice, Wheat, Gold and Platinum markets tended softer for the day and the Sugar markets registered sharp losses for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.19% lower; to see this Index registered at 429.11.   The day starts with the U.S. Dollar steady and trading at 1.501 to Sterling and 1.133 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 53.10 per barrel.

The London and New York markets started the day yesterday with a degree of buoyancy, which was presumably inspired by the positive close in New York on Friday.   This remained the track into the early afternoon’s trade, when the New York market slipped back to par and the London market maintained some of its buoyancy.   The New York market continued to slip below par and with the London market following this market into negative territory, but while the New York market once again recovered and moved back above par, the London market remained on its softer track.  The London market continued to end the day on a softer note and with 88.9% of its modest losses for the day intact, while the New York market ended the day on a positive note but with only 31.4% of its gains of the day intact.   This rather dull close is likely to inspire little better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.                                                
                                                
MAR     1917 – 8                                                 MAR     162.45 + 0.55
MAY     1948 – 6                                                 MAY     165.25 + 0.60
JUL      1973 – 6                                                  JUL      167.85 + 0.50
SEP      1998 – 5                                                 SEP      170.40 + 0.55
NOV     2011 – 4                                                 DEC      173.60 + 0.45
JAN      2021 – 4                                                 MAR     175.85 + 0.45
MAR     2035 – 7                                                 MAY     176.55 + 0.45
MAY     2057 – 4                                                  JUL     176.65 + 0.45
JUL      2083 unch                                              SEP     176.40 + 0.55
SEP      2095 – 1                                                 DEC     176.05 + 0.65

2nd. February, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 21.55% in the week of trade leading up to Tuesday 27th. January;  to register a net long position of 19,392 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 1.20%, to register a net long on the day of 26,026 Lots.   

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 32.50%, to register a net long of 13,632 lots on the day.   This net long position that is the equivalent of 3,864,612 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

With the month of January over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported that the islands robusta coffee exports for the month of December were 13,370 bags or 9.67% higher than the same month last year, at a total of 151,690 bags.   This follows a relatively dismal performance over the previous three months and therefore the cumulative robusta exports from Sumatra for the first four months of the present new October 2014 to September 2015 coffee year are 1,109,701 bags or 52.59% lower than the same period in the previous coffee year, at a total of 1,000,304 bags.

This relatively poor performance on the part of robusta coffee supply from Sumatra is of course related to a poor weather related crop last year and one can expect that for the short term and ahead of the new crop that starts to come into play during the second quarter of this year, that the figures shall continue to be relatively modest for the next four to five months.   However the weather conditions have been much improved and the prospects are for a much improved new crop, which should see the Sumatran robusta coffee exports start to pick up and become more aggressive by the third quarter this year and therefore, the last quarter of the present coffee year.

Meanwhile and ahead of the potentially rising volumes of new crop robusta coffees due from Indonesia in the second half of the year, the consumer markets shall focus upon the relatively good supply of new crop Vietnam, Indian and African robusta coffees, but with the week-long Tet New Year Holiday (Tết Nguyên Đán) in Vietnam due to start on Sunday 15th. February, which shall interrupt the flow of supply from this the leading supplier to the consumer markets.   This year and unlike tradition in the previous years and with Vietnamese farmers seemingly having good financial support in hand, there has not been the usual pre-holiday flurry of increased selling aggression coming into play.   Thus it would seem that internal market price resistance to the dictates of the softer nature of the reference prices of the London market is due to see sales and exports of new crop robusta coffees from Vietnam remain relatively slow and to perhaps continue so, until well past these celebrations that see Vietnam enter this new year of the Goat.

Brazil weather reports while raining upon the confidence of the speculative sector of the New York market last week, do still indicate that many important arabica coffee districts have ended the month with less than 50% of their long term monthly averages, which tended to stall the recent downside track for the market on Friday.  It is however still noted that there has been unlike last year’s experiences some reasonable rains during the month, which is proving with a seemingly wet start to February on the cards to be sufficient moisture intake to maintain the steady progress of this year’s relatively modest new arabica coffee crop.

The arbitrage between the markets has broadened on Friday to register this at 74.58 usc/Lb., while this equates to a relatively attractive 46.07% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 6,888 bags on Friday, to register these stocks at 2,268,568 bags.   There was meanwhile a smaller in volume 290 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,170 bags.

The commodity markets were mixed on Friday and were in receipt of softer growth figures for the last quarter of last year from the U.S.A. and likewise from China, which has some impact upon prospective longer term demand.   This did not however impact upon the relatively soft macro commodity index, which showed buoyancy for the day.   The Oil, New York arabica Coffee, Copper, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy and the Cotton market was steady, while the Natural Gas, Sugar, Cocoa, London robusta Coffee, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.28% higher; to see this Index registered at 429.91.   The day starts with the U.S. Dollar steady and trading at 1.507 to Sterling and 1.130 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 50.05 per barrel.

The London and New York markets started the day on Friday on a steady note and in very thin trade, with the New York market adding a little more value in the first hour of trade, while the London market remained steady.   Trade was however very hesitant and the early afternoon saw the New York market lose its early gains and head back to join London on par.   This dip was however short lived and the New York market soon recovered, while the London market started to show a degree of modest buoyancy.    The London market did not however manage to retain its buoyancy moved back to take a negative track for the rest of the day and to end the day on a soft note and with 90.5% of the earlier losses of the day intact, while the New York market took a steady upside track for the rest of the day and to end the day on a positive note and with 84.4% of the earlier gains of the day intact.    The positive nature of the New York market on the close is perhaps due to provide follow through support for sentiment and to inspire a degree of modest buoyancy for early trade today, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.                                                
                                                
MAR     1925 – 19                                               MAR     161.90 + 1.90
MAY     1954 – 18                                               MAY     164.65 + 1.90
JUL      1979 – 17                                                JUL      167.35 + 1.90
SEP      2003 – 14                                               SEP      169.85 + 1.90
NOV     2015 – 13                                                DEC     173.15 + 1.90
JAN      2025 – 13                                                MAR    175.40 + 1.80
MAR     2042 – 13                                                MAY    176.10 + 1.75
MAY     2061 – 13                                                 JUL    176.20 + 1.70
JUL      2083 – 13                                                 SEP    175.85 + 1.60
SEP      2083 To open                                         DEC    175.40 + 1.65

30th. January, 2015.
The rains continue to impact upon the main arabica coffee districts within south east Brazil, but so far not all districts have reported heavy rains.  The prospects are however for more rains over the coming week and the perspective remains for relatively good coverage and for much relief for the farmers, who have been voicing concerns over the development of the coffee cherries towards the new crop.

These rainfall reports are being followed by new forecasts for not only good rains for the first week of February, but further rains to come during the month.   These rains for south east Brazil to result in February to be a wetter month than January and in terms of moisture, to assist to build up ground water retention levels ahead of the relatively drier months to follow.

But more important in terms of the market which has been focusing upon the relatively fresh memories of the two months of dry and damaging weather to start off last year is that there really has been no repeat of the partial drought of last year, which has dampened speculative spirits towards the New York arabica coffee market and accompanied by technical chart based speculative and fund selling.   With the London market that is fundamentally more secure, following the track set by New York.

Weather issues aside Brazil’s Ministry of Agriculture have officially declared a Phytosanitary emergency for the mostly arabica coffee producing state of Sao Paulo and the mixed arabica coffee and conilon robusta coffee producing state of Espirito Santo, due to the increasing incidences of the Broca or Coffee Borer beetle (Hypothenemus hampei) being experienced by coffee farmers in these states.   There are measures that can be taken by farmers to control Broca but they are difficult and while one would expect that the countries very experienced and efficient farmers will apply good degrees of control that one might expect to see an increased percentage of damaged, rather than lost bean from these states from the forthcoming new crop.

Fortunately Brazil has a very large domestic coffee market that can presently absorbs approximately 20 million bags of coffee per annum and is a market that aside for quality coffees, also absorbs the price competitive lower grades.   Therefore one might speculate that damaged beans from this Broca problem shall have no real impact upon the export potential of the still undetermined in size new Brail crop and in this respect, the Broca infestation should have no influence upon market sentiment.

In the meantime there is nothing in the way of supportive fundamental news coming to the markets from any of the other main producer blocs which by nature of the silence, confirms that there are no concerns and aside from the prospects of a relatively modest new crop in Brazil this year, that overall world coffee production shall be good.   This good overall production is presently chasing a consumer market that is still showing some growth in terms of the second largest North American market and within the new markets in Asia, but countered by the dip in consumption within the largest European market and economic difficulties for Eastern Europe, which is likely to impact negatively upon consumption for this year.   

The arbitrage between the markets has narrowed yesterday to register this at 71.82 usc/Lb., while this equates to a relatively attractive 44.89% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,065 bags yesterday, to register these stocks at 2,275,456 bags.   There was meanwhile a larger in volume 3,213 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,880 bags.

The commodity markets were under pressure again yesterday and with the macro commodity index slipping further south, which is well illustrated by the fact that the Reuters Equal Weight Commodity index is now 132.32 points or 23.76% below peak in June last year.   Of course in terms of its weighted dominance, the reversal in the fortunes of commodities is heavily weighted towards the collapse of the Oil markets.   The Brent Oil, Cotton, Wheat and Soybean markets had a day of buoyancy, while the U.S. Oil, Cocoa, London robusta Coffee, Copper, Orange Juice and Corn markets had a softer day and with the Natural Gas, New York arabica Coffee, Gold, Silver and Platinum markets experiencing a very soft day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.69% lower; to see this Index registered at 424.48.   The day starts with the U.S. Dollar steady and trading at 1.508 to Sterling and 1.134 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 47.35 per barrel.

The London and New York markets started the day yesterday, on a softer note and within and environment of very thin and lacklustre trade as has been the case for the past few weeks during early trade, as players remain uncertain over the fortunes for the day once the Americans both north and south, enter the field of play.  As the afternoon progressed and with trade still thin, the New York market lost some more weight and followed by a softer stance being taken within the London market.    This set the markets on a solid negative track for the rest of the day and despite some support coming from opportunist industry price fixations, both markets continued to lose more weight.   The London market continued to end the day on a soft note and with 93% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 85.6% of the earlier losses of the day intact.   This dismal close does little to inspire confidence and one might expect to see little better than a cautiously steady start for early thin trade today against the prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1921 - 42                                                         
MAR     1944 – 40                                               MAR     160.00 – 7.70
MAY     1972 – 40                                               MAY     162.75 – 7.65
JUL      1996 – 40                                                JUL      165.45 – 7.60
SEP      2017 – 40                                               SEP      167.95 – 7.50
NOV     2028 – 41                                                DEC     171.25 – 7.40
JAN      2038 – 41                                               MAR     173.60 – 7.20
MAR     2055 – 41                                               MAY     174.35 – 7.10
MAY     2074 – 41                                                JUL     174.50 – 7.10
JUL      2096 – 41                                                SEP     174.25 – 7.15

29th. January, 2015.
There has been a new Reuters Poll held on the basis of 13 traders and analysts and with a somewhat bullish outcome, in that the poll came out with a forecast that the New York market would end the year for the New York market at 198.00 usc/Lb. and the London market at US$ 2,115.00 per Mt.   These figures based on the averages for the new Brazil crop to come in at a modest 46.5 million bags and the recently completed Vietnam crop as having been 27.2 million bags, which would result in a deficit coffee supply of 6 million bags.  

It is however in terms of this poll still a relatively modest deficit and one that does not look to scare the international coffee industry, who would rather look to the very significant stocks that would very easily counter such a deficit and without doing much damage to world coffee stocks.  While in terms of the year end value for the market, one must consider that by the second half of the year the focus shall rather be on the prospects for the year end new Vietnam crop, the forthcoming new Colombian and Central American crops and the prospects for the follow on 2016 Brazil crop, which if looking good in numbers, would most certainly counter any bullish sentiment within the market and the related values of the markets.   

There were meanwhile during the afternoon yesterday, more rainfall reports for south eastern Brazil and reports that were talking in terms of good rains for the rest of the month, which would be followed by good rains for the first week of February.  These reports were accompanied by a comment from the U.S. Commodities Weather Group that while these rains might not be enough in some districts to achieve their monthly average rainfall in January, they would most likely be quite sufficient to maintain the steady development of the new coffee crop within these districts.  

With all the talk and focus having been on the rainfall for the south east of Brazil and the related main arabica coffee districts of the country, there has been little said about the conilon robusta districts further to the north east and the north west of the country.      In this respect there have been conilon robusta farmers in the costal state of Espirito Santo who have also been talking in terms of relatively dry weather of late, which might negatively affect their developing new crop.   But such comments have so far not been as loud as the comments coming forth from their southern neighbours within the arabica coffee districts and for the present and with rains also forecasted for Espirito Santo for the end of this month, such comments have so far had little impact upon market sentiment.  
 
The arbitrage between the markets has narrowed yesterday to register this at 77,71 usc/Lb., while this equates to a relatively attractive 46.34% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 6,200 bags yesterday, to register these stocks at 2,277,521 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

These modest certified stocks remain dominated by the 1,291,632 bags or 56.71% contributed by Mexico and Central America, which is followed by the 457,055 bags or 20.07% share held by coffees from Peru and the 321,788 bags or 14.13% share held by the African countries, Burundi, Rwanda, Tanzania and Uganda.    Added to this and somewhat minor players in terms of these stocks, Colombia contributes 142,732 bags or 6.27% and India 58,432 bags or 2.56% and Brazil 5,882 bags or 0.26% of the stocks.

However with price resistance prevalent within most of the internal markets within the arabica producing countries, there is little in the way of arabica coffee availability at prices low enough to make the price dictates of the New York market attractive enough to inspire tendering new coffees to this market, which has stalled any potential growth for these stocks.   However one would think that by the second quarter of this year and by which time there shall be clarity to the prospects of the new Brazil crop, that internal market selling aggression shall increase within many markets and export prices come closer to the price levels of the New York market, which might bring increased volumes of coffee to the related certified stocks.

The commodity markets were mostly soft yesterday and with the macro commodity index drifting lower through the day, with world economic data doing little to inspire confidence within most markets.  The Cotton and Copper markets did however show some modest buoyancy and the Sugar, London robusta Coffee and Gold markets were close to steady, while the Oil, Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets were softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.81% lower; to see this Index registered at 431.77.   The day starts with the U.S. Dollar maintain its muscle and trading at 1.515 to Sterling and 1.128 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.25 per barrel.

The London market started the day yesterday on a softer note and followed by a degree of buoyancy for the New York market, with both markets maintaining this track into the afternoon’s trade, with the New York market shrugging off a dip south to maintain its modest gains.   However as the afternoon progressed the New York market once again dipped back, to join the London market in negative territory.   The downside for the markets was however limited and the London market continued to recover most of its losses to end the day on a near to steady note and having recovered 83.3% of the earlier losses of the day by the close, while the New York market ended the day on a marginally softer note and having recovered 80.8% of the earlier losses of the day by the close.   This marginally softer close but with the markets having shown a degree of stability is likely to set the markets for a hesitantly near to steady start for early thin trade today against the prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1963 + 4                                                          
MAR     1984 – 3                                                 MAR     167.70 – 0.50
MAY     2012 – 3                                                 MAY     170.40 – 0.50
JUL      2036 – 4                                                  JUL      173.05 – 0.45
SEP      2057 – 4                                                 SEP      175.45 – 0.45
NOV     2069 – 3                                                  DEC     178.65 – 0.45
JAN      2079 – 3                                                 MAR     180.80 – 0.45
MAR     2096 – 3                                                 MAY     181.45 – 0.50
MAY     2115 – 3                                                  JUL     181.60 – 0.60
JUL      2137 – 3                                                  SEP     181.40 – 0.75

28th. January, 2015.
With the month of January export registrations in hand; the Vietnamese authorities are estimating that due to slow internal market sales and the corresponding relatively high asking differential for new business on the part of exporters that the country’s exports for this month of mostly robusta coffees, shall be approximately 14.4% lower than the same month last year, at a total of 2 million bags.    This relatively poor seasonal export performance shall precede a potentially slow and relatively low volume month of February that is not only a short month, but shall include the week long Tet New Year holiday.

The latest rainfall reports from Brazil are seemingly indicating that rainfall for the leading arabica coffee state of Minas Gerais over the next two weeks, might only be 50% of average for this time of the year, but for the neighbouring prominent arabica coffee state of Sao Paulo, the rains might exceed the average rainfall for this time of the year.   These rainfall forecasts to come to the fore, following the past few days of scattered rains and further confirm that there is no reason to believe in any chance of a repeat of the partial drought conditions that were experienced during the first two months of last year, however the late in the day activity within the New York market did not indicated that these rains have completely dampened all of the speculative spirits within the volatile New York market.

However while the further rainfall reports from south eastern Brazil did not put further negative pressure upon the New York coffee markets, they contributed to a further dip within the soft sugar market, which is yet another commodity heavily influenced by the large sugar production areas in south east Brazil.   Albeit that that the negative nature of the sugar market is also being influenced by the prospects for increased export subsidies coming to the fore, for the Indian sugar industry.

The question for Brazil is however no longer the short term weather which is providing much needed rains to the main arabica coffee districts, but more so if these rains shall continue into a normal rainfall pattern for the second half of February and through to April, as following the relatively modest rains since the few weeks delayed start of the spring and summer rain season late in October last year, the new arabica coffee crop shall require a good end for the rain season, so as to guarantee a reasonable crop.    This new crop in terms of the arabica coffees, already expected to be relatively modest, albeit that most independent trade and industry forecasts do not believe in the dismal figures that are being indicated by the National Coffee Council in Brazil.

Nevertheless there remains uncertainty over the forthcoming new Brazil crop and even the bears within the market are apparently cautious over the prospects for medium term rains in Brazil and one would think that the downside potential of the market is somewhat limited, until there is more clarity over the rainfall for south eastern Brazil for the months of March and April.   Meanwhile the weather for all the other main producer blocs is proving to be positive for coffee production, with Central America, Colombia, Peru, Vietnam, Indonesia, India and Africa all reporting normal seasonal weather conditions, which should be positive for worldwide coffee production volumes from most producers, aside from Brazil.

The uncertainty over medium term Brazil weather does however continue to fuel a degree of internal market price resistance within most of the producer countries, as farmers and internal traders hold back for better value that might come to the market, should there be further problems for Brazil.   This is tending to buoy the export differentials from the majority of the producers and is dampening trade house spirits in terms of taking on stocks at relatively firm differentials, while the firm differentials do likewise inflate values to above tenderable levels and for the present there is little attraction to buy stocks to tender to the flat and relatively low in volume stocks being held against the terminal markets.

The arbitrage between the markets has broadened yesterday to register this at 78.07 usc/Lb., while this equates to a relatively attractive 46.41% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,511 bags yesterday, to register these stocks at 2,283,721 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed yesterday with trade in many markets being slowed by the lack of participation of a number of leading players in north east U.S.A., who were somewhat snowed in for the day, albeit that in the end the weather was not as severe as initially expected.  The slightly weaker U.S. dollar die however assist to buoy value in a number of markets, with the macro commodity index taking a positive track for the day.    The Oil, Natural Gas, Cocoa, Coffee, Cotton, Wheat, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Copper, Orange Juice, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.31% higher; to see this Index registered at 435.29.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.136 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.85 per barrel.

The London market started the day yesterday on a softer note and followed by a steady start for the New York market, within an environment of hesitant and thin trade.    The New York market shrugged off some wobbles to enter the afternoon’s trade with buoyancy and joined by a recovery for the London market and with both markets trading on a positive sideways track as the afternoon progressed, but with trade remaining thin and lacklustre. This all changed however late in the day as the markets started to trigger buy stops and encountered little in the way of resistance and with further buy stops being triggered, to see both markets surge out of the days positive but narrow trading zone.   The London market ended the day on a positive note and with 87.5% of the gains of the day intact, while the New York market ended the day on a very positive note and with 95.5% of the gains of the day intact.   This positive close is constructive for the markets but unless there is early buoyancy in the usual thin morning trade, they might attract a degree of modest profit taking reversal against the firmer prices set yesterday, as follows:
   
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1959 + 35                                                         
MAR     1987 + 35                                               MAR     168.20 + 6.35
MAY     2015 + 34                                               MAY     170.90 + 6.35
JUL      2040 + 34                                                JUL      173.50 + 6.35
SEP      2061 + 34                                               SEP      175.90 + 6.35
NOV     2072 + 32                                                DEC     179.10 + 6.35
JAN      2082 + 32                                               MAR     181.25 + 6.20
MAR     2099 + 32                                               MAY     181.95 + 6.10
MAY     2118 + 32                                                JUL     182.20 + 6.25
JUL      2140 + 32                                                SEP     182.15 + 6.20

27th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net long position within this market by 2.36% in the week of trade leading up to Tuesday 20th. January, to see this long position turned into a net long that was registered at 13,977 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,329,500 bags has most likely been little changed during the period of mixed but overall steady trade that has since followed.

What is assisting the London robusta coffee market to hold its value is the value while the more volatile New York has been taking a softer stance against speculative negative pressure that has come with the Brazil rains, has been the price resistance being shown within the internal market in Vietnam for their new crop robusta coffees, which has limited to a degree the volumes of price fixation selling coming into play over the London market.   The question is however how long this resistance might continue, but while there is some competition coming to Vietnam from the new Indian robusta coffee and the new West African robusta crops the further competition from Uganda and Indonesia is only likely to start picking up in volume during the second quarter of this year, which might assist to see the London market remain relatively stable.    Albeit that if the New York market were to lose some more weight in the coming weeks against further rain reports from Brazil, the London market would most certainly shed some more modest weight in sympathy.

The week long Tet New Year Holiday (Tết Nguyên Đán) in Vietnam shall start on Sunday 15th. February and trigger the New Year of the Goat from Thursday 19th. February, but while traditionally the advent of this holiday has seen farmers become aggressive sellers of new crop coffees to finance their celebrations, this has not been the case for this year.   Farmers and internal traders fully aware of the short sold export commitments on the part of the mills and exporters are rather playing their stocks and holding back for higher relative value against the price dictates of the London market, which is likewise providing positive buoyancy for asking differentials from the exporters and tending to slow new business activity for the new crop robusta coffees.    These actions assisting to a degree, to be supportive for the London market at present, but there remains a chance that some of the less well financed farmers might look to become more aggressive sellers ahead of this all important family holiday period.

The latest forecasts from within Brazil and from some of the international meteorological centers and now talking of the present rains that are falling over the main arabica coffee districts in Brazil, to continue through to the end of the first week in February.   These are not however constant rains, but are nevertheless related to regular scattered showers and are expected to provide reasonable all over coverage for these coffee districts.  While the U.S.A. based Commodities Weather Group is also hinting at the rains most likely to continue through to the middle of next month.

These reports do most certainly confirm that the weather conditions in Brazil are not anything like the eight to nine weeks of mostly dry weather that was experienced for the first two months of last year, as in reality this year’s dry spell for these arabica coffee districts has been a relative modest three to perhaps four weeks for some districts and a spell that has mostly been bridged, by the ground water retention reserves that had been built up with the rains over the preceding two months.    Thus for the present, the Brazil weather and despite a number of reports that it is meaningless as the damage has already been done, has taken the wind out of the sails of the speculative bulls within the New York market.   

The arbitrage between the markets has narrowed yesterday to register this at 73.31 usc/Lb., while this equates to a relatively attractive 45.29% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,750 bags yesterday, to register these stocks at 2,286,232 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed yesterday but with many leading players located in the North East of the U.S.A. somewhat distracted by the oncoming weather issues, as a severe snow storm is now impacting upon the area and keeping many away from the desk.  The Oil, Sugar, London robusta Coffee, Cotton, Copper and Soybean markets had a day of buoyancy, while the Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.28% lower; to see this Index registered at 433.92.   The day starts with the U.S. Dollar steady and trading at 1.509 to Sterling and 1.23 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 45.85 per barrel.

The London market started the day yesterday on a steady to positive note, while the New York market started the day taking a thinly traded negative track.  The New York market did however as the markets entered the afternoon’s trade recover to join the London market in positive territory, but with trade remaining generally thin and lacklustre and seemingly lacking much in the way of industry participation.    The New York market did however come under some pressure as the afternoon progressed and head back to par, while the London market retained a degree of buoyancy.    The London market continued on its modest upside track for the rest of the day and ended the day on a positive note and with 84% of the gains of the day intact, while the New York market stuttered towards a marginally softer close but having recovered 64.7% of the earlier losses of the day by the close.   This mixed might well bring in some light producer selling and a softer start for the relatively firm London market but a cautiously slow sideways start for the New York market for early trade today, against the prices set yesterday, as follows;

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1924 + 21                                                         
MAR     1952 + 21                                               MAR     161.85 – 0.60
MAY     1981 + 21                                               MAY     164.55 – 0.60
JUL      2006 + 22                                                JUL      167.15 – 0.60
SEP      2027 + 22                                               SEP      169.55 – 0.55
NOV     2040 + 25                                                DEC     172.75 – 0.55
JAN      2050 + 26                                               MAR     175.05 – 0.40
MAR     2067 + 25                                               MAY     175.85 – 0.30
MAY     2086 + 23                                                JUL     175.95 – 0.35
JUL      2108 + 22                                                SEP     175.95 – 0.35

26th. January, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 10.52% in the week of trade leading up to Tuesday 20th. January;  to register a net long position of 24,718 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 8.21%, to register a net long on the day of 25,718 Lots.   This decrease on the part of the Index funds long positions, having been related to the tail end of the New Year fund rebalancing activity, which is correcting the relatively inflated value share that the commodity was holding within the overall funds positons.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 16.26%, to register a net long of 20,196 lots on the day.   This net long position that is the equivalent of 5,725,476 bags has most likely been marginally decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The pre-weekend weather reports from Brazil confirmed rains coming into the main arabica coffee districts within south eastern Brazil and with forecasts for the rains to continue during this week, while there are indications coming from some forecasts for rains to continue into early February.   These rains coming one would think just in time, to confirm that the arabica coffee weather for early this year shall not mirror the damaging partial drought that was experienced over the first two weeks of last year.

This does not however dampen the pessimistic spirits of the National Coffee Council of Brazil who came forth with their forecast that due to the past three weeks of dry weather and the resulting dry soils, that it shall have done irreversible damage to the prospects for the forthcoming new crop that is presently developing upon the trees.  With the comment that this damage makes the official government forecasts for a new crop of between 44.1 and 46.6 million bags far too optimistic and indicating that the National Coffee Council’s doing a new survey, which they do not expect to forecast the new crop at above 40 million bags.

This rather market supportive report from the National Coffee Council of Brazil provided some support for the waning spirits of the speculative bulls within the New York arabica coffee market on Friday, but one would think that it shall be very much questioned in the coming days and might not have sufficient muscle to do much more than bring some caution to the spirits of the speculative bears who have recently been taking the market on its recent softer path.   Especially so as while it has indeed been mostly dry and hot over most of the main arabica coffee districts for the first three weeks of the year, there would have been reasonable ground water retention levels inherited from the fair rains that were experienced over November and December.

Meanwhile with the Brazil Real having regained some muscle relative to the strong U.S. dollar over the past week, while the reference prices of the New York arabica coffee market has been on a decline, it has resulted in a degree of internal market resistance for new sales.  This having the effect of firming up the asking differentials for new business, but not to a degree that would indicate that farmers foresee a severely tightening longer term Brazil arabica coffees supply.   Which is a factor that would make one presume that the farmers whom one would be the best to assess the prospects for the forthcoming new crop, do not believe in the radically lower figures being forwarded by the Brazil’s National Coffee Council.

The arbitrage between the markets has broadened on Friday to register this at 74.86 usc/Lb., while this equates to a relatively attractive 46.08% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,835 bags on Friday, to register these stocks at 2,288,982 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,093 bags.

The commodity markets were mixed on Friday, but with the overall macro commodity index tending easier for the day.   The Brent Oil, Natural Gas, New York arabica Coffee, Orange Juice and Corn markets had a day of buoyancy, while the U.S. Oil, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, 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 0.71% lower; to see this Index registered at 435.13.   The day starts with the U.S. Dollar tending firmer and trading at 1.501 to Sterling and 1.119 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 45.85 per barrel.

The London market started the day on Friday on a steady note and with the New York market showing some early buoyancy, in cautiously thin and lacklustre trade.   The remained the track into the afternoon’s trade but while the New York market retained it buoyancy while the afternoon progressed the London market started to lose its way and moved back into negative territory.    The London market continued on its sideways negative track to end the day on a softer note and with 66.7% of the earlier losses of the day intact, while the New York market added to its modest buoyancy in late in the day’s trade to end the day on a positive note and with 86.2% of the earlier gains of the day intact.    This mixed close and with little in the way of fundamental news other than rain reports from Brazil coming forth to fuel market sentiment is likely to inspire yet another slow and hesitant near to steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1903 – 10                                                         
MAR     1931 – 10                                               MAR    162.45 + 2.50
MAY     1960 – 8                                                 MAY    165.15 + 2.50
JUL      1984 – 9                                                  JUL     167.75 + 2.55
SEP      2005 – 8                                                 SEP     170.10 + 2.60
NOV     2015 – 6                                                  DEC    173.30 + 2.70
JAN      2024 – 5                                                 MAR    175.45 + 2.70
MAR     2042 – 4                                                 MAY    176.15 + 2.65
MAY     2063 – 2                                                  JUL    176.30 + 2.65
JUL      2086 + 3                                                  SEP    176.30 + 2.60

23rd. January, 2015.
The Coffee Development Authority of Uganda have reported that the countries coffee exports for the month of December were 32,583 bags or 12.66% lower than the same month in the previous year, at a total of 224,803 bags.   This figure which follows a relatively lower export performance in November and a marginally better export performance in October last year has contributed to the cumulative exports from Uganda for the first three months of the present October 2014 to September 2013 coffee year having been 57,482 bags or 7.86% lower than the same period in the previous coffee year, at a total of 674,189 bags.

However in terms of value for these Ugandan coffee exports during the month of December which were made up from an 78.61% to 21.39% mix of robusta and arabica coffees, the value of the exports for the month were US$ 4,560,437 or 18.09% higher than the same month in the previous coffee year, at a total of US$ 29,778,184.   This improved value and despite the lower volumes of exports has contributed to the cumulative value of coffee exports for Uganda for the first three months of this present coffee year having been US$ 15,335,394 or 20.56% higher than the same period in the previous coffee year, at a total of US$ 89,941,011.

This improved income from coffee exports that within the free market nature of coffee farming and marketing environment within Uganda sees the majority of the value of sales ending up in farm hands, continues to encourage improved coffee production within the country and is very evident, by the areas of replanted coffee farms and new coffee trees being planted out within farms that had previously not planted coffee or had long since abandoned their coffee.   Thus while for this coffee year the countries coffee production is expected to match the previous coffee year’s production and bring forth approximately 3.6 million bags, the prospects are for improved levels of production for the coming years.   With the country very likely to see production start to return to the production levels of in excess of 4 million bags per annum that were experienced eighteen years ago.

The National Cocoa and Coffee Board of the Cameroon have reported that the countries robusta coffee exports for the month of December were 7,700 bags or 195.78% higher than the same month in the previous coffee year, at a total of 11,633 bags.   While they reported no arabica coffee exports for the month, from their much smaller arabica coffee share of total production.   Illustrated that while the Cameroon works on a December to November for robusta coffees it works on a more universal October to September coffee year for their arabica coffees and so far for this present October 2014 to September 2015 coffee year, the arabica coffee exports are so far only registered at 4,150 bags.

What is a concern for the coffee authorities in the Cameroon though, is the fact that this country which used to produce coffee crops of in excess of 2 million bags per annum 28 years ago, is that their production for the previous coffee year and made up from a 90 to 10 mix of robusta and arabica coffees was only a modest 364,650 bags, which illustrates the demise of this once significant player within the West African coffee producing bloc that has seen coffee production decrease by 73% over the last 28 years, while in the meantime over these 28 years the world production has registered an approximate 84% increase.    It is however not a situation unique to Cameroon but is a West African problem as the producer blocs leading player the Ivory Coast who are forecasted to produce a 1.9 million bags robusta coffee crop for the present coffee year, are presently producing annual coffee crops that are 55% lower than the coffee crops that they used to bring in 28 years ago.  

The arbitrage between the markets has narrowed yesterday to register this at 71.91 usc/Lb., while this equates to a relatively attractive 44.96% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,252 bags yesterday, to register these stocks at 2,291,817 bags.   There was meanwhile a larger in volume 2,060 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 5,453 bags.

The commodity markets were mixed again yesterday, but with the overall macro commodity index tending easier for the day.   The Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.70% lower; to see this Index registered at 438.26.   The day starts with the U.S. Dollar tending firmer and trading at 1.499 to Sterling and 1.133 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 47.10 per barrel.

The London market started the day yesterday on a relatively quiet and steady to softer note and followed by a steady to buoyant start for the New York market, but with both markets experiencing lacklustre trade and thin trade, while they maintained a similar through the into the early afternoon.   The more positive New York market came under some pressure to dip back into negative territory for short period and quite quickly recovered, while the London market maintained is steady to soft sideways track.   The New York market however came under late in the day speculative selling that was presumably encouraged by the combination of the negative nature of the macro commodity index, the Brazil rains and the stronger U.S. dollar, to see the market move back into negative territory and mirrored to a lesser degree, by the London market.   The London market continued to register a marginally softer close and with 40% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 83.9% of the losses of the day intact.   This soft close for the volatile New York market that is threatening to dip towards the next bout of speculative sell stops is likely to contribute towards cautious hesitancy but there might be some opportunist industry price fixation activity within early trade, to contribute towards a steady start for4 the day against the soft prices set yesterday, as follows:
 
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1913 – 4                                                           
MAR     1941 – 6                                                 MAR     159.95 – 1.30
MAY     1968 – 8                                                 MAY     162.65 – 1.30
JUL      1993 – 7                                                  JUL      165.20 – 1.25
SEP      2013 – 7                                                 SEP      167.50 – 1.15
NOV     2021 – 7                                                  DEC     170.60 – 1.15
JAN      2029 – 7                                                 MAR     172.75 – 1.25
MAR     2046 – 6                                                 MAY     173.50 – 1.25
MAY     2065 – 4                                                  JUL     173.65 – 1.20
JUL      2083 – 2                                                  SEP     173.70 – 1.55

22nd. January, 2015.
The cold front is moving north within south east Brazil and is heading into the main arabica coffee districts of the country, which is due to bring relief to the farmers who have seen their ground water retention levels declining over the past three weeks of hot and dry weather.   But more important as most likely there was enough moisture inherited from the preceding fair rains over November and December, to support the steady development of the maturing coffee cherries towards the coming new crop.  Meanwhile the rains are dampening speculative spirits for the present, within the New York arabica coffee market.

But perhaps more important for the consumer market industries in terms of the advent of the rains and the probability that there might be no further damage due for the forthcoming new crop, is that it shall inspire those farmers who have been holding back some reserve stocks to value add should there be damage and the resulting higher prices, to once again become more aggressive sellers.   Therefore to reduce the price resistance and price supportive activities within the internal market, which would by nature bring more and price competitive Brazil arabica coffees to the consumer markets.   While the resulting price fixation selling activity into the New York market, is likely to put some modest pressure upon the market.  

Agronomists from the National Coffee Federation in Colombia have cautioned that the probability of a mild El Nino developing within the Pacific Ocean and the resulting drier weather in the coming months for the countries coffee districts, shall make it important for farmers to start taking aggressive steps to control the threat of Broca or Berry borer beetle.   While in terms of Roya or Leaf Rust that develops during wet conditions, the prospects of drier weather are a positive factor and shall further limit its potential.   In this respect one must take note that over the past couple of years of improved controls, that Colombia boasts of the fact that Roya infestations within the Colombian coffee farms has been reduced by 85%, which is a success story that provides guidance for their neighbours in Central America.

The report does meanwhile stress that with the guidance of good agronomy support programs for the Colombian coffee farmers that these issues of insect and fungus controls are well in hand, while historically the periods of modestly drier weather have been related to better flowerings and larger crops.   Thus with the past few years of relatively aggressive farm replanting programs that has seen the average age of coffee trees within Colombian coffee farms reduced by 42% to an average of 7.2 years old and therefore much better yielding trees, one can feel some degree of confidence that unforeseen weather issues aside, that the annual crops shall continue to steadily increase over the next two to three years.

The new Central American crops that had experienced some cold and wet weather delays in cherry development and maturity late last year are now in full swing and with good volumes of new crop coffees being processed, but with still evidence of price resistance being experienced within the internal markets.  But one might question how long this can continue, as while farmers can take advantage of exporters having to pay up to cover their short sold nearby export commitments, there must certainly be a point were nearby supply shall exceed short term demand and one might expect this to start impacting upon the presently relatively firm export differentials from this important fine washed arabica coffee producer bloc.

The arbitrage between the markets has narrowed yesterday to register this at 72.94 usc/Lb., while this equates to a relatively attractive 45.23% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 207 bags yesterday, to register these stocks at 2,293,069 bags.   There was meanwhile a larger in volume 2,880 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 7,513 bags.

The commodity markets were mixed again yesterday, but with the dominant Oil markets that are heavily weighted within the mix showing some degree of buoyancy.  While the continued muscle being shown by the U.S. dollar continues to have an impact within many markets and with the European Central Bank expected to announce a more aggressive and Euro weakening quantitative easing package, the dollar can be expected to maintain its negative pressure within many fundamentally well supplied markets.   The Oil, Natural Gas, Sugar, Copper, Wheat and Platinum markets showed buoyancy and the London robusta Coffee, Orange Juice and Gold markets were near to steady, while the Cocoa, New York arabica Coffee, Cotton, Corn and Soybean markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.48% higher; to see this Index registered at 441.34.   The day starts with the U.S. Dollar relatively steady and trading at 1.513 to Sterling and 1.159 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 46.60 per barrel.

The London market started the day yesterday on a relatively quiet and steady note and followed by a steady to buoyant start for the New York market, but with both markets experiencing lacklustre trade and thin trade, while they maintained a positive stance through the early afternoon and with the New York market adding some additional value and posting 2.55 usc/Lb. gains for the day.   This positive stance was however unsustainable and the pathfinder New York market started to lose its way and with industry and speculative support thin, was pressured back into negative territory.  The relatively thinly traded London market followed this negative track but was able to attract support and limit its losses, while the New York market continued on its steady downside track.  The London market continued to end on a near to steady note and having recovered 66.7% of the earlier late in the day losses, while the New York market ended the day on a soft note and with 92.4% of the losses of the day intact.   This close and the lack of fundamental supportive news does little to buoy confidence and one might expect to see a steady to soft start for thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1917 – 1                                                           
MAR     1947 – 3                                                 MAR     161.25 – 3.05
MAY     1976 – 3                                                 MAY     163.95 – 3.05
JUL      2000 – 2                                                  JUL      166.45 – 3.00
SEP      2020 – 2                                                 SEP      168.65 – 3.00
NOV     2028 – 2                                                  DEC     171.75 – 3.05
JAN      2036 – 2                                                 MAR     174.00 – 3.30
MAR     2052 – 2                                                 MAY     174.75 – 3.55
MAY     2069 unch                                              JUL      174.85 – 3.65
JUL      2085 + 3                                                 SEP      174.85 – 3.65

21st. January, 2015.
The relatively high profile Brazilian trade house Comexim reported yesterday that with the have assessed the 2014 Brazil coffee crop to have been 48.45 million bags, which is a number that is very much in line with many other respected trade and industry reports.   Added to this they have assessed that the private cooperative, farm trade and industry stocks into this new crop and as at 1st. July last year, were 10.6 million bags and therefore indicating a coffee supply of 59.05 million bags and this aside from the 1.7 million bags of government coffee stocks.

These Comexim figure with an approximate combined domestic and export coffee demand of around 54 million bags per annum would indicate the potential for carryover coffee stocks into the new 2015 Brazil coffee crop of approximately 5 million bags and this aside from the additional 1.7 million bags of government stocks, which would further indicate that unless the new crop were to dip below 48 million bags, that Brazil coffee supply is potentially safe trough to the 2016 crop.   Thus with the prospects for rains to end of this month and with many still forecasting a new crop that shall exceed 48 million bags, the report tended to dampen some of the spirit of the speculative bulls within the New York market.

One might comment in terms of demand for Brazil coffees where the critical factor has been and continues to be the arabica coffee districts in south east Brazil, rather than the main conilon robusta coffee districts further to the north that have not suffered as much from the low rain factor, that the consumer market demand for Brazil arabica coffees is no longer as critical as it was over the past two years.   This year sees rising washed arabica coffee supply now coming in from Central America and Colombia and soon to be followed as the year progresses, by rising washed arabica coffee supply from Peru and thus the potential for the consumer markets to live with 2 to 3 million bags less Brazil arabica coffee supply for the year.

Thus with the evidence of good levels of consumer market coffees stocks, flat to even weakening demand from the Europe the largest consumer market and rising Latin American washed arabica coffee supply and still reasonable natural arabica coffee stocks within Brazil, there remain for the present little in the way of concern over longer term coffee supply on the part of the consumer market industries.   This is of course so long as there are no further weather problems for south eastern Brazil, to threaten and significantly lower the developing new Brazil arabica coffee crop potential and this can really only be known better by the end of next month and with the evidence of the January and February rains in hand.

Meanwhile more damaging to market confidence yesterday afternoon was a host of weather forecasts that are coming to the market that now not only indicate a wet end to the month for south east Brazil and following the three weeks of hot and dry weather, but some not talking of a wet start to the month of February.  These forecasts indicating that there is little chance to see a repeat of the partial drought that was experienced over the first two months of last year within south east Brazil and dampening the spirits of the speculative bulls within the more volatile and active New York market, which is now showing a degree of exhaustion.   

The arbitrage between the markets has narrowed yesterday to register this at 75.85 usc/Lb., while this equates to a relatively attractive 46.17% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 1,315 bags yesterday, to register these stocks at 2,293,276 bags.   There was meanwhile a larger in volume 3,738 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,393 bags.

The commodity market were mixed yesterday with the influential American players returning from their long weekend Martin Luther King holiday to the news of a twenty four year low in Chinese growth, albeit still nevertheless impressive growth due for this year.  While in terms of sentiment for the day there were many who were distracted by yesterday’s state of the nation address by the American President which did prove to be positive in terms of its confirmation of longer term positive growth for the U.S.A.   The Sugar, Wheat, Corn, Gold, Silver and Platinum markets had a day of buoyancy and the Orange Juice market was steady, while the Oil, Natural Gas, Cocoa, Coffee, Cotton, Copper and Soybean markets had softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.24% lower; to see this Index registered at 439.24.   The day starts with the U.S. Dollar relatively steady and trading at 1.517 to Sterling and 1.159 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 46.25 per barrel.

The London and New York markets started the day on a steady note and started to add value and take a positive track into the afternoon’s trade, but with volumes remaining relatively thin.  As the afternoon progressed however and with the Americans entering the field of play both markets came under seemingly speculative pressure and headed down into negative territory and with sell stops being triggered to both increase the volumes of trade and accentuate the losses.   The London market continued on a very much sideways track at its lower levels and the end the day on a soft note and with 67.7% of the earlier losses of the day intact, while the New York market that was suffering from both the negative influences of a softer macro commodity index and the Brazil rain reports dent to speculative confidence ended the day on a very soft note and with 93.7% of the earlier losses of the day intact.   This close has to be seen to be negative for sentiment and especially so with the Brazil rains now so close and one might expect to see little better than a cautious steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1918 – 21                                                         
MAR     1950 – 21                                               MAR     164.30 – 6.70
MAY     1979 – 20                                               MAY     167.00 – 6.65
JUL      2002 – 21                                                JUL      169.45 – 6.65
SEP      2022 – 21                                               SEP      171.65 – 6.45
NOV     2030 – 21                                                DEC     174.80 – 6.30
JAN      2038 – 19                                               MAR     177.30 – 6.05
MAR     2054 – 16                                               MAY     178.30 – 5.90
MAY     2069 – 16                                                JUL     178.50 – 5.90
JUL      2082 – 10                                                SEP     178.50 – 5.80

20th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market increase their net long position within this market by 31.06% in the week of trade leading up to Tuesday 13th. January, to see this long position turned into a net long that was registered at 14,315 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,385,833 bags has most likely been little changed to perhaps register a marginal decrease during the period of mixed trade that has since followed.

This London robusta coffee market with the new Vietnam crop largely seen to have been steady to modestly smaller than the previous crop, is likely to shrug off the negative influences that come with the prospects for larger new robusta coffee crops due from Indonesia and India this year, along with modestly rising supply from Africa, as the main driver of growth in world consumption is heavily weighted towards the new markets and the relatively inexpensive robusta coffees.   However this does not detract from the fact that the London market with robusta coffee demand seemingly matching supply shall to a degree, continue to track the fortunes of the more volatile New York market.   This latter market presently shrugging off the negative influences of rising washed arabica coffee supply and perhaps even surplus washed arabica coffee supply, on the speculation for deficit new natural arabica coffee supply, which would come with another modest Brazil crop this year.

In terms of the prospects for the new Brazil arabica coffee crop which has been negatively affected by the stresses experienced within many coffee farms during the partial drought they experienced during the first two months of last year and followed by a late start to the present spring and summer rain season, there remain some concerns over the relatively modest rains experienced for the start of this year.   The latest forecasts do however talk of a new cold front and fair rains for most of the Brazil arabica coffee districts for the latter half of this week and through to the end of the month.

These rains that follow a couple of weeks of mostly hot and dry weather and are not expected to do much more than influence the rainfall for the month to be much more than 50% of the monthly average for the month, but they do nevertheless bring much needed moisture to the developing new coffee crop.   Thus while there are many that have suggested that the modest nature of these rains might have done some further damage to the new arabica coffee crop potential, the question is with at least fair ground water retention levels following the reasonable November and December rains if the two to three weeks of dry weather has in fact been damaging, which is a factor that took some of the wind out of the sails of the speculative bulls within the New York market at the end of last week.

But there is no question that the relatively dry January would have lowered ground water retention levels and that fair follow through rains shall be required during February in south east Brazil, if there is to be stability for the development of the new arabica coffee crop.   Thus while the New York market might have lost some of its steam, there is still the possibility for renewed volatility and buoyancy during the coming month, should hot and dry weather return and thus one might think, that there might be some degree of short term caution shown by the speculative sector of the market in the coming days, which may limit the downside potential for the market.

The arbitrage between the markets has narrowed yesterday to register this at 81.60 usc/Lb., while this equates to a relatively attractive 47.72% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 500 bags yesterday, to register these stocks at 2,291,961 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,131 bags.

Many of the commodity markets were closed yesterday, with the observation of Martin Luther King Day in the U.S.A., which resulted in a long weekend for many market players.   Meanwhile with the world’s economic drivers distracted by the safari to Davos Switzerland for the World Economic Forum that shall take place over Wednesday to Saturday this week, one might expect that is shall prove to be something of a distraction in terms of fundamental influences within many markets.  The London robusta Coffee and Platinum markets showed buoyancy yesterday, while the Oil, Natural Gas, Sugar, Cocoa, Copper Gold and Silver markets tended softer.   With many markets closed the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is unchanged; to see this Index registered at 444.74.   The day starts with the U.S. Dollar steady and trading at 1.508 to Sterling and 1.158 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 46.60 per barrel.

The London trading solo yesterday and following the soft end to last week for both markets, started the day yesterday on a thinly traded lower note.  This remained the track into the early afternoon trade, which remained lacklustre in nature, but with some degree of recovery coming into play later in the afternoon.  This saw the market recover its losses and move into modest positive territory and briefly build upon its gains, but soon encountering selling activity to pressure the market back towards par.   The London market continued to end the day with very modest buoyancy and with only 7.7% of the earlier gains of the day intact, which gives little guidance for sentiment and one might expect little better than a steady to soft start for early trade today against the prices set in London yesterday and New York on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1939 – 2                                                           
MAR     1971 + 1                                                 MAR     171.00 – 5.65
MAY     1999 + 2                                                 MAY     173.65 – 5.65
JUL      2023 + 2                                                  JUL      176.10 – 5.60
SEP      2043 + 3                                                 SEP      178.10 – 5.65
NOV     2051 + 3                                                  DEC     181.10 – 5.55
JAN      2057 + 3                                                 MAR     183.35 – 5.55
MAR     2070 + 3                                                 MAY     184.20 – 5.65
MAY     2085 + 3                                                  JUL     184.40 – 5.50
JUL      2092 + 3                                                  SEP     184.30 – 5.45

19th. January, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 12.05% in the week of trade leading up to Tuesday 13th. January;  to register a net long position of 27,623 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 29.85%, to register a net long on the day of 28,017 Lots.   This latter sharp drop on the part of the Index funds long positions, having been related to the New Year fund rebalancing activity, which is correcting the relatively inflated value share that the commodity was holding within the overall funds positons.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 57.76%, to register a net long of 24,117 lots on the day.   This net long position that is the equivalent of 6,837,063 bags has most likely been decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Council in Nicaragua have reported that the countries coffee exports for the month of December were 21,779 bags or 83.87% higher than the same month in the previous year, at a total of 47,746 bags.   This figure contributes to the countries cumulative exports for the first three months of the new October 2014 to September 2015 coffee year being 78,649 bags or 79% higher than the same period in the previous coffee year, at a total of 178,210 bags.

The Vietnam Customs authorities have reported that following coffee exports of mostly robusta coffees during the month of December of 1.92 million bags, the countries cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year are 7% higher than the same period in the previous coffee year, at a total of 4,920,000 bags.    It is noted however that the exports in December have been reported and well below the forecasted expectations for exports for the month of between 2 million to 2.5 million bags, which perhaps is related to the present internal market price resistance that is being experienced within Vietnam, which is inflating asking differentials for new business and is slowing new business activity on the part of the international coffee trade.

The National Coffee Council in Brazil has reported on Friday that the latest new crop forecast by the National Crop Supply Agency CONAB has not really given sufficient consideration to the dry start to the month of January and that in reality, the new crop might be smaller than the 44.1 to 46.6 million bags CONAB forecast.   This report alike the CONAB report, does not take into account the very much discounted Conilon robusta coffee factor included within the overall figures and with this in mind, most private trade and industry players would already be adding at least 4 million bags and perhaps even more, to these quoted official figures.  

Adding to these further comments on the matter of Brazil weather was a report on Friday by the Brazilian Electrical Grid Operators in South East Brazil, who forecasted that they expect to see only 44% of the monthly average rainfall for their hydro power reservoirs during January.   This report by nature indicating the lower rainfall that could be expected for the neighbouring coffee districts, but one might comment that unlike last years’ experience of almost no rain in these districts in January, that there is at least some rain and one cannot repeat the drought talk of last year.   Thus one needs to show a degree of caution towards some of the more dramatic scare stories that are being voiced, over the negative weather effect upon the prospects for the new and relatively modest 2015 Brazil crop.

The arbitrage between the markets has narrowed on Friday to register this at 81.64 usc/Lb., while this equates to a relatively attractive 47.74% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 825 bags on Friday, to register these stocks at 2,292,461 bags.   There was meanwhile a larger in volume 4,196 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,131 bags.

The commodity markets were mixed on Friday, but with the recently battered Oil markets that are now trading well below cost for many leading producers, finally showing some modest reversal in their fortunes.  The Oil, Copper, Wheat, Corn, Gold, Silver and Platinum markets had day of buoyancy and the Orange Juice and Soybean markets were steady, while the Natural Gas, Sugar, Cocoa, Coffee and Cotton markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.56% higher; to see this Index registered at 444.74.   The day starts with the U.S. Dollar steady and trading at 1.514 to Sterling and 1.156 to the Euro, while North Sea Oil is tending easier in early trade and is selling at $ 48.00 per barrel.

The London and New York markets started the day on Friday on a steady not in very thin trade, but with the markets tending marginally softer in hesitant, thin and lacklustre afternoon trade.    As the afternoon progressed and with the reports and forecasts for improved rains for south eastern Brazil for this week coming into play to dampen speculative spirits, both markets continued on a steady downside track for the rest of the relatively quiet days trade.   The London market continued to end the day on a soft note and with 70% of the losses of the day intact, while the New York market ended the day on a very soft note and with 90.4% of the losses of the day intact.     This soft close and with the further Brazil weather reports and forecasts only due later in the day, is likely to see the markets encounter thin and cautious near to steady activity for early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1941 – 32                                                         
MAR     1970 – 28                                               MAR     171.00 – 5.65
MAY     1997 – 30                                               MAY     173.65 – 5.65
JUL      2021 – 30                                                JUL      176.10 – 5.60
SEP      2040 – 30                                               SEP      178.10 – 5.65
NOV     2048 – 31                                                DEC     181.10 – 5.55
JAN      2054 – 33                                               MAR     183.35 – 5.55
MAR     2067 – 33                                               MAY     184.20 – 5.65
MAY     2082 – 33                                                JUL     184.40 – 5.50
JUL      2089 – 33                                                SEP     184.30 – 5.45

16th. January, 2015.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 169,190 bags or 2.97% during the month of December, to register these stocks at 5,524,964 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.

Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6,524,964 bags, it would have equated to at least a very safe 13.3 weeks of roasting activity and still a safe reserve, ahead of the pending delivery of increasing volumes of new crop coffees from Mexico, Central America, Colombia and Vietnam.  These new crop coffees and however not expected to surge in supply, as the North American roasters alike the consumer industries worldwide, remain slow and steady buyers against what many predict to be a market that should the rains come in Brazil next week, might still lose some more weight.

One might further comment that with these 2014 year-end U.S.A. stocks seen to be a significant 438,246 bags or 8.62% higher than they were at the end of the previous year, the report is not really that supportive for market sentiment.   With only the uncertain and erratic weather issues within Brazil proving to be a factor that can counter the negative nature of the evidence of good consumer stock levels and potentially more than adequate coffee supply, from most of the producer blocs.

While their southern neighbours in Central America are all coming out of the past two years of severe problems from Roya or Leaf Rust and are looking to increased new crops from the harvest that is presently in progress, the Mexican National Coffee Association has reported that due to the devastating effects of the Roya infestation, they are looking at a the probability of an 12.8% to 17.9% lower new crop.    In this respect and with the new crop presently being harvested, they are forecasting a relatively modest new crop of between 3.2 and 3.4 million bags.   

This forecast is rather dramatically lower than the many trade and industry forecasts that have been talking a New Mexican crop of fine washed arabica coffee, which they expected to be well in excess of 4 million bags and likewise a past crop of in excess of 4 million bags.  While this Mexican National Coffee Association forecast and percentage dip, has been based on the past crop having been a lower figure of 3.9 million bags.   Thus one might suggest that with the rather high percentage drop that has been quoted, that it is likely that there might be some degree of market manipulation might be related to the forecast, which shall see the market players take a cautious wait and see stance towards this report.

The well respected Brazil analysts Safras & Mercado who have assessed the 2014 Brazil crop at 48.9 million bags, have estimated that by the end of last week 72% of the coffees from this new crop had been sold.   This is a significantly higher percentage than the 63% factor they applied for the same time last year from the previous crops coffees, which would indicate that this well sold factor shall see internal market selling activity start to slow for the first half of this year.   Thus lessening the price fixation selling activity on the part of Brazilian exporters, but perhaps to be replaced by similar activity on the part of exporters hedging their purchases out of the new crops in Mexico, Central America, Vietnam and India and thus, one would say the news is somewhat neutral to the market.

Somar Meteorologists in Brazil reported yesterday that they foresee hot and mostly dry weather for south eastern Brazil over the weekend and for the first couple of days of next week, but with rains to come during the second half of the week and through to the end of the month.   These are however very much catch up rains so to speak and the report forecasted that the January rainfall for many districts shall be 48% below average, but unlike last year where there was almost no rain for many of the districts.  Thus one might comment that there are at least some rains forthcoming and perhaps sufficient so long as rainfall over the coming two to three months is close to average levels, to ensure the steady development of the forthcoming new crop.  

But there is no guarantee that the rains in February shall be normal, as the U.S.A. based Commodity Weather Group has forecasted the potential for a hot and dry spell for south eastern Brazil for early February, but without any comment from thereon.    Thus one can foresee these issues of rain and the focus of the speculative trade shall remain upon the day by day weather reports out of Brazil, to maintain volatility within the New York market for the coming weeks.   

The arbitrage between the markets has narrowed yesterday to register this at 86.02 usc/Lb., while this equates to a relatively attractive 48.70% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 2,092 bags yesterday, to register these stocks at 2,293,286 bags.   There was meanwhile a similar in volume 2,028 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,935 bags.

The commodity markets were mixed yesterday, but with some relatively sharp moves either side of par encountered within many of the markets.    The Sugar, London robusta Coffee, Cotton, Copper, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, New York arabica Coffee, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.21% lower; to see this Index registered at 442.27.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.163 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 48.10 per barrel.

The London and New York markets started the day yesterday on a positive note and with both markets building upon their gains as they entered the afternoon trade, but with the New York market losing its way as the afternoon progressed and shedding its gains, while the London market maintained the earlier in the days muscle.   The New York market dipped back into negative territory while the London market remained positive and post a brief recovery for the New York market, the track for the rest of the day was south and with the London market shedding most of its weight.  The London market continued to end the day on a modestly positive note but with only 13.5% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 68.8% of the losses of the day intact.    This close is unlikely to inspire much more than a steady start in thin and cautious trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1973 + 5                                                          
MAR     1998 + 5                                                 MAR     176.65 – 3.20
MAY     2027 + 3                                                 MAY     179.30 – 3.25
JUL      2051 + 4                                                  JUL      181.70 – 3.25
SEP      2070 + 4                                                 SEP      183.75 – 3.15
NOV     2079 + 4                                                  DEC     186.65 – 3.05
JAN      2087 + 4                                                 MAR     188.90 – 2.70
MAR     2100 + 4                                                 MAY     189.85 – 2.45
MAY     2115 + 4                                                  JUL     189.90 – 2.45
JUL      2122 + 4                                                  SEP     189.75 – 2.40

15th. January, 2015.
The government in El Salvador have voiced their intent to invest in support programs to assist approximately 30% of their coffee farmers and presumably the small scale farmers in this country that has its coffee industry dominated by relatively wealthy commercial farmers, to replant their farms with new disease resistant and higher yielding coffee trees.    These programs which follow the very successful examples of Colombia and Honduras and are similarly to Honduras a five year plan, are designed to see the country that has seen the recent problems of Roya or Leaf Rust dip their crop from 1.3 million bags to below 700,000 bags, target annual crops of in excess of 2 million bags in the coming years.

The speculative sector of the New York coffee market took the reins of market sentiment yesterday to lead the markets into a rally and see New York briefly head towards a six week high, as concerns over the dry weather in south east Brazil fuelled positive sentiment, with the London market following the track being set by the volatile New York market.    There was however late in the day a cap to the market that was attracting light producer price fixation selling, from index fund re-balancing selling and the markets settled back to set a more modest positive end to the day.

One must however question within what is presently a very emotive and volatile New York market, what might be the reaction to the forecasted rains for latter half of next week and thereon, into what is forecasted to be normal rainfall conditions in February.    With the potential with new crop coffee stocks now building up in Mexico and Central America and competing with Colombia for market share within the top end fine washed arabica coffee sector of the mainstream developed consumer markets, for more aggressive selling activity and the resulting price fixation selling into the New York market.   In this respect there is the potential for rains to trigger both speculative profit taking selling and to bring to the market more aggressive producer selling activity, but the biggest question is how much more traction might there be for the presently rising New York market and at what level it might be when it shall potentially hit a Brazil rain inspired tipping point.

Meanwhile within an environment of a significant downside track for the macro commodity index that is being effected by soft economic forecasts for the year and the renewed muscle of the U.S. dollar, the coffee markets are something of a solo star for the present and with the New York market as at yesterdays close having posted a 7.95% increase for the year, while the London market is a more modest 4.02% higher for the year.   This relatively good buoyancy that follows the coffee markets having been the best performer out of all markets in 2014 and based on the supportive fundamentals of Brazil weather, might still be vulnerable to a couple of months of fair weather in Brazil that would influence a degree of speculative exhaustion and catch up producer selling activity within the coffee markets.    Thus focus for the present is very much upon the day by day Brazil weather reports and forecasts.

The arbitrage between the markets has broadened yesterday to register this at 89.45 usc/Lb., while this equates to a relatively attractive 49.74% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 5,245 bags yesterday, to register these stocks at 2,291,194 bags.   There was meanwhile a larger in volume 14,265 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,963 bags.

The commodity markets encountered the somewhat negative news of the World Bank’s lowering of their forecast for global growth to 3% from 3.4% for 2015 and the 0.9% dip in U.S. retail sales for November last year, which both impacted upon prospects for softer demand.   But with most markets already well sold, these reports had little influence upon the overall flat and soft macro commodity index.  The U.S. Oil, Natural Gas, Sugar, Coffee, Orange Juice, Gold, Silver and Platinum markets showed buoyancy and he Cocoa market was near to steady, while the Brent Oil, Cotton, Wheat, Corn and Soybean markets had a softer day’s trade and the Copper market with a 5.77% loss for the day, was perhaps the headline market for the day.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher; to see this Index registered at 443.19.   The day starts with the U.S. Dollar steady and trading at 1.522 to Sterling and 1.176 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 48.05 per barrel.

The London and New York markets started the day yesterday on a positive note and with both markets building upon their gains as they entered more active afternoon and with the New York market leading the way to peak with a rather impressive 4.44% increase in value for the day, while the more stable London market followed a more steady upside track and peaked near to the close at a 1.58% gain in value for the day.   The New York market with the increased late in the day selling activity did however experience a negative correction to limit its gains but nevertheless maintained its overall positive stance, while the London market maintained its steady upside track.   The London market ended the day on a positive note and with 93.5% of the gains of the day intact, while the New York market ended the day on a positive note and with 36.9% of the earlier gains of the day intact.   This overall positive close is likely to inspire a degree of confidence and along with the thoughts that index selling activity is most probably concluded, to support a steady to perhaps buoyant start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1968 + 26                                                         
MAR     1993 + 29                                               MAR     179.85 + 2.90
MAY     2024 + 31                                               MAY     182.55 + 2.90
JUL      2047 + 30                                                JUL      184.95 + 2.80
SEP      2066 + 30                                               SEP      186.90 + 2.70
NOV     2075 + 28                                                DEC     189.70 + 2.70
JAN      2083 + 28                                               MAR     191.60 + 2.75
MAR     2096 + 26                                               MAY     192.30 + 2.80
MAY     2111 + 26                                                JUL     192.35 + 2.80
JUL      2118 + 26                                                SEP     192.15 + 2.70

14th. January, 2015.
The National Coffee Association of Guatemala have reported that the countries coffee exports for the month of December were 30,581 bags or 24.71% lower than the same month in the previous year, at a total of 93,191 bags.  This relatively modest performance that is related to the weather delayed new crop harvest and a consumer market price resistance to the relatively high asking prices for Guatemala coffees contributes to the cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year being 75,658 bags or 27.17% lower than the exports for the same period in the previous coffee year, at a total of 202,786 bags.

Brazil’s official National Crop Supply Agency CONAB came forth with their latest coffee crop report and forecast yesterday, in which they have reported that contrary to many other market supportive suggestions, the rainfall for the countries coffee districts over November and December was sufficient to maintain ground water moisture levels for the coffee farms.    They did however state that the January rainfall reports shall need to be watched as they do have the potential, to have some impact upon the new 2015 coffee crop.

In terms of the new coffee crop they have forecasted the arabica coffee production to be marginally larger than their figure for the 2014 crop of 32.3 million bags, at between 32.5 million and 34.4 million bags.  While they have forecasted the conilon robusta production to be marginally lower than their figure for the 2014 crop of 13 million bags, at between 11.6 million and 12.2 million bags.    Therefore a new crop of between 44.1 million and 46.6 million bags, as against their assessment of last year’s crop having been 45.3 million bags.

At first sight this is a rather dismal crop forecast and potentially bullish in nature, but one has to seriously question the very modest conilon robusta coffee figure that is included within both their 2014 crop assessment and for the forthcoming new 2015 crop.  The usually very reliable trade and industry figures for the conilon robusta production in 2014 and supported by evidence of business concluded for these coffees since their harvest over March to June 2014, are that the crop was between 16.8 and 17.5 million bags.  While the forecasts by the trade and industry players are that the new 2015 crop shall most likely be close to these last figures.

Thus if one is to say work on a 17 million bags figure for conilon robusta coffees in 2014 and a 16 million bags figure for 2015, it would inflate their 2014 crop to 50.3 million bags and their minimum crop forecast for the 2015 crop to 48.5 million bags and their maximum forecast to 50.4 million bags.    These being numbers in terms of the still reasonable stocks of Brazil arabica coffees, that would not really threaten longer term Brazil coffee supply through to the 2016 Brazil crop.

But the question still remains over the prospects for rainfall over south east Brazil for the first quarter of this year, as this has to be cumulatively close to average levels, it the Brazil arabica coffee forecast of 32.5 million to 34.4 million bags is to be secure.  Thus while on analysis and adjustment for the conilon quantities this latest CONAB report would appear to be not very bullish for the market, the uncertain weather for the coming weeks would tend to make it  more neutral than bearish for short term market sentiment.

Vietnam’s week long Tet New Year holiday starts in four and half weeks’ time, with the countries commercial activities due to close for nine days from the 14th. February.   This holiday that shall celebrate the start of the Year of the Goat will however start to slow commercial activity a few days prior to the start of the holiday and traditionally within Vietnam the need to finance the holidays, it has encouraged more active selling of new crop coffee stocks in the weeks prior to it.   However this is seemingly not the case this year, as all evidence is that the farmers and internal market traders are showing price resistance to the robusta coffee prices that are being dictated by the London market and for the present, the export differentials out of Vietnam remain relatively firm.

Thus for the present new crop export selling activity is relatively lacklustre in nature, as the consumer market industries follow more a need to buy policy than taking a longer term premium differential cover for the Vietnam robusta coffee needs.   One might think though that in time and as and when the exporters have covered their short sold forward export commitments and are under less pressure to buy that it shall become more of a buyer’s market in Vietnam and that in time, once might expect to see export differentials soften a little bit.  But this is now looking to be more a medium term than a short term scenario and most probably more likely to occur for the second quarter rather than the first quarter of this year, by when Vietnam shall be actively competing with robusta coffee exports from Indonesia, India and Uganda.

The arbitrage between the markets has broadened yesterday to register this at 87.86 usc/Lb., while this equates to a relatively attractive 49.65% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,051 bags yesterday, to register these stocks at 2,285,949 bags.   There was meanwhile a smaller in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 26,228 bags.

The commodity markets experienced another mixed day yesterday, but with the negative influences of the World Bank’s latest forecast that lowered world growth expectations for 2015, many markets remained on a negative track.  The Natural Gas, Sugar, New York arabica Coffee, Cotton, Orange Juice, Gold, Silver and Platinum markets showed buoyancy, while the Oil, Cocoa, London robusta Coffee, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% lower; to see this Index registered at 441.71.   The day starts with the U.S. Dollar steady and trading at 1.517 to Sterling and 1.179 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 45.25 per barrel.

The London market started the day yesterday shedding a little weight, while the New York market started on a steady note, but soon losing some value and joining the London market in negative territory.  Both markets lost more value as they moved into early afternoon’s trade, but with the markets recovering half of their early afternoon’s losses, as the afternoon progressed and the New York market finally breaking through to positive trade, while the London market remained below par.    The London market continued to end the day on a negative note and with 42.9% of the earlier losses of the day intact, while the New York market ended the day with modest buoyancy with only 9.3% of the earlier gains of the day intact.   This rather uninspiring close is likely to encourage little better than a near to steady start for early thin trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1942 – 11                                                         
MAR     1964 – 9                                                 MAR     176.95 + 0.20
MAY     1993 – 8                                                 MAY     179.65 + 0.25
JUL      2017 – 6                                                  JUL      182.15 + 0.30
SEP      2036 – 5                                                 SEP      184.20 + 0.35
NOV     2047 – 4                                                  DEC     187.00 + 0.35
JAN      2055 – 3                                                 MAR     188.85 + 0.30
MAR     2070 – 3                                                 MAY     189.50 + 0.15
MAY     2085 – 3                                                  JUL     189.55 + 0.05
JUL      2092 – 3                                                  SEP     189.45 + 0.10

13th. January, 2015.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net long position within this market by 1.36% in the week of trade leading up to Tuesday 6th. January, to see this long position turned into a net long that was registered at 10,923 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 1,820,500 bags has most likely been little changed to perhaps register a marginal increase during the period of mixed trade that has since followed.

Supportive for the markets during the afternoon yesterday was a report from the Cocatrel Coffee Cooperative in the leading Brazilian arabica coffee state of Minas Gerais, which stated that following a meeting between fifteen cooperatives they estimate the coffee production in Minas Gerais might this year be as much as 20% less than last year’s already relatively modest deficit crop.    This modest forecast being based not only on the damage done to the potential of the coffee trees following the stress of the early in 2014 partial drought, but also upon the relatively modest rains experienced during the delayed start new spring and summer rain season.

In terms of this issue of Brazil rains over the main south eastern Brazil arabica coffee districts, the latest forecasts are talking in terms of many leading coffee areas within these districts likely to experience only around 50% of their monthly average rainfall.   With many of the districts already reporting very modest rainfall for the month so far and the potential that this scenario shall continue into the coming week, with the weather to only change during the second half of next week, when good widespread rains are presently forecasted to impact upon south eastern Brazil, but not in sufficient volume, to compensate for the relatively dry start to the month.

It has to be noted that these Brazil weather reports do most usually caution that the relatively dry weather for the start of the year is not a repeat of last year’s partial drought conditions, as there have been at least some light rains experienced over south east Brazil.   Thus highlighting that the present conditions are not a mirror of the previous year’s disastrous January and February partial drought and most certainly so with the late in the month rains being forecasted, but are more an indication of the more difficult conditions for new crop arabica coffee cherries to develop.  Therefore, only the potential for these lower moisture weather conditions to result in a higher percentage of smaller beans from this crop and a negative effect upon overall volume, rather than a dramatically lower crop.  

While not in any way striking new news the Brazilian Exporters Association highlighted yesterday that the countries green coffee exports for 2014 were 4.78 million bags or 17.02% higher than the previous year’s 28.08 million bags, at a total of 32.86 million bags.    This report is perhaps only significant in terms of the fact that it highlights that the consumer markets in terms of a potentially lower new Brazil crop, were only very recently able to live with a Brazil coffee supply of below 30 million bags per annum.    Thus in terms of the countries domestic coffee consumption of approximately 20 million bags per annum and the significant coffee stocks still in hand, the potential for a couple of million bags deficit crop this year, is something that the consumer markets could easily live with.   This report when it came to the board during the afternoon’s trade and following the month end rain reports from Brazil assisted to take some of the wind out of the sails of the speculative sector of the New York market.

The arbitrage between the markets has narrowed yesterday to register this at 87.26 usc/Lb., while this equates to a relatively attractive 49.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 526 bags on yesterday, to register these stocks at 2,288,000 bags.   There was meanwhile a similar in volume 550 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,948 bags.

The Certified robusta coffee stocks held against the London market were seen to increase by 61,667 bags or 2.92% over the two weeks of trade leading up to Monday 5th. January: to register these stocks at 2,171,333 bags on the day.  The New Year has however brought with it firming differentials within the internal market in Vietnam, which is inflating nearby robusta coffee prices and one would not expect to see for the short term, much in the way of growth potential for these stocks.

The commodity markets experienced another mixed day yesterday, but mostly towards the negative track for the day.   The Cocoa, London robusta Coffee, Orange Juice, Corn, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Wheat and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.19% lower; to see this Index registered at 442.83.   The day starts with the U.S. Dollar steady and trading at 1.516 to Sterling and 1.182 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 45.90 per barrel.

The London market started the day yesterday with a degree of buoyancy and followed by a follow through from Friday firmer start for the New York market, with the markets gaining support from speculative weather concerns in Brazil and some cautious price fixation activity.   The markets maintained their positive track into the afternoon’s trade and with the New York market having peaked at a 4.85 usc/Lb. gain for the day, but started to shed some weight as the afternoon progressed and both markets slipped back towards par.   The New York market further suffered from a degree of exhaustion later in the afternoon, which saw the market move below par and start on a downside track, while the London market maintained some modest muscle for the rest of the day’s trade.   The London market ended the day on a positive note and with 26.3% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 69.5% of the losses of the day intact.    This mixed close and with the more speculative New York market having lost is positive traction during the day, is perhaps not going to inspire much better than a cautious near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1953 + 20                                                         
MAR     1973 + 10                                               MAR     176.75 – 3.30
MAY     2001 + 11                                               MAY     179.40 – 3.30
JUL      2023 + 13                                                JUL      181.85 – 3.30
SEP      2041 + 15                                               SEP      183.85 – 3.30
NOV     2051 + 17                                                DEC     186.65 – 3.30
JAN      2058 + 17                                               MAR     188.55 – 3.25
MAR     2073 + 17                                               MAY     189.35 – 3.25
MAY     2088 + 17                                                JUL     189.50 – 3.20
JUL      2095 + 17                                                SEP     189.35 – 3.20

12th. January, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 2.45% in the week of trade leading up to Tuesday 6th. January;  to register a net long position of 24,652 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.25%, to register a net long on the day of 39,940 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 11.42%, to register a net long of 15,287 lots on the day.   This net long position that is the equivalent of 4,333,797 bags has most likely been further increased over the period of positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

Relatively cool and wet weather over much of Central America late last year has delayed the development of maturing cherries and sees the new crops tending to come in a little later than normal for many farmers, which while a benefit in terms of overall quality that comes with a longer time on the tree, has taken some of pressure off the farmers to conclude early sales.   Thus with new crop shipments tending to be slow and not so much selling aggression being experienced, it does take some of the seasonal price fixation selling pressure away from the New York market.   This is to a small degree, assisting the market that has experienced an early year fund and speculative boost, on its overall upside track while in the meantime, there are some instances of late new crop shipments being experienced from Central America.

The Coffee Board of India who had been forecasting the countries new coffee crop for this present October 2014 to September 2015 coffee year at 5,745,833 bags and made up by a 30.6 to 69.4 ratio of arabica and robusta coffees, has downgraded its forecast by 229,166 bags or 3.99%, to a more modest figure of 5,516,667 bags.   This adjustment is related to what they have seen to be weather problems over mostly their arabica coffee districts, which has the new ratio adjusted to a 30.1 to 69.9 ratio of arabica and robusta coffees.   It is however a new crop forecast that still well exceeds the countries production during the previous coffee year and secures increased robusta coffee supply from India, for this present coffee year.

The continued speculation over the unseasonal relatively dry weather in South Eastern Brazil continued to play its part within the speculative sector of the New York market on Friday, with the reports of a dry start to the year coming into play, on top of resorts that some farms while having received steady bouts of rain over the past two months, the cumulative rainfall was below average.    The effects of these reports upon market sentiment are very obviously being accentuated as the memories of last year’s first two months of partial drought over most of these presently affected districts is still very fresh in mind, albeit that the prevailing medium term weather forecasts clearly state that the present situation is not yet a mirror of last year’s problems.

The international Coffee Organisation has reported that World coffee exports for the month of November were 0.5% lower than the previous year, at a total of 7.93 million bags.   This contributing to the cumulative World coffee exports for the first two months of the present October 2014 to September 2015 coffee year having been 0.06% higher than the same period in the previous coffee year, at a total of 16.82 million bags.   While the report highlights that the marginal dip in coffee exports in November last year was entirely influenced by slow buying interest in arabica coffees where exports were 3.58% lower than the previous year, as against the robusta coffee exports which were 5.64% higher than the previous year.   But one might expect that arabica coffee market share within world export volumes shall recover in the coming months, with the larger New Mexican and Central American crops now coming into play.  

The arbitrage between the markets has broadened on Friday to register this at 91.01 usc/Lb., while this equates to a relatively attractive 50.55% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,748 bags on Friday, to register these stocks at 2,288,526 bags.   There was meanwhile on change to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,398 bags.

The commodity markets experienced another mixed day on Friday and while the Oil markets maintained their downside track, there was support within selected markets from the marginally softer U.S. dollar.  The Natural Gas, New York arabica Coffee, Sugar, Cotton, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Cocoa, London robusta Coffee, Copper, Orange Juice and Wheat markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% higher; to see this Index registered at 448.15.   The day starts with the U.S. Dollar steady and trading at 1.516 to Sterling and 1.186 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 47.85 per barrel.

The London market started the day yesterday with a degree of buoyancy and followed by a firmer start for the New York market and to see both markets heading into the afternoon upon a thinly traded positive track.  The markets built upon these gains during the afternoon, but to see pressure coming upon both markets and to force the London market back into negative territory, but with the New York market maintaining a more modest positive stance.   The London market continued to end the day on a marginally softer note but having recovered 57.1% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 45.3% of the earlier gains of the day intact.    The positive end for the week for the New York market and with no significant contradictory reports in play to counter the supportive weather reports from Brazil is likely to inspire a steady to buoyant start for the markets for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1933 – 2                                                           
MAR     1963 – 6                                                 MAR     180.05 + 3.15
MAY     1990 – 3                                                 MAY     182.70 + 3.15
JUL      2010 – 3                                                  JUL      185.15 + 3.10
SEP      2026 – 3                                                 SEP      187.15 + 3.20
NOV     2034 – 3                                                  DEC     189.95 + 3.35
JAN      2041 – 3                                                 MAR     191.80 + 3.40
MAR     2056 – 3                                                 MAY     192.60 + 3.50
MAY     2071 – 3                                                  JUL     192.70 + 3.55
JUL      2078 – 3                                                  SEP     192.55 + 3.75

9th. January, 2015.
It is with apologies for the typo that we correct yesterday’s first paragraph which should have read December and not November:  The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of December was 29,000 bags or 2.6% lower than the same month in the previous year, at a total of 1,086,000 bags.   This contributes to the countries cumulative production for the first three months of the present October 2014 to September 2015 coffee year to be 16,000 bags or 0.49% higher than the same period in the previous coffee year, a total of 3,302,000 bags.

The year has started with a week of scattered showers but below average rainfall for the main arabica coffee districts in Brazil, which has with the memories of last year’s partial drought over these districts for the first two months of the year, dampened the bearish spirits of the speculative and fund sectors of the New York market.   It is however noted that while lower than normal for this time of the year rainfall is being experienced that it is nevertheless not the same dry pattern as last year, but with forecasts now indicating modest rather than normal rains for probably the rest of the month, it is a factor that is proving to be supportive for the market.  The weather is however never completely predictable and the question is what might happen, should there be some good rain reports from Brazil in the coming weeks, which would be a factor to immediately take the wind out of the sails of the bulls in the market.  Thus with this in mind, one can see a degree of caution and nervousness within the presently erratic in nature New York market.

Meanwhile following the past months of relatively aggressive internal market selling in Brazil that has been assisted by the weakening Brazil real to the U.S. dollar, there is now a degree of price resistance being shown within the market and the prices being paid by exporters for arabica coffees to cover their forward commitments are being forced higher relative to the reference prices of the New York market.  Likewise the differentials for new business are starting to tighten, but Brazil arabica coffees still remain a relatively affordable coffee for the consumer markets.

The situation in Central America and Colombia with new crop coffees flowing into the market is similarly tighter than it has been over the past month, with a degree of price resistance being shown within the internal markets and differentials for new business tending to tighten.  While with consumer market industries having returned from the holidays and chasing short term fill in coffee supply commitments, there is apparently sufficient short term support for the overall relatively firmer prices for these new crop washed arabica coffees.   But volumes of physical business are relatively thin and with both sides seemingly playing a waiting game, which is a scenario that shall seemingly only change as and when there is certainty over the direction that outcome of the Brazil weather shall set for the longer term market.   

The U.S. Climate Prediction Centre has announced that they now foresee a 50% to 60% chance of a mild El Nino phenomenon developing within the Pacific Ocean within the next couple of months, but the emphasis on mild should be noted.   It really is only a strong El Nino that one would need to consider to be a real concern in terms of the Pacific rim producing countries, as modestly drier weather would actually be beneficial to counter Roya of Leaf Rust in Colombia and Peru and so long as there is still sufficient rainfall, the coffee crops from Colombia, Peru and Indonesia should not suffer unduly.   While one must keep in mind that on the longer range, an El Nino is usually a positive factor for rains in South East Brazil.
     
The arbitrage between the markets has broadened yesterday to register this at 87.59 usc/Lb., while this equates to a relatively attractive 49.51% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 3,595 bags yesterday, to register these stocks at 2,290,274 bags.   There was meanwhile a smaller in volume 680 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,398 bags.

The commodity markets experienced another mixed day yesterday, but with many markets experiencing concerns over the lack of positive economic coming from the presently struggling Euro zone bloc and the relatively strong U.S. dollar.  The U.S. Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper and Orange Juice markets ended the day on a firmer track, while the Brent Oil, London robusta Coffee, Wheat, Corn, Soybean, Gold, Silver and Platinum markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.09% lower; to see this Index registered at 447.40.   The day starts with the U.S. Dollar steady and trading at 1.509 to Sterling and 1.181 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 49.85 per barrel.

The London market started the day yesterday taking a softer stance, but with the New York market starting the day on a firmer note.    This remained the track for the day into the afternoon’s trade, with London remaining marginally softer and the New York market on the back of mostly chart based fund and speculative trade, retaining its buoyancy.   The New York market stuttered very briefly, but very quickly returned to an upside track and with the London market moving back up to par but to soon dip back into negative territory.  The London market continued to end the day on a softer note and with 50% of the losses of the day intact, while the New York market ended the day on a positive note but with only 25.3% of the earlier gains of the day intact.  This mixed close and the inability of the more volatile New York market to hold onto most of its gains is likely to see a very cautious and probably steady start to thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1935 – 26                                                         
MAR     1969 – 11                                               MAR     176.90 + 1.85
MAY     1993 – 10                                               MAY     179.55 + 1.80
JUL      2013 – 8                                                  JUL      182.05 + 1.85
SEP      2029 – 8                                                 SEP      183.95 + 1.70
NOV     2037 – 9                                                  DEC     186.60 + 1.50
JAN      2044 – 9                                                 MAR     188.40 + 1.45
MAR     2059 – 9                                                 MAY     189.10 + 1.45
MAY     2074 – 9                                                  JUL      189.15 + 1.45
JUL      2081 – 9                                                  SEP      188.80 + 1.20

8th. January, 2015.
The Coffee Growers Federation in Colombia has reported that the countries coffee production for the month of November was 29,000 bags or 2.6% lower than the same month in the previous year, at a total of 1,086,000 bags.   This contributes to the countries cumulative production for the first three months of the present October 2014 to September 2015 coffee year to be 16,000 bags or 0.49% higher than the same period in the previous coffee year, a total of 3,302,000 bags.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of December were 51,000 bags or 5% higher than the same month in the previous year, at a total of 1,061,000 bags.    This contributes to the countries cumulative exports for the first three months of the present October 2014 to September 2015 coffee year to being 56,000 bags or 1.87% higher than the same period in the previous coffee year, at a total of 3,049,000 bags.

Meanwhile following a coffee production of 12,128,400 bags for the October 2013 to September 2014 coffee year and an export performance of 10,960,000 for the same coffee year, there are many forecasts already talking of production to grow slightly for this present October 2014 to September 2015 coffee year, with longer term forecasts that are based on a large percentage of young coffee trees that are still to come to maturity, to see production exceed 14 million bags per coffee year within the next two to three years.    This is however whilst being a very realistic forecast, is subject to weather conditions over the coming years an while there have been many forecasts for a mild El Nino to start early this year, this is so far not foreseen to be threatening to Colombian coffee production and for the present, the longer term production target remains in place.

More significant in terms of Latin American fine washed arabica coffee production and supply for the present coffee year and the year to follow, is that while Colombia is steaming along with good supply, the Mexicans and Central Americans are forecasting an overall 1.4 million bags increase for their new crop that is presently in harvest.   This to be followed by an approximate 0.7 million bags increase in production from Peru, whose new crop shall start to come into play by May this year and therefore, the consumer markets can remain confident in longer term Latin American fine washed arabica coffee supply.

More significant perhaps is the fact that these fine washed arabica coffees are dominant only within the traditional higher value Western European and North American consumer markets, with similar support from the Japanese and Australasian markets, which are markets that are not overall registering any significant growth in consumption.  Therefore the rise in supply is perhaps moving into a marginal surplus situation for these coffees as the year progresses and one would think that unless there are some unforeseen climatic or disease issues developing, that one can expect steady growth in the alternative market for these coffees within the Certified coffee stocks of the New York market during the second half of this year.   This factor could in time prove to be somewhat negative for sentiment within the New York market which is supported for the present, but the caution over the prospects for the forthcoming mid-year new Brazil mostly natural arabica crop.    
     
The arbitrage between the markets has narrowed yesterday to register this at 85.24 usc/Lb., while this equates to a relatively attractive 48.69% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 4,825 bags yesterday, to register these stocks at 2,298,694 bags.   There was meanwhile a smaller in volume 4,543 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 25,078 bags.

The commodity markets experienced another mixed day yesterday, with the majority of the markets remaining within a narrow trading range with the exception of the broad trading range experienced within the coffee markets.   The U.S. Oil, Cocoa, London robusta Coffee, Orange Juice, Corn and Platinum markets ended the day with buoyancy and the New York arabica Coffee and Cotton markets were steady, while the Brent Oil, Natural Gas, Sugar, Copper, Wheat, Soybean, Gold and Silver markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.38% lower; to see this Index registered at 447,80.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.509 to Sterling and 1.182 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 49.85 per barrel.

The London market started the day yesterday on near to steady note, which was followed by early buoyancy for the New York market and very much a repeat of the previous day’s trade and with both markets building on their gains to take a positive track into the afternoons trade.     As the afternoon progressed the Americans entered the field of play and with the New York market triggering buy stops to accentuate the gains and with the London market following suit, with similarly good added value.   As the afternoon progressed however the New York market that at one stage was 7.95 usc/Lb. higher for the day hit a period of exhaustion and started to come under seemingly producer selling and speculative profit taking pressure and steadily shed all of the gains and move back into negative territory, with the London market that had posted gains of $ 37.00 for the day, lost some weight and moved back into modest positive territory.   The New York market did however steady and move to trade around par and remain either side of par for the rest of the day of relatively high volume trade, while the London market shrugged off a late in the day dip towards par to take a positive track to the close.   The London market ended the day on a positive note and with 75.7% of the earlier gains of the day intact, while the New York market ended the day on steady note and with only 1.9% of the gains of the day intact.   This close and with signs of a degree of exhaustion being seen within the more volatile New York market which has absorbed high volumes of overall supportive trade over the past few days, might see the markets due for a cautiously steady start to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1961 + 27                                                         
MAR     1980 + 28                                               MAR     175.05 + 0.15
MAY     2003 + 28                                               MAY     177.75 + 0.20
JUL      2021 + 27                                                JUL      180.20 + 0.30
SEP      2037 + 27                                               SEP      182.25 + 0.30
NOV     2046 + 26                                                DEC     185.10 + 0.25
JAN      2053 + 26                                               MAR     186.95 + 0.25
MAR     2068 + 26                                               MAY     187.65 + 0.15
MAY     2083 + 26                                                JUL     187.70 + 0.15
JUL      2090 + 26                                                SEP     187.60 + 0.10

7th. January, 2015.
The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of December were 40,514 bags or 15.86% higher than the same month in the previous year, at a total of 295,921 bags.   This follows a positive start for the previous months and the cumulative coffee exports for the first three months of the present October 2014 to September 2015 coffee year are 88,014 bags or 26.34% higher than the same period in the previous coffee year, at a total of 422,166 bags.

This improved export performance from Honduras is partly related to the countries forecasts for a significantly larger new crop which is presently in harvest, following the problems over the past two years that came with the Roya or Leaf Rust infestation, which is now under control and is encouraging farmers to become active sellers early on during the harvest.   But more influential in the increased volumes of exports early on during this new coffee year has been the practical stance that the farmers in Honduras have taken in their willingness to follow the recent negative track of the reference prices of the New York market and the competition from the willing selling activity out of Colombia.   As against most of their neighbours in Mexico and Central America who have continued to show a degree of price resistance and have to a degree and at expense of market share, partially priced themselves out of the market.

The general trade and industry forecasts within Vietnam are indicating that with forward contract commitments in hand that the countries coffee exports of mostly robusta coffees during the month of January shall be approximately 25% higher than last month, at around 2.5 million bags.   This would in terms of the previous year, be marginally higher than the 2.383 million bags exported in January last year.

The problem for exporters in Vietnam is now thought that with still to cover forward contract export commitments still to cover, that there is internal market price resistance being experienced, as farmers remain unconvinced in the present value of the reference prices of the London market.   This is a factor that is also slowing the volumes of new business, as the consumer market buyers try to resist the corresponding higher differentials being demanded for new business.  But this is no doubt a short term scenario and with roasters back at work post the holidays and the week long Tet New Year holiday season only five and a half weeks to the fore, one would expect that internal market selling and export activity shall pick up steam within the next couple of weeks.

The New York market defied the many bearish statements that have been voiced by a host of commodity investment houses and advisors as it did the charts over the past few days, as the market rather than taking a flat to softer stance, once again seemingly took cognisance of the weather reports out of Brazil that indicated caution over the prospects for January.    This factor more than likely to come to the fore with the predictable official low new crop forecasts that shall shortly start coming to the market, where it is presently Brazil alone out of the main producer blocs, where there is any concern over medium to longer term coffee supply.  

This sudden surge in the reference prices of the New York market that have risen by 4.98% for the year so far and with the London market following with a 1.88% recovery, has been something of a shock for the consumer markets and one might think that it has influenced a degree of precautionary cover being taken by consumer industries.    A factor that might have assisted to buoy the markets, but the question is if it does rain as had been forecasted for the second half of January over the main coffee districts in Brazil, if the recovery can be sustained over the longer term.    

The arbitrage between the markets has broadened yesterday to register this at 86.36 usc/Lb., while this equates to a relatively attractive 49.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 12,730 bags yesterday, to register these stocks at 2,298,694 bags.   There was meanwhile a larger in volume 13,990 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 20,535 bags.

The commodity markets experienced another mixed day yesterday, with the Oil and Coffee markets once again being major movers in either direction and with the Sugar market also taking a sharp positive move.   The Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Coffee and Sugar markets had a strong days trade, while the Natural Gas, Cocoa, Cotton, Copper, Orange Juice, Wheat and Corn markets had a softer days trade and the Oil markets took another sharp dip for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.07% higher; to see this Index registered at 449.50.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.514 to Sterling and 1.188 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 49.25 per barrel.

The London market started the day yesterday on a softer note, but followed by a degree of follow through buoyancy for the New York market.  The London market soon recovered and joined the New York market in positive territory and to see both markets take a positive track into the afternoon’s trade, but with volumes remaining very thin.   This set a positive platform for the markets and volumes picked up as the afternoon progressed and with further buy stops being triggered, to see both markets add to their already impressive gains.  The London market continued to end the day on a firm note and with 93.2% of the gains of the day intact, while the New York market likewise ended the day on a firm note and with 93.2% of the gains of the day intact.    This very positive close could be seen to be supportive for sentiment, but there might be the possibility of a degree of exhaustion setting in and one might expect to see a degree of corrective profit taking and producer fixation coming into play for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1934 + 45                                                         
MAR     1952 + 41                                               MAR     174.90 + 6.80
MAY     1975 + 41                                               MAY     177.55 + 6.80
JUL      1994 + 38                                                JUL      179.90 + 6.75
SEP      2010 + 35                                               SEP      181.95 + 6.55
NOV     2020 + 33                                                DEC     184.85 + 6.25
JAN      2027 + 33                                               MAR     186.70 + 5.80
MAR     2042 + 33                                               MAY     187.50 + 5.65
MAY     2057 + 33                                                JUL      187.55 + 5.30
JUL      2064 + 33                                                SEP      187.50 + 5.20

6th. January, 2015.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 11.47% in the week of trade leading up to Tuesday 30th. December;  to register a net long position of 24,063 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 0.57%, to register a net long on the day of 40,041 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 23.87%, to register a net long of 13,720 lots on the day.   This net long position that is the equivalent of 3,889,559 bags has most likely been marginally increased over the period of mixed but overall positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 9.42% in the week of trade leading up to Tuesday 30th. December, to see this short sold position turned into a net long that was registered at 11,074 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 1,845,667 bags has most likely been little changed during the period of mixed trade that has since followed.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of December were 11,589 bags or 17.89% lower than the same month in the previous year, at a total of 53,195 bags.   This slow start to the new coffee year has contributed to the countries cumulative exports for the first three months of the present October 2014 to September 2015 coffee year to being 30,542 bags or 21.01% lower than the same period in the previous coffee year, at a total of 114,858 bags.

The preliminary December coffee export figure from Brazil has seen the countries coffee exports for the month to have been 520,000 bags or 17.11% higher than the same month in the previous year, at a total of 3,040,000 bags.   This significant number is despite the many concerns over tightening Brazil arabica coffee supply for this new year and does to a degree in terms of internal market selling to support such volumes, further question the farmers belief in a new crop that shall be a low as many have been forecasting.

Meanwhile the year has started in Brazil with a relatively dry week over the main coffee districts, but with forecasts for the rains to gain in intensity by the coming weekend and therefore, indicating less chance for a repeat of last year’s partial drought conditions during the month of January.   But there are still some forecasts that look to the past week of more modest rains that shall continue this week, with a word of caution that there is still no certainty on the quality of rains for the rest of the month.   These reports assisted to fuel a degree of caution on the part of the speculative sector within the New York market, following the past few weeks of liquidation of their long positions and assisting to buoy the market in yesterday’s trade.

The Vietnam Cocoa and Coffee Association have forecasted that the country shall most probably export 3.3 million bags less coffee during this year; following last year’s impressive export performance of close to 26.67 million bags.    This forecast is based on the associations forecast for the close to completed new crop of mostly robusta coffees having been 20% to 25% lower than the previous 2013/2014 crop.   It is however a new crop forecast that is very much contrary to the general trade and industry forecasts, which only foresee the possibility of a slight dip in production from the new crop and therefore, this market supportive forecast is most likely to be largely ignored.

Meanwhile the sharp drop for the coffee markets on Friday has not been followed within the internal markets of the majority of the producer countries, with price resistance being common to most producers.   This has had the effect of firming the asking differentials for new business, which is shall most probably result in erratic physical trade for this week.  

The arbitrage between the markets has broadened yesterday to register this at 81.42 usc/Lb., while this equates to a relatively attractive 48.43% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,832 bags yesterday, to register these stocks at 2,311,424 bags.   There was meanwhile a larger in volume 2,015 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,545 bags.

The commodity markets experienced a mixed day yesterday, with many markets making sharp moves for the day and particularly so the Oil markets on the negative side and the Coffee and Soybean markets on the positive side of the day.   The Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets had a day of buoyancy and the Coffee and Soybean markets were firm for the day, while the Natural Gas and Copper markets had a softer day and the Oil markets registered sharp losses for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.39% higher; to see this Index registered at 449.18.   The day starts with the U.S. Dollar near to steady and trading at 1.526 to Sterling and 1.196 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 51.65 per barrel.

The London market started the day yesterday showing modest buoyancy and followed by a steady to soft start for the New York market, but with this latter market soon recovering and moving back to join the London market to take a modestly positive track into the early afternoon’s trade.     The New York market with the Americans entering the field of play and volumes picking up and buy stops being triggered to add some more value as the afternoon progressed and with the London market following suit, to add to the earlier gains.   The London market continued to end the day on a positive note and with 88.7% of the gains of the day intact, while the New York market ended the day on a firm note and with 92.8% of the gains of the day intact.   This close is somewhat supportive in nature but was based on somewhat questionable weather related fundamental news and one might expect to see a degree of caution and possibly a lack of follow through and only a steady to soft start for early trade today, against the firm prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1889 + 51                                                         
MAR     1911 + 47                                               MAR     168.10 + 7.05
MAY     1934 + 45                                               MAY     170.75 + 7.00
JUL      1956 + 45                                                JUL      173.15 + 6.80
SEP      1975 + 45                                               SEP      175.40 + 6.70
NOV     1987 + 43                                                DEC     178.60 + 6.60
JAN      1994 + 41                                               MAR     180.90 + 6.55
MAR     2009 + 45                                               MAY     181.85 + 6.45
MAY     2024 + 49                                                JUL     182.25 + 6.30
JUL      2031 + 49                                                SEP     182.30 + 6.30

5th. January, 2015.
It was not such a happy New Year for the coffee producers on Friday, with the markets lacking underlying buying support from the consumer industry players of which many were still on holiday and taking an extended long weekend holiday, being very much left in the hands of negative fund activity and the speculative chartists within the markets who pressured both markets lower.    One might however think that with the consumer market industries coming back to work today that there might be some advantageous corrective price fixation buying coming into play, to bring a degree of buoyancy for the markets that have suffered from fund and speculative liquidation.  But this might not be enough to counter the negative effects of the rising value of the U.S. dollar, which is hanging over the markets.

In terms of the producers there has been little news of late and despite the steady slide in the value of the international coffee markets over the past few weeks, which is a clear indication that there actually is nothing in the way of supportive fundamental news that the producers can presently bring to the markets, to try to manipulate some degree of support.    Thus one can foresee that it is only the prospects for the new Brazil crop that starts coming into play during the second quarter of this year that might have some degree of positive influence upon the markets, but the fact that this new crop has already suffered to some degree from the partial drought within the main arabica coffee districts in Brazil early last year and from a delayed start to the now normal rain season has already been much reported and been somewhat exhausted in terms of its influence upon market sentiment.

Therefore the Brazil factor is now more related to the quality of the rains within the country’s main arabica coffee districts for the first quarter of this year, as if they prove to be fair to good and even though one can anticipate some low official new crop forecasts to be reported, the prospects for a relatively modest new Brazil crop is unlikely to provide much of a boost the value of the markets.   However should there be some hiccups in these rains and with the memories of last year’s weather problems still very fresh, there would most certainly be a degree of speculative support coming back to the markets.    This is however in terms of the weather forecasts so far, not foreseen to be likely to occur and for the present market sentiment remains flat.

The producers are gaining some degree of relief from the softening nature of the coffee markets at present, from the renewed muscle of the U.S. dollar that has taken some of the bite out of the lower prices in terms of the value of sales in domestic currency terms.   However the fall in prices has been far more dramatic than the rising value of the U.S. dollar and for some producers and with the steady inflation in production costs, the prices are starting to become a critical factor and one of justifiable concern.   This is very much the case for Mexico and the Central Americans who have their new crops presently being harvested and with these new crops overall larger than last and therefore not threatening tight supply for the medium to longer term, there will be no relief from the softer reference prices of the New York market, in terms of hardening positive differentials and rather, one might expect the competition to sell to result in the differentials more likely to soften in the coming months.     

The arbitrage between the markets has narrowed on Friday to register this at 76.50 usc/Lb., while this equates to a relatively attractive 47.50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 675 bags on Friday, to register these stocks at 2,313,256 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,530 bags.

The commodity markets experienced a mixed day on Friday but one that was somewhat erratic in terms of thin partial holiday atmosphere trade within many markets, while the overall sentiment within the markets in general is under some pressure from poor economic figures coming out of Europe and the slowing of growth from China.   While with the U.S. dollar where there is speculation for rising interest rates in the second half of the year gaining in strength, the firmer dollar is bringing further negative pressure within many markets.  The Natural Gas, Cocoa, Orange Juice, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Cotton, Copper, Wheat, Corn and Soybean markets had a softer day and the Sugar and Coffee markets had a very soft day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% higher; to see this Index registered at 447.44.   The day starts with the U.S. Dollar showing further muscle and buoyancy and trading at 1.528 to Sterling and 1.193 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 54.10 per barrel.

The London market started the day on Friday taking a marginally softer start in thin and lacklustre trade, while the New York market had a delayed start and opened the day on thinly traded steady note.    This was however short lived and the New York market almost immediately moved back to join the London market in negative territory and with both markets extending their losses, as the afternoon progressed.    This decline triggered stop loss sell stop and accentuated the losses, to see the markets lose more weight late in the day and to see the higher profile and more volatile New York market set new five and half month lows.   The London market continued to end the day on a soft note and with 89.7% of the earlier losses of the day intact, while the New York market ended the day on a likewise soft note and with 86.7% of the earlier losses of the day intact.   This soft close might well attract some supportive price fixation and a degree of buoyancy for early trade today, but with the strong dollar in play one might not expect too much of a correction against soft prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1838 – 55                                                         
MAR     1864 – 52                                               MAR     161.05 – 5.55
MAY     1889 – 50                                               MAY     163.75 – 5.55
JUL      1911 – 50                                                JUL      166.35 – 5.55
SEP      1930 – 50                                               SEP      168.70 – 5.50
NOV     1944 – 44                                                DEC     172.00 – 5.25
JAN      1953 – 43                                               MAR     174.35 – 4.55
MAR     1964 – 43                                               MAY     175.40 – 3.70
MAY     1975 – 43                                                JUL     175.95 – 2.90
JUL      1982 – 43                                                SEP     176.00 – 2.45

2nd. January, 2015.
With the month of December over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported that the islands robusta coffee exports for the month of December were 108,148 bags or 28.93% lower than the same month last year, at a total of 265,614 bags.   This follows a relatively dismal performance in October and November and therefore the cumulative robusta exports from Sumatra for the first three months of the present new October 2014 to September 2015 coffee year are 1,123,071 bags or 56.96% lower than the same period in the previous coffee year, at a total of 848,614 bags.

This relatively poor performance on the part of robusta coffee supply from Sumatra is of course related to a relatively poor weather related crop last year and one can expect that for the short term and ahead of the new crop that starts to come into play during the second quarter of this year, that the figures shall continue to be relatively modest for the next four to five months.   However the weather conditions have been much improved and the prospects are for a much improved new crop, which should see the Sumatran robusta coffee exports start to pick up and become more aggressive by the third quarter this year and therefore, the last quarter of the present coffee year.

The green coffee exports from India for 2014 have been reported to have been a modest 28,017 bags or 0.69% lower than the previous year, at a total of 4,053,733 bags.   This dip in exports for last year is significantly lower than the 5% drop that had been forecasted by the Coffee Exporters Association and with a larger new crop now starting, one might expect that the exports for 2015 shall be somewhat larger.

This forecasted increase in the new Indian crop comes to the market along with forecasts for larger new crops from Mexico, Central America, Peru, Colombia and Indonesia and therefore with the new Vietnam crop forecasted to be only marginally lower, the only factor of concern in terms of longer term coffee supply, remains with the question over the prospects for the next Brazil arabica coffee crop.  However with the fair to good rains that have been experienced over November and December last year in the main arabica coffee districts in Brazil and with more rain expected for the second half of this month, the prospects for the new Brazil arabica coffee crop is presently having a reduced influence upon the speculative sector of the New York market.

There shall however be a close watch upon the Brazil weather reports and forecasts as this month progresses and there can be no doubt after the experiences of the partial drought early last year, that should these rains not be forthcoming, that the market would experiences a sharp rally.   In this respect, one might expect to see some precautionary roaster cover being taken in the coming weeks, which could prove to be a supportive factor for the markets and thus despite the negative nature of the charts upon the markets, limit the short term downside potential for the markets.

The Reuters Equal Weight Continuous Commodity index which peaked at 556.80 in June 2014 having started at 508.06 at the end of 2013, has ended 2014 11.98% lower for the year, at a relatively dismal 447.21, with the Oil markets having had a strong influence upon this dip.  Meanwhile bucking to a degree this negative performance for the macro commodity index, the coffee markets while coming off their Brazil drought inspired highs earlier in 2014, did nevertheless end the year with the London market 13.84% higher and the New York market 58.6% higher.   Thus in terms of weighted value within many fund portfolios the share held by coffee has increased and one might think that there shall be some funds that might look to correct this share, which could be a factor that might blunt the positive influence of the funds within the coffee markets for the short term.

The arbitrage between the markets has broadened on Wednesday to register this at 79.69 usc/Lb., while this equates to a relatively attractive 47.83% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 4,306 bags on Wednesday, to register these stocks at 2,313,931 bags.   There was meanwhile a similar in volume 4,750 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,530 bags.

These stocks, which have been negatively affected through the year by the tighter supply of Mexican, Central American and Peru coffees which suffered from the previous year’s devastating Roya or Leaf Rust infestation, with the stocks ending the year 14.59% lower for the year.    The dominance of these fine washed arabica coffee producers upon the levels of these stocks clearly illustrated, as they still account for 1,779,405 bags or 76.9% of the stocks at present.

The commodity markets experienced a dismal end to the year on Wednesday and with the exception of the Coffee markets, it was very much a minus day.   The Coffee markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a soft day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.52% lower; to see this Index registered at 447.41.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.554 to Sterling and 1.206 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 56.15 per barrel.

The London market started the day on Wednesday taking a softer track, while the New York market, while the New York market had a hesitantly steady start.    However later in the day and within an environment of thin pre-holiday trade, both markets bucked the negative influences of the negative macro commodity index and posted a recovery, with the thin trade assisting for the New York market to trigger stop loss buy stops and experience something of a short term rally.   The London market continued to end the day on a positive note and with 76.9% of the gains of the day intact, while the New York market likewise ended the day on a positive note and with 27.7% of the gains of the day intact.   This close while modestly supportive for sentiment is unlikely to do much for direction today, as many players have taken a long weekend and one might expect to see a thinly traded near to steady start for the markets for early trade today, against the yearend prices set on Wednesday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1893 + 22                                                         
MAR     1916 + 10                                               MAR     166.60 + 1.80
MAY     1939 + 9                                                 MAY     169.30 + 1.80
JUL      1961 + 11                                                JUL      171.90 + 1.80
SEP      1980 + 11                                               SEP      174.20 + 1.80
NOV     1988 + 9                                                  DEC     177.25 + 1.80
JAN      1996 + 9                                                 MAR     178.90 + 1.60
MAR     2007 + 9                                                 MAY     179.10 + 1.60
MAY     2018 + 9                                                  JUL     178.85 + 1.55
JUL      2025 + 9                                                  SEP     178.45 + 1.55

31st. December, 2014.
Firstly we apologise for an error in the report yesterday in terms of the Commitment of Traders report for the London market which referred to a non-existent long position, as the report should read:  The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 23.4% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position registered at 12,226 Lots, on the day.  This speculative net short position within the London market which is the equivalent of a relatively modest 2,037,667 bags has most likely been marginally decreased during the period of overall negative trade that has since followed.

The Latest Commitment of Traders report for the New York arabica coffee market has seen the speculative sector of this market decrease their net short sold position within this market by 17.77% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position registered at 18,021 Lots, on the day.   This net short position that is the equivalent of 5,108,874 bags has most likely been further reduced, over the period of negative trade that has since followed.

The physical coffee trade with many players already moving into the New Year holiday remains thin and lacklustre for the present, while with the majority of the industries extending tomorrows New Year Day holiday for the markets into a long weekend, there is unlikely to be much activity until later next week.   Thus the year is ending off on a quiet note and with little in the way of positive fundamental news in play for the markets, to inspire strong industry support.

The arbitrage between the markets has narrowed yesterday to register this at 78.35 usc/Lb., while this equates to a relatively attractive 47.54% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,369 bags yesterday, to register these stocks at 2,309,625 bags.   There was meanwhile a similar in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,280 bags.

The commodity markets were mixed yesterday in mostly thin trade, with most activity more than likely being related to the squaring off positions ahead of the year end.    The U.S. Oil, Sugar, Cocoa, London robusta Coffee, Copper, Soybean, Gold, Silver and Platinum markets showed buoyancy for the day and the Cotton market was steady, while the Brent Oil, Natural Gas, New York arabica coffee, Orange Juice, Wheat and Corn markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.07% higher; to see this Index registered at 454.30.   The day starts with the U.S. Dollar steady and trading at 1.556 to Sterling and 1.216 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 55.70 per barrel.

The London market started the day yesterday with a degree of buoyancy, while the New York market kicked off on a near to steady note, which remained the track into early afternoon trade.  However as the afternoon continued and within an environment of thin trade the New York market recovered and moved back into modest positive territory, while the London market extended its gains of the day.   This positive nature of the New York market was however short term and the market drifted back to marginally below par, while the London market lost some of its earlier gains.  This decline in the markets was however reversed as the afternoon progressed, with the New York market moving into positive territory and the London market extending its gains of the day.  The London market continued on a positive note and with a late in the day further spike in value and to end the day on a positive note with 79.5% of the gains of the day intact, while the New York market following a further dip and recovery dipped again late in the day of thin trade, to end the day on a modestly softer note and with 53.8% of the losses of the day intact.  This mixed close but with the relatively good and positive activity in London being mostly related to switch trading does not provide much inspiration and one might expect to see little better than a cautiously steady start for the New York market and a steady to soft start for the London market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1871 + 36                                                         
MAR     1906 + 31                                               MAR    164.80 – 0.35
MAY     1930 + 31                                               MAY    167.50 – 0.30
JUL      1950 + 31                                                JUL     170.10 – 0.25
SEP      1969 + 31                                               SEP     172.40 – 0.25
NOV     1979 + 29                                                DEC    175.45 – 0.20
JAN      1987 + 29                                               MAR    177.30 – 0.35
MAR     1998 + 30                                               MAY    177.50 – 0.65
MAY     2009 + 32                                                JUL    177.30 – 0.85
JUL      2016 + 32                                                SEP    176.90 – 1.35
The Directors and Staff of I & M Smith (Pty) Ltd., take this opportunity to wish you an exciting New Year’s Eve Celebration and Health and Prosperity for the coming year.  While making note that we take some special pleasure in entering our Centenary Year, which is related to the 15th. October 1915, that was the day that the brothers Smith started the company and its trading activities.


30th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee has reported that the speculative sector of this market decrease their net short sold position within this market by 23.4% in the week of trade leading up to Tuesday 23rd. December, to see this short sold position turned into a net long that was registered at 12,226 Lots, on the day.  This speculative net long position within the London market which is the equivalent of a relatively modest 2,037,667 bags has most likely been marginally decreased during the period of overall negative trade that has since followed.

The National Coffee Association of Peru with the coffee cherries presently developing towards their new harvest that shall start in the second quarter of next year, have announced that the countries coffee production of fine washed arabica coffees in 2015 shall be approximately 40% higher than this year’s crop, at a total of 4.5 million bags.   This recovery from their Roya or Leaf Rust damaged 2014 crop is seen to be due to the investment that the countries farmers have put in over the year, in terms of improved farm fertiliser inputs and disease controls.

This report from Peru comes in on top of the forecasts for a significantly overall larger new crop from Mexico and Central America and likewise, steadily rising coffee supply from Colombia, to remove any concerns that the consumer markets might have, over medium to longer term fine washed arabica coffee supply.    The prospects of this taking some of the wind out of the sails of the speculative bulls within the New York market, who remain with only the questions over the prospects for the new 2015 Brazil natural arabica crop, as any form of support factor.

In terms of this Brazil issue and following a few weeks delayed by since then a normal rain season over November and December, the latest forecasts are for hot and dry conditions to return to the arabica coffee districts for the first two weeks of January.    This is however not a matter of concern as with the recent two months of rains having assisted to build up ground water retention levels within the farms, a spell of hot and dry weather will assist towards the development of the new crop.   

However one might suggest that with the memories of the partial drought over the first two months of this year that was experienced within the main arabica coffee districts, that should more and good rain coverage not occur for the second half of January, that is will more quickly than this year, fuel further speculative concerns over the prospects for the new 2015 crop.  Thus one can expect that by the second week of January, the short to medium term weather forecasts in Brazil shall provide a degree of volatility within the presently softening New York market.   In the meantime, the memories of this year and the uncertainty of the Brazil weather for the coming two to three months, might assist to limit the further downside for the presently softer coffee markets.

The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of November were 43,785 bags or 16.6% lower than the same month last year, at a total of 219,948 bags.   This follows a better performance during the previous month and therefore, the cumulative exports for the first two months of the present October 2014 to September 2015 coffee year are only 24,899 bags or 5.25% lower than the same period in the previous coffee year, at a total of 449,386 bags.     In terms of value however the value of the country’s coffee exports for the first two months of the present October 2014 to September 2015 coffee year is US$ 10,774,956 or 21.82% higher than the same period in the previous coffee year, to total US$ 60,162,826.

The arbitrage between the markets has narrowed yesterday to register this at 80.10 usc/Lb., while this equates to a relatively attractive 48.50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 4,885 bags yesterday, to register these stocks at 2,310,994 bags.   There was meanwhile a larger in volume 7,040 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 8,000 bags.

The commodity markets remained under pressure yesterday and with many markets not assisted by the news that many hedge funds have not fared well this year, which follows the closing of many funds during the course of the year.  Likewise many of the markets came under pressure, from some renewed muscle for the U.S. dollar.  The Cocoa market did however have a positive day and the Orange Juice, Wheat, Corn and Soybean markets were relatively steady, while the Oil, Natural Gas, Sugar, Coffee, Copper, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.27% lower; to see this Index registered at 453.99.   The day starts with the U.S. Dollar steady and trading at 1.551 to Sterling and 1.213 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 56.25 per barrel.

The London market started the day yesterday on a steady note, while the New York market lost a little weight and within an environment of thin and lacklustre trade for both markets.   This was the track into early afternoon’s trade, but with the New York market recovering to trade around par and London slipping back to likewise trade within a narrow band around par.   The markets did however both come under further pressure as the afternoon progressed and in continued thin trade, to move into more significant negative territory.  The markets maintained their downside track for the rest of the day and with the London market ending on a soft note and with 90.3% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 87.3% of the earlier losses of the day intact.   This soft close once again does little to inspire confidence but one might expect some degree of cautious corrective buoyancy in thin trade for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1835 – 29                                                         
MAR     1875 – 28                                               MAR    165.15 – 3.45
MAY     1899 – 25                                               MAY    167.80 – 3.45
JUL      1919 – 25                                                JUL     170.35 – 3.40
SEP      1938 – 26                                               SEP     172.65 – 3.35
NOV     1950 – 25                                                DEC    175.65 – 3.20
JAN      1958 – 24                                               MAR    177.65 – 2.80
MAR     1968 – 23                                               MAY    178.15 – 2.50
MAY     1977 – 23                                                JUL     178.15 – 2.45
JUL      1984 – 23                                                SEP     178.25 – 2.30

29th. December, 2014.
The General Statistics Office in Vietnam and with the evidence of export registrations in hand, have estimated that the countries coffee exports for the mostly robusta coffees for December shall be in the region of 2 million bags, which is at the lower end of the private domestic trade estimates for exports of between 2 million and 2.5 million bags.   Should this figure of 2 million bags prove to be correct, the General Statistics Office say that this would see the Vietnam coffee exports for the 2014 to be 29.7% higher than the previous year, to end this year with a very impressive total of 28.17 million bags.  

This rise in Vietnam coffee exports which is related to mostly robusta coffees has not however resulted in a corresponding 6.4 million bags rise increase in the levels of the certified robusta coffee stocks held against the London market, which have only increased by approximately 1.5 million bags during this year.   With the increase in volumes of exports partially related to the slower export performance of robusta coffees out of Indonesia this year, but also an indication of the rising share that robusta coffees are taking within the consumer markets.

On might comment that while there is no doubt that with the growth in world coffee consumption weighted towards the more price sensitive new market consumption that is very much instant coffee and robusta in nature, that there is also a steady growth in market share within the higher value traditional consumer markets in Western Europe, North America, Japan and Australasia.   These latter markets and especially the former two and the latter Australasia experiencing a significant increase in the market share being taken up by the portion control new capsule machines and with the extraction process of these machines and therefore the blends within many of the capsules, being more robusta coffee friendly.

The Coffee Association of Yunnan China have reported that their arabica coffee production has reached levels of 2 million bags per annum and from approximately 120,000 hectares of coffee farms, which is considerably more than some of the private trade and industry reports that talk in terms of approximately 1.3 million bags per annum.   They have also voiced their intent to increase the provinces land under coffee and by doing so, to target an annual coffee crop of in the region of in excess of 4 million bags per annum, over the next five to six years.

Presently much of the Chinese arabica coffees are being exported to the consumer markets but there are signs of slow but steadily growing consumption, in line with the rising popularity of the coffee shop culture and one might presume that these developments shall further assist to develop interest in coffee farming.    Thus while the worlds coffee producers have for many years been looking to China to one day step in with rising demand and to assist to buoy prices, the signs are rather that the Chinese are likely to follow demand with domestic production.   Albeit that China, is already an importer of rising volumes of robusta coffees in the form of soluble coffees, but is likewise an exporter of rising volumes of arabica coffees.

The arbitrage between the markets has narrowed on Friday to register this at 82.28 usc/Lb., while this equates to a relatively attractive 48.80% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 300 bags on Wednesday, to register these stocks at 2,305,809 bags.   There was meanwhile a larger in volume 1,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,040 bags.

The commodity markets on Wednesday were overall quiet and lacklustre in nature, with most of the main players already starting on their Christmas holiday break, while with the U.S.A. trading solo on Friday the North American markets were quiet at best, for the day.   The Oil, Natural Gas, Cocoa, Sugar, Coffee, Copper and Orange Juice markets are tending softer and the Cotton, Wheat, Corn and Soybean markets steady, while the Gold, Silver and Platinum markets showed some buoyancy.    It is however the season for year-end book squaring and trade for these last days of the year is already and is likely to remain more focused on this activity, than fundamental direction for the markets.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.22% lower; to see this Index registered at 455.21.   The day starts with the U.S. Dollar showing steady and trading at 1.557 to Sterling and 1.219 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.65 per barrel.

The London market started the day on Wednesday tending softer, while the New York markets started the day hesitantly near to steady, in thin and lacklustre holiday trade.    The markets in pre-holiday trade and with trade thin were erratic and hesitant through the day and while the London market continued to remain most of the day near to par and end the day on a marginally softer note, the New York market closed off for their relatively short Christmas day holiday on a soft note.    Friday was a holiday for the majority of the market players and with the U.S.A. markets trading solo for a short day and while the New York market experienced a corrective positive modest rally and with the prompt March contract showing gains of 2.85 usc/Lb. over the Wednesday close, it once again faltered and the market ended the day on a soft note and with 64.6% of the losses of the day intact.   The soft close on Wednesday for both markets and the follow through softer close for New York on Friday does little to inspire, but one might expect to see a cautiously steady to soft start for the London market and a steady start for the New York market in thin early trade today, against the prices set in London on Wednesday and New York on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb. 24th. and 26th. December:
                                                
JAN      1864 – 8                                               
MAR     1903 – 8                                                 MAR    170.15 – 0.85 168.60 – 1.55
MAY     1924 – 6                                                 MAY    172.80 – 0.80 171.25 – 1.55
JUL      1944 – 6                                                  JUL     175.30 – 0.80 173.75 – 1.55
SEP      1964 – 5                                                 SEP     177.60 – 0.80 176.00 – 1.60
NOV     1975 – 6                                                  DEC    180.25 – 0.75 178.85 – 1.40
JAN      1982 – 6                                                 MAR    181.65 – 0.75 180.45 – 1.20
MAR     1991 – 6                                                 MAY    181.70 – 0.80 180.65 – 1.05
MAY     2000 – 6                                                  JUL     181.40 – 0.85 180.60 – 0.80
JUL      2007 – 6                                                  SEP     181.20 – 0.80 180.55 – 0.65

24th. December, 2014.
The Community Development Centre in the important coffee province of Daklak in Vietnam have voiced their fears that due to an early end to this year’s rain season and fewer than normal rain storms during the May to September rain season, that the countries ground water retention levels are lower than normal for this time of the year and therefore, could have a negative impact upon the counties next coffee crop.   One might however suggest that there might be some degree of market manipulation related to the statement, as recent weather reports had not indicated an early end to the rain season but rather, reports of rains interrupting the new crop harvest from time to time, over the past six weeks.   Albeit that it would seem that this year’s rain season did indeed experience less in the way of dramatic tropical storms than the previous year, which provides some basis for the report.

Nevertheless in the meantime and following the past few day’s dip in the value of the reference prices of the London robusta coffee market, the internal market in Vietnam has almost stalled and with farmers showing price resistance and holding out for higher value, for their new crop coffee stocks.   This is however not having much impact upon short term export activity from Vietnam, as most exporters still hold good cover for their forward contract commitments, but it has slowed the volumes of new business out of Vietnam.

There is likewise a degree of price resistance in play within the Latin American producer countries, but with the consumer market industries well covered for their short term requirements and patiently awaiting the lows of the market, it is proving to be rather an early Christmas holiday for physical trade out of the region, than a situation of concern.    This scenario is likely to continue into the New Year, as there is much speculation on the fact that the Index Funds might well look to balance their individual commodity investments and reduce their exposure to the New York market post the end of the year, in reaction to the presently 54.47% higher value of this arabica coffee market as against the near to 10% lower value of the macro commodity index.  Therefore there is presently a generally cautious view towards the market, in reaction to the potential for lower reference prices for the New York arabica coffee market and likewise in sympathy, the less volatile London robusta coffee market.

Thus with no striking fundamental news coming to the fore to provide any excitement for the coffee markets and such news that is in play tending to be bearish in terms of guarantees of more than sufficient supply for the short to medium term, one can foresee a dull and less than lacklustre coffee market for the rest of the year.  In this respect, the majority of the market players already on holiday and preferring to concentrate on the forthcoming celebrations, than on the trade in coffee and with large volumes of new crop coffees still due to come to the market from Central America, Vietnam and India, it has become a buyers rather than a sellers’ market, for the present.

The arbitrage between the markets narrowed yesterday to register this at 84.32 usc/Lb., while this equates to a relatively attractive 49.31% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 6,700 bags yesterday, to register these stocks at 2,306,109 bags.   There was meanwhile a larger in volume 9,400 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,760 bags.

The commodity markets were partially buoyed yesterday by the news of improved economic growth figures from the world’s largest economy the U.S.A., which is supportive of longer term demand.   The Oil, London robusta Coffee, Wheat, Corn and Silver markets showed buoyancy, while the Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.44% higher; to see this Index registered at 458.41.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.552 to Sterling and 1.218 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.00 per barrel.

The London and New York markets are due to close early today for Christmas Eve and with both markets closed tomorrow, but while the London market shall remain closed on Friday; the New York market shall be open again on Friday for a short day’s trade.    It is however expected to be a day of limited activity and one can expect little to come of it.

The London and New York markets both started the day yesterday in thin and lacklustre trade, with a degree of hesitant buoyancy and maintained a steady positive track into the afternoon’s trade.   However as the afternoon progressed and with volumes remaining thin, the New York market lost its way and headed back into negative territory, while he London market retained its buoyancy.   This remained the track for the rest of the day, of thin and lacklustre trade.  The London market continued to end the day with a degree of buoyancy and with 62.1% of the gains of the day intact, while the New York market ended the day on a soft note and with 71.9% of the earlier losses of the day intact.   This dull end to the day is likely to see the markets due for a steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1872 + 18                                                         
MAR     1911 + 18                                               MAR    171.00 – 1.15
MAY     1930 + 19                                               MAY    173.60 – 1.15
JUL      1950 + 21                                                JUL     176.10 – 1.10
SEP      1969 + 25                                               SEP     178.40 – 1.05
NOV     1981 + 29                                                DEC    181.00 – 0.95
JAN      1988 + 29                                               MAR    182.40 – 0.90
MAR     1997 + 29                                               MAY    182.50 – 0.80
MAY     2006 + 29                                                JUL    182.25 – 0.60
JUL      2013 + 29                                                SEP    182.00 – 0.45

23rd. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 24.58% in the week of trade leading up to Tuesday 16th. December;  to register a net long position of 15,961 Lots on the day.   This net long position that is the equivalent of 2,660,167 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed.

The Brazil Crop Supply Agency CONAB has raised marginally their new 2014 new crop assessment, which they have now pegged at 45.3 million bags.   What is very noticeable within this assessment is the fact that out of these 45.3 million bags, they have included a new arabica coffee crop of 32.33 million bags and new conilon robusta crop of only 13.03 million bags.

The general consensus from the private trade and industry however and while the various reports do provide mixed numbers for the arabica coffee crop this year, is that the conilon robusta crop exceeded 17 million bags and with many talking the number of close to 17.5 million bags.  Nevertheless even adding the lower 17 million bags to the new official and traditionally conservative CONAB figure, the total would be raised to 49.33 million bags and therefore an overall deficit crop of only 3 million to 5 million bags, depending on the volumes of exports that are due for the present October 2014 to September 2015 coffee year.  

This report did not after all include any indication of the CONAB forecast for the next 2015 crop which they have said they shall delay until the 13th. January and therefore, they shall keep the market waiting for a further three weeks.    Albeit that with the CONAB report traditionally being relatively conservative, one cannot expect any striking numbers to come from this early in the New Year forecast which shall most likely indicate a relatively modest new crop potential.

Following the relatively high October 2014 to September 2015 coffee supply forecast from the United States Department of Agriculture who have assessed this to be 149.8 million bags, they have also highlighted the fact that the world’s largest market Europe, has been suffering from a declining overall consumption.   They do however foresee that this decline is short term and that they forecast a recovery for the present coffee year, to around 45.7 million bags and with the U.S.A. to continue show a modest increase in consumption and total 25.44 million bags.   This they forecast to result in the combination of world producer and consumer consumption for the present 2014/2015 coffee year, rising to 147.63 million bags.   

Thus this USDA report does tend to contradict the many other reports that indicate that the 2014/2015 world coffee supply shall produce a deficit supply, but it is early days as of yet and one might expect that most players shall be cautious and still consider the many respected trade and industry reports and forecasts who work on a lower production figure and in some instances, a higher consumption figure.   The report does not however do much to inspire confidence for the funds and the speculative sectors of the market, which have been the supportive factor for the price trading range through the year.

There was a report yesterday from the East Java branch of the Indonesian Coffee Producers Association that has indicated that while production levels in Sumatra the leading coffee producing island of Indonesia have suffered from climatic problems, that production in East Java for the first eleven months of this year was 40% to 50% higher than last year.   In this respect they have quoted a number for the first eleven months of this year of a very impressive 3.66 million bags, but also note that traditionally 70% of the East Java production is absorbed by the countries domestic coffee industry.    It is however if true a very impressive increase and while the domestic coffee industry in Indonesia is showing vibrant year on year growth, must if true and indicating an approximate 1 million to 1.2 million bags of additional supply, fuel higher volumes of Java coffees for export to the consumer markets.

The arbitrage between the markets narrowed yesterday to register this at 86.28 usc/Lb., while this equates to a relatively attractive 50.11% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,379 bags yesterday, to register these stocks at 2,299,409 bags.   There was meanwhile a similar in volume 1,280 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,160 bags.

The commodity markets were mostly on a softer track yesterday and with many experiencing relatively thin pre-holiday trade, to see the macro commodity index taking a softer track for the day.  The Cocoa, Cotton, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Coffee, Copper, Orange Juice, Gold, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.08% lower; to see this Index registered at 456.39.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.559 to Sterling and 1.223 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.95 per barrel.

The London market started the day yesterday on a relatively steady note, while the thinly traded New York market started with a degree of buoyancy.   The London market took a marginally softer track into the afternoon’s trade, while the New York market retained its buoyant stance.  However once the American came onto the field of play as the afternoon progressed the New York market came under pressure and in extremely thin trade and with the negative nature of the macro commodity index having some influence, to lose its way and head back into negative territory, while the London market lost a little more weight.   The London market continued to end the day on a soft note and with 92.3% of the earlier losses of the day intact, while the New York market likewise ended the day on a soft note and with 70.4% of the earlier losses of the day intact.   
 
LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1854 – 42                                                         
MAR     1893 – 36                                               MAR    172.15 – 2.55
MAY     1911 – 35                                               MAY    174.75 – 2.50
JUL      1929 – 34                                                JUL     177.20 – 2.50
SEP      1944 – 35                                               SEP     179.45 – 2.50
NOV     1952 – 37                                                DEC    181.95 – 2.50
JAN      1959 – 37                                               MAR     183.30 – 2.45
MAR     1968 – 38                                               MAY     183.30 – 2.50
MAY     1977 – 39                                                JUL     182.85 – 2.65
JUL      1984 – 39                                                SEP     182.45 – 2.70

22nd. December, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 2.83% in the week of trade leading up to Tuesday 16th. December;  to register a net long position of 32,577 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.93%, to register a net long on the day of 39,997 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 7.55%, to register a net long of 21,916 lots on the day.   This net long position that is the equivalent of 6,213,089 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The well respected U.S. Department of Agriculture have reported on Friday that based on a new Brazil coffee crop that they have pegged at a relatively high 51.2 million bags and a new Vietnam crop that is still in progress that they have forecasted at 29.4 million bags, that they forecast world coffee supply for the October 2014 to September 2015 coffee year at149.8 million bags.   This forecast is in terms of many of the other official and private trade and industry forecasts that have been recently voiced, is very much at the high end of the forecasts and has to be seen to be a relatively bearish for the market forecast.

Especially so as the general consensus is for a world coffee demand of approximately 150 million bags, this USDA forecast indicates only a very modest deficit coffee supply for this new coffee year, as against relatively high carry over coffee stocks into the new coffee year and therefore, no risk of tight coffee supply for the short to medium term and depending on the still questionable prospects for the next 2015 Brazil crop, for the longer term as well.    There shall however be many who will question the figures that the USDA have applied for this forecast and with many of the other forecasts talking in terms of a world production figure that is between 5 million to as much as 9 million bags lower than this forecast, one can expect some counter and more bullish for the market forecasts to soon be repeated.

Meanwhile in terms of the critical next 2015 Brazil crop, the main arabica coffee growing districts have been in receipt of fair to good November and December rains and for the present, there are no threatening dry weather forecasts coming to the market for the coming month.   Thus the debate for the present remains with the degree of damage that was caused by the partial drought early this year and the percentages of flower loss in September and October, which came with the erratic rain showers and the delayed start to the new spring and summer rain season for the main arabica coffee districts.   With many expecting that the first official new crop forecast that is due out later today from Brazil, shall be a market supportive modest figure.

The Vietnam Coffee and Cocoa Association have reported that with the year nearly over that they estimate coffee exports for 2014 of mostly robusta coffees, shall earn the country 3.6 billion U.S. dollars.  This impressive figure they report is 32% higher than the countries coffee export income for the previous year.   But contrary to the many private trade and industry forecast for the new Vietnam crop that is approximately 75% completed and presently coming off its peak, the Association is still talking the crop to be potentially in excess of 20% lower than the past crop.    It has however to be noted that the Association traditionally takes such a conservative stance towards the countries new coffee crop at this time of the year and therefore, this market supportive forecast can be expected to be largely ignored.

The arbitrage between the markets broadened on Friday to register this at 87.20 usc/Lb., while this equates to a relatively attractive 49.91% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 2,630 bags on Friday, to register these stocks at 2,300,788 bags.   There was meanwhile a larger in volume 3,270 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 24,440 bags.

The commodity markets were mixed on Friday, with many markets tending to slow down ahead of the shortened two weeks of holidays.   The Oil, Cocoa, New York arabica Coffee, Copper, Gold, Silver and Platinum markets had a day of buoyancy, while the Natural Gas, Sugar, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower; to see this Index registered at 461.37.   The day starts with the U.S. Dollar relatively steady and trading at 1.565 to Sterling and 1.225 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 60.85 per barrel.

The London and New York markets started the day on Friday with hesitant buoyancy, but with both markets coming under pressure in early afternoon’s trade and the London market moving back into negative territory, while the New York market held its ground.   The New York market once again started to attract support as the afternoon progressed and added significant value which had some influence for a recovery within the London market, but this was short lived and with the New York market coming off its highs in relatively thin trade, the London market headed back into negative territory.   The London market continued to end the day on a soft note and with 76.5% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with only 10.6% of the earlier gains of the day intact.   This relatively dull close and the latest USDA report does little to inspire confidence and the markets are most likely going to struggle to maintain a steady stance for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1896 – 16                                                         
MAR     1929 – 13                                               MAR    174.70 + 0.35
MAY     1946 – 13                                               MAY     177.25 + 0.30
JUL      1963 – 11                                                JUL     179.70 + 0.35
SEP      1979 – 9                                                  SEP    181.95 + 0.40
NOV     1989 – 8                                                  DEC    184.45 + 0.40
JAN      1996 – 6                                                 MAR    185.75 + 0.35
MAR     2006 – 4                                                 MAY     185.80 + 0.35
MAY     2016 – 3                                                  JUL     185.50 + 0.30
JUL      2023 – 3                                                  SEP     185.15 + 0.20

19th. December, 2014.
The Brazilians are forecasting a wet Christmas and New Year for the main coffee districts, with on and off rains forecasted to continue for the rest of the month.  These rains shall continue to support the development of the immature new crop cherries, towards the next 2015 crop and to meanwhile, contribute to the steady increase of the ground water retention levels within the farms.

It has to be noted however that with the delayed start to the new spring and summer rain season in south eastern Brazil this year and with only two months of rains having been in play, that the reservoirs remain relatively low for this time of the year and there shall need to be good follow on rains for the first quarter of the coming year, if these districts are to but the memory of the early in this year’s partial drought behind them.    Thus there shall remain a close focus upon the rainfall reports out of south eastern Brazil for the coming three months and with this year’s weather problems still relatively fresh on the mind significant market volatility, should there be any extended periods of dry weather.

Meanwhile with the reference prices of the international coffee markets having softened and the Brazil real having recovered a little against the U.S. dollar to the present level of 2.66 to the dollar and with farmers relatively well sold, the internal market in Brazil is seen to be slow for the present.   Thus presenting the farmers something in the way of an early start for the Christmas and New Year season, which shall unless some unforeseen dramatic news come forth to buoy the markets, see the selling activity from Brazil become slow and lacklustre for the holiday season and most probably, for the first couple of weeks in January.

It is not only Brazil that is seemingly closing down early for the festive season, as the physical trade in coffee remains slow and lacklustre in general, with producers reluctant to follow the international markets lower and consumer industry buyers looking to their relatively good stocks and short term cover and stepping back, to await further news and new lows to the market.   The latter and in anticipation of rising volumes of new crop coffees due to come to the market, playing something of a waiting game and looking to see where shall be the lows for the market.

One might think however that these lows cannot be too far away, as there is the potential that with the new crop now developing in Brazil and therefore providing some degree of substance to support new crop forecasts, that there shall be some relatively low forecasts to soon start coming to the market and to inspire the funds and the speculative sector of the market.  Thus while many of these forecasts might be related to some degree of market manipulation, one would expect them to nevertheless inspire cautious market support from the funds and many within the speculative sector of the market.

The Agriculture, Livestock and Fisheries Ministry in Kenya has announced that they are actively promoting coffee growing in western Kenya and with the intent to bring thousands of new farmers to the industry, in their bid to rebuild the Kenya coffee industry.   This being an industry that has seen production of their relatively special fine washed arabica coffees dip from levels in excess of 2 million bags twenty five years ago, to the present modest levels of approximately 800,000 bags per annum.   Thus it shall be a timely event that Kenya shall host the African Fine Coffees Association www.africanfinestcoffee.com 12th. Annual conference in Nairobi, which shall be held between the 12th. and he 14th. February 2015.  

The arbitrage between the markets broadened yesterday to register this at 86.26 usc/Lb., while this equates to a relatively attractive 49.48% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 757 yesterday, to register these stocks at 2,298,158 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,710 bags.

The commodity markets were mixed yesterday and with the overall commodity index taking something of a sideways track for most the day, but with a degree of buoyancy being experienced within many markets and with the markets quietly heading towards the nearby year end book squaring activities.   The Sugar, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, London robusta Coffee, Copper 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 0.03% lower; to see this Index registered at 461.41.   The day starts with the U.S. Dollar relatively steady and trading at 1.566 to Sterling and 1.228 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.85 per barrel.

The London and New York markets both opened the day showing buoyancy in thin trade and carried this steady positive track into the early afternoon trade, when both markets slipped back to par, but with the New York market recovering to once again experience modest buoyancy.  It was a quiet and hesitant thinly traded day however for the New York market which assisted to maintain its buoyancy, while the less volatile London market continued to attract modest selling pressure.  The London market continued to end the day on a modestly soft note and with 44.4% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 92.6% of the earlier gains of the day intact.   This close and with the New York market having ended near to its highs of the day, is perhaps due to influence a degree of buoyancy for thin early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1912 – 3                                                 DEC     173.65 + 2.80
MAR     1942 – 4                                                 MAR     174.35 + 2.50
MAY     1959 – 6                                                 MAY     176.95 + 2.50
JUL      1974 – 6                                                  JUL      179.35 + 2.50
SEP      1988 – 6                                                  SEP     181.55 + 2.50
NOV     1997 – 4                                                  DEC     184.05 + 2.40
JAN      2002 – 4                                                  MAR     185.40 + 2.35
MAR     2010 – 4                                                  MAY     185.45 + 2.30
MAY     2019 – 4                                                   JUL     185.20 + 2.55
JUL      2026 – 4                                                   SEP     184.95 + 2.85

18th. December, 2014.
The National Coffee Organisation of Guatemala has reported that the country’s coffee exports for the month of November were 23,794 bags or 26.94% lower than the same month last year, at a total of 64,523 bags.   This lower performance and following a slow October has seen the countries cumulative coffee exports for the first two months of this new October 2014 to September 2015 coffee year to be 45,077 bags or 29.14% lower than the same period in the previous coffee year, at a total of 109,595 bags.

The National Export Centre of Nicaragua has reported that the countries coffee exports for the month of November were 2,151 bags or 6.36% lower than the same month last year, at a total of 31,668 bags.   This marginally lower performance follows a month of good carryover past crop exports and therefore, the countries cumulative coffee exports for the first two months of this new October 2014 to September 2015 coffee year to be 56,870 bags or 77.28% higher than the same period in the previous coffee year, at a total of 130,464 bags.

It is however early days for the new Central American crops, which have been mostly slow to start coming to the market, due to regional spells of cold and wet weather that have retarded cherry maturity.  This factor is however a positive one, as the slower the cherry takes to mature, the harder the bean and the more intense the taste profile of the coffee and therefore, one would expect to see good quality coming forth from this new crop from the region.    While in terms of volume from the Central American producers and including Mexico, the indications are that the regional crop might prove to be approximately 1.3 million bags or 8% larger than the previous crop.   Thus ensuring along with the rising production from Colombia, a good supply of fine washed arabica coffees for the coming year.

The Coffee Markets and particularly so the more volatile New York market, encountered an unforeseen hurdle yesterday, with the public news of the latest E D & F Man Volcafe report.  This report that was based on farm visits between the 6th. November and 9th. December has estimated that with the good rains that the next Brazil arabica coffee crop shall increase by 12% over this year’s relatively dismal drought affected harvest and to total 33 million bags, while the smaller Brazil conilon robusta coffee harvest shall not match this year’s bumper harvest an shall register a 6% decline, to register 16.5 million bags.    These forecasts in terms of overall coffee supply and with the improvement weighted towards the arabica coffees indicate a 5% larger new overall Brazil crop in 2015, which was quoted at 49.5 million bags.

Such a crop and if there is reality to these early days forecasts, would in terms of present export volumes and domestic consumption still result in and over 4 million bags deficit.  However with Brazil having carried over in excess of 12 million bags of past crop arabica coffees into this year’s 6 million bags deficit crop, it is a report counters the threat of tightening world coffee supply for the next October 2015 to September 2016 coffee year.   Therefore by nature, and with no other threatening reports or forecasts from Brazil or any of the other main coffee producing blocs, it is a report that takes some of the wind out of the sails of the speculative bulls within the New York arabica coffee market.

But one can expect that shortly there shall be some lower forecasts coming forth from Brazil, to counter the negative aspects of this latest forecast.   With the traditionally conservative Brazil Government Commodity Bureau CONAB due to present its latest forecast on Monday and with this in mind, it might inspire the some degree of hesitancy within the speculative sector, to further liquidate their now reduced long positions within the New York arabica coffee market.  

The arbitrage between the markets narrowed yesterday to register this at 83.58 usc/Lb., while this equates to a relatively attractive 48.64% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 17,565 yesterday, to register these stocks at 2,298,933 bags.   There was meanwhile a smaller in volume 16,440 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 27,710 bags.

The commodity markets experienced a day of stability within many markets, but with the continued muscle of the U.S. dollar tending to cap such markets that are not party to supportive fundamental news.   The Oil, Natural Gas, Sugar, Cocoa, Copper, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets had a day of buoyancy, while the Coffee, Cotton and Gold markets had an easier day and with the New York arabica Coffee market the biggest loser for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.42% higher; to see this Index registered at 461.53.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.559 to Sterling and 1.234 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.60 per barrel.

The London market opened the day yesterday with early buoyancy, but with the New York market opening on a marginally softer note and with both markets maintaining a sideways track and respectively either side of par, into the early afternoon trade.   As the afternoon progressed the New York market recovered and joined the London market in positive territory but this was a short lived recovery and with the higher 2015 crop forecast coming into play, the New York market suffered from a sharp reversal and with Sell Stops being triggered to accentuate the losses, fell sharply lower and followed by a softening within the London market, which likewise moved south into negative territory.   This remained the stance to be taken for the rest of the day’s trade and the London market continued to end the day on a soft note and with 54.5% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 89.3% of the earlier losses of the day intact.    This overall soft close and with the charts tending negative provides little support for speculative sentiment, but one might think that there shall nevertheless be a hesitant and cautiously near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1915 – 22                                               DEC     170.85 – 5.85
MAR     1946 – 18                                               MAR    171.85 – 5.85
MAY     1965 – 16                                               MAY     174.45 – 5.75
JUL      1980 – 15                                                JUL     176.85 – 5.60
SEP      1994 – 12                                                SEP    179.05 – 5.30
NOV     2001 – 9                                                  DEC    181.65 – 5.20
JAN      2006 – 7                                                 MAR    183.05 – 5.20
MAR     2014 – 7                                                 MAY     183.15 – 5.20
MAY     2023 – 7                                                  JUL     182.65 – 5.25
JUL      2030 – 7                                                  SEP     182.10 – 5.25

17th. December, 2014.
The Coffee Markets are so far heading into the two weeks of Christmas and New Year’s holidays on a dull and lacklustre trading track, with the negative influences of the soft macro commodity index supressing speculative support and with the well-stocked consumer industries looking for the potential lows and therefore,  slow to buy into new crop coffee stocks.   Meanwhile with renewed muscle of the U.S. dollar over the past few weeks the negative nature of the markets has not yet had its full influence upon the producer prices, as is illustrated by the Brazil real that has fallen to 2.74 to the dollar and continues to inspire slow but steady selling of past and new crop Brazil coffees.

The main question is where is the low for the coffee markets as while the steady rains in Brazil have had their additional influence over and above the influence of the macro commodity index upon sentiment upon the markets, there can be no doubt that the presently silent new crop forecasters out of Brazil shall shortly come to the fore.  In this respect, one can expect that the first of the official forecasts shall very shortly come to the market with some relatively low predictions and that perhaps the thought of this, shall slow the present speculative liquidation within the markets and that perhaps the downside for the markets is now limited.

Aside from the prospects of nearby low volume new crop forecasts from Brazil, the markets are seemingly devoid of any supportive fundamental news due from any of the other main producer blocs.   Rather the news is all mostly related to rising coffee supply from Mexico, Central America, Colombia, India, and Africa and on the longer term, from Indonesia.  While despite the traditional lower crop official forecasts that come at this time of the year from Vietnam, the overall and more reliable trade and industry forecasts are indicating a new crop that shall be little different from the last large crop.    

Thus for the present and Brazil aside and with consumer stock while marginally lower post slow export volumes over the past couple of months, the markets lack any prospects of market supportive excitement and remain within the doldrums of slow and featureless thin trade.   Thus allowing the trade and industry to look to closing their books a little early for this year and to concentrate more upon the festive season, than to the short term cover of coffee requirements and sales.

On the European front the European Commission has started its in depth investigation to assess the influence that the proposed merger between Mondelez and D E Master Blenders, the second and third market players in this leading coffee consumer market.   This merger that is proposed to form the new Jacobs Douwe Egberts company would include a host of major consumer brands that include Carte Noir, Jacobs, Gevalia, Tassimo, Douwe Egberts, L’Or, Senseo and Merrild, amongst some other smaller brands, shall have an impact upon competition or the lack of it, within many of the European markets.    Thus the commission has been given quite some time to look into the matter and with a cut-off date for a decision having been set, for the 6th. May 2015.

Thus in terms of this rather high profile merger within the consumer markets there is still quite some time before there shall be clarity on the situation and meanwhile the individual brands shall continue to battle for market share, within a highly price sensitive consumer market.   This competition being accentuated for the present, but the poor to sometimes desperate economic circumstances that prevail within Europe, which is putting pressure upon grocery spend potential of the average consumer.   

The arbitrage between the markets narrowed yesterday to register this at 88.61 usc/Lb., while this equates to a relatively attractive 49.86% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 2,812 yesterday, to register these stocks at 2,316,498 bags.   There was meanwhile a smaller in volume 1,240 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,270 bags.

The commodity markets continued to come under pressure in yesterday’s trade, with nothing in the way of supportive news forthcoming, to inspire confidence within most of the markets.   The Cocoa, Orange Juice and Wheat markets nevertheless showed some degree of buoyancy and the London robusta Coffee was steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Corn, Soybean, Gold, Silver and Platinum markets had a softer days trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.17% lower; to see this Index registered at 459.59.   The day starts with the U.S. Dollar steady and trading at 1.572 to Sterling and 1.249 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 58.50 per barrel.

The London market predictably opened the day yesterday with early buoyancy, following the soft close on Monday that was contradictory to the positive stance for the New York market.    This was followed however by corrective softer start for the New York market, in thin trade.    The afternoon saw the New York market coming under further pressure and with the London market that had posted gains of $ 20.00 per metric ton drifting lower and into modest negative territory, but with the markets bouncing back from their lows of the day, as the afternoon progressed.  The London market continued to end the day little changed and having recovered 85.7% of the earlier losses of the day, while the New York market ended the day on a soft note, but having recovered 75.9% of the earlier losses of the day.   This soft close but with a significant recovery of much of the earlier losses of the day is perhaps supportive for a cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1937 + 1                                                 DEC     176.70 – 0.95
MAR     1964 – 1                                                 MAR     177.70 – 0.95
MAY     1981 – 1                                                 MAY     180.20 – 1.00
JUL      1995 unch                                              JUL      182.45 – 1.10
SEP      2006 unch                                             SEP      183.35 – 1.20
NOV     2010 unch                                              DEC     186.85 – 1.30
JAN      2013 unch                                              MAR    188.25 – 1.25
MAR     2021 unch                                              MAY    188.35 – 1.05
MAY     2030 unch                                               JUL     187.90 – 0.95
JUL      2037 unch                                               SEP     187.35 – 0.90

16th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 4.88% in the week of trade leading up to Tuesday 9th. December;  to register a net long position of 21,163 Lots on the day.   This net long position that is the equivalent of 3,527,167 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed.

The National Coffee Council of El Salvador has reported that the countries coffee exports for the month of November were 14,752 bags or 78.5% lower than the same month last year, at a total of 4,040 bags.   This low performance has equated to the countries coffee exports for the first two months of the present October 2014 to September 2015 coffee year being 51,246 bags or 89.38% lower than the same period in the previous coffee year, at a total of only 6,087 bags.

These soft export figures for the coffee year so far from El Salvador are no reflection on the size of the present new crop, which has just started to be harvested.  This new crop has been forecasted by the National Coffee Council and with the combination of improved Roya or Leaf Rust controls and the recovery of the high percentage of coffee trees that were pruned back to assist in countering Rust, to be 65% larger than the previous crop.   Thus one can expect that in the coming months the countries coffee export volumes shall start to accelerate and that they shall soon start to overtake the previous coffee year’s performance.

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 307,289 bags or 5.12% during the month of November, to register these stocks at 5,694,154 bags at the end of the month.   These stocks do not of course include the in transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is fed by these stocks of 490,000 bags per week, would conservatively have been at least 1 million bags.
 
Therefore if one is to consider the additional unreported stocks and look to end August stocks in North America of at the very least 6,694,145 bags, it would have equated to at least a very safe 13.6 weeks of roasting activity and still a safe reserve, ahead of the pending delivery of increasing volumes of new crop coffees from Mexico, Central America, Colombia and Vietnam.  These new crop coffees and however not expected to surge in supply, as the North American roasters alike the consumer industries worldwide, remain slow and steady buyers against what many predict to be a market that might still lose some more weight.    However the relatively sharp drop in the stocks for the past month, does provide some degree of support for speculative sentiment within the New York market, which has recently been taking a downside bearish track.

The Vietnam customs have reported that the countries coffee exports of mostly robusta coffees were much lower than the 2 million to 2.5 million bags that the trade had earlier forecasted and even lower than the official government forecast for exports for the month of 1,583,333 bags, to see these official coffee exports for the month now pegged at 1,400,983 bags.   This figure is likewise according to the Vietnamese customs authorities; significantly 12.3% lower than the previous month’s exports, but is nevertheless a volume of exports that is 4.55% higher than the same month last year.

Thus one might not read much into this dip in coffee exports from Vietnam for the month, as they remain somewhat seasonally in order and perhaps are more of a reflection of the hand to mouth nature of exports into the flat consumer markets, than any degree of hiccup in robusta coffee supply.   With little excitement expected from the physical coffee market, until at least post the Xmas and New Year holidays.

The arbitrage between the markets broadened yesterday to register this at 89.52 usc/Lb., while this equates to a relatively attractive 50.11% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 3,700 yesterday, to register these stocks at 2,319,310 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 10,030 bags.

The commodity markets came under further pressure yesterday, with the news of softer economic figures out of China, which comes to the table on top of dismal growth potential for Europe.   The Cocoa and New York arabica Coffee markets did however have a day of buoyancy, while the Oil, Sugar, London robusta Coffee, Gold and Platinum markets had a softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.66% lower; to see this Index registered at 465.03.   The day starts with the U.S. Dollar steady and trading at 1.566 to Sterling and 1.246 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 60.60 per barrel.

The London and New York markets opened the day yesterday with a degree of buoyancy, but within an environment of thin and lacklustre trade.   However by the afternoon while the New York market retained its early buoyancy, the London market had drifted back into negative territory.   The afternoon progressed quietly with the New York market maintaining its buoyancy, while the London market recovered to take a thin sideways track at the levels set on Friday.   The late afternoon was however a more eventful time, albeit that the volumes were not extraordinary, with the London market once again turning south and the New York market building upon its gains and with value being enhanced by the triggering of Buy stops.  The London market continued to end the day on a soft note and with 69.2% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 90.3% of the gains of the day intact.    This mixed close makes it difficult to read the markets but one might think that with the positive nature of the recovery within the more volatile New York market, that it might well inspire a degree of buoyancy for the London market and a hesitantly steady start for the New York market for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1936 – 8                                                 DEC     177.65 + 4.65
MAR     1965 – 9                                                 MAR     178.65 + 4.65
MAY     1982 – 10                                               MAY     181.20 + 4.65
JUL      1995 – 12                                                JUL     183.55 + 4.60
SEP      2006 – 14                                               SEP     185.55 + 4.50
NOV     2010 – 14                                                DEC    188.15 + 4.55
JAN      2013 – 14                                               MAR     189.50 + 4.60
MAR     2021 – 14                                               MAY     189.40 + 4.50
MAY     2030 – 14                                                JUL     188.85 + 4.70
JUL      2037 – 14                                                SEP     188.25 + 4.90

15th. December, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the Non Commercial Speculative sector of the market decreased their net long position within the market by 24.06% in the week of trade leading up to Tuesday 9th. December;  to register a net long position of 23,707 Lots on the day.   This net long position that is the equivalent of 6,720,829 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed, while perhaps the news of this  relatively sharp reduction that has likely to have been further reduced, due to inspire some corrective buying for this sector of the market.

This prevailing negative stance being taken within the New York market and so well illustrated by the speculative selling activity has been inspired by the day by day reports of rains in Brazil, however while the rains have been very beneficial for the support and carry of the new crop flowering and thereon the development into 2015 crop cherries, there remains a good degree of uncertainty as to the volume of cherry that shall be forthcoming from the early in the year partial drought affected farms.    The forecasts vary so far from 43 million to 50 million bags and more defining clarity only due to come to the markets in February next year, by which time there shall be an ability to more accurately cherry count the trees and make a more reliable assessment.

So far the longer range and weather forecasts are already pointing to fair rains due for the main coffee districts in Brazil for the rest of the month and to continue in the coming month, which is a factor that continues to dampen speculative spirits for the New York market.    However there can be no doubt that these reports shall encounter some poor crop forecasts from within Brazil and albeit that they may well be partially market manipulative in nature, they shall have some influence upon speculative sentiment.  While any dry spells that might occur during the next two months and with the memories of this year’s partial drought for the first two months of the year still recent, that these factors shall bring a degree of erratic volatility to the presently softening New York market.

Further influencing the markets softer stance last week has been the lacklustre nature of the physical coffee trade, where the relatively well stocked consumer market industries have been able to step back and await for new lows to buy into the market.   Thus with new crop coffees from Vietnam, Colombia, Mexico, Central America and India now hanging over the market and with the speculative sector of the markets showing a degree of exhaustion, there is little in the way of underlying support.   The consumer industries having the confidence for the present in the fact that Brazil forecasts aside, there is in reality surplus coffee supply for the short to medium future and with the renewed muscle of the relatively firm U.S. dollar adding value to the domestic prices for the majority of the producers and including all of the leading producers, little indication of any degree of effective price resistance due from the producers.     

The arbitrage between the markets narrowed on Friday to register this at 84.46 usc/Lb., while this equates to a relatively attractive 48.54% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 3,930 on Friday, to register these stocks at 2,323,010 bags.   There was meanwhile a larger in volume 5,120 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 9,390 bags.

The commodity markets remained with a cloud of negativity on Friday, as slowing growth in China and poor economic figures from Europe and Japan continue to impact upon longer term market sentiment.   The Oil markets were in particular on a back foot, with energy growth forecasts for 2015 pointing to soft demand and likewise soft longer term prices.    The Natural Gas, Cocoa, London robusta Coffee, cotton, Copper, Orange Juice, Wheat, Corn and Soybean nevertheless ended the week with some degree of buoyancy, while the Oil, Sugar, New York arabica Coffee, Gold, Silver and Platinum markets had a softer days trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.13% lower; to see this Index registered at 468.12.   The day starts with the U.S. Dollar steady and trading at 1.573 to Sterling and 1.245 to the Euro, while North Sea Oil is showing some degree of buoyancy in early trade and is selling at $ 61.80 per barrel.

The London market somewhat surprisingly started the day on Friday with a relatively sharp corrective rally, with the New York market showing some more modest and hesitant buoyancy, within an environment of thin and lacklustre trade.    The London market soon came off its early highs of the day but nevertheless retained its buoyancy, while the New York market slid back to par and with both markets taking a sideways track into the early afternoon trade.    The New York market continued to steadily drift lower as the afternoon progressed and eventually had some influence upon the London market that briefly dipped back into negative territory later in the afternoon, but to post a late in the day recovery.   The London market ended the day on a hesitantly positive note and with 40.9% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 84.2% of the losses of the day intact.    This mixed but overall soft close might nevertheless with the news of the much reduced speculative long within the New York market in play, result in some degree of cautious buoyancy for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1944 + 6                                                 DEC     173.00 – 2.40
MAR     1974 + 9                                                 MAR    174.00 – 2.40
MAY     1992 + 10                                               MAY    176.55 – 2.40
JUL      2007 + 10                                                JUL     178.95 – 2.35
SEP      2020 + 10                                               SEP     181.05 – 2.50
NOV     2024 + 8                                                  DEC    183.60 – 2.45
JAN      2027 + 6                                                 MAR    184.90 – 2.60
MAR     2035 + 6                                                 MAY    184.90 – 2.75
MAY     2044 + 6                                                  JUL     184.15 – 2.85
JUL      2051 + 6                                                  SEP     183.35 – 2.90

12th. December, 2014.
The International Coffee Organisation have forwarded their latest forecast for global coffee supply for the October 2014 to September 2015 coffee year, which they say shall be 141 million bags, which is 4.2 million bags lower than their assessment of the coffee supply for the previous year of 145.2 million bags.   These figures on the part of the International Coffee Organisation are by nature of this official body that is obliged to base its calculations upon the often conservative official figures from the individual members, likewise tend to be conservative.

In this respect their figure for the previous 2013 to 2014 coffee year is approximately 6.5 million to 7 million bags shy of many of the private trade and industry reports for this previous coffee year and therefore, one might presume that the figure of 141 million bags for the present coffee year is most likely a conservative figure and most probably at least 2 million bags shy of what shall finally by the end of this present coffee year and with the evidence of exports and estimated domestic consumption, prove to be the correct figure.

This said, one has to now compare the potential coffee supply for the present coffee year against what is a complicated to assess global coffee consumption figure, which is being forecasted at figures that vary between 145 million and 150 million bags for the present coffee year.   However with the clear evidence of flat to lower consumption within many of the traditional coffee markets in Europe and with economic issues more than likely to slow the growth within the growing Asian markets, one might guess that the demand figure is more than likely not going to exceed 148 million bags.   Therefore a guess at a global deficit coffee supply for the present coffee year that shall be closer to a more modest 5 million to 7 million bags, rather than some of the more dramatic figures that have been voiced.

This deficit in terms of the global coffee stocks that were in excess of 23 million bags within consumer market hands at the start of the coffee year and with the two major producers having jointly entered their new crops with carryover stocks of approximately 16 million bags, most certainly does not indicate any potential problems for coffee supply for the present coffee year.  Thus one has to look rather to the critical issue of the next 2015 Brazil crop, which shall fuel the coffee supply for the follow on October 2015 to September 2016 coffee year and while there is no doubt that the combination of the early this year drought and a late start to the rain season shall not fuel a bumper crop, one has to question how much of a deficit new crop it shall be.

Some of the more dramatic forecasts have pointed to a deficit Brazil crop for 2015 of close to 10 million bags, while many and perhaps more reliable in nature forecasts, have been talking a more modest figure of around 5 million bags.   These deficit figures for Brazil for the coming year have however to be seen against rising coffee supply from Central America and parts of Asia that shall assist to lessen the influence of a deficit in Brazil, in terms of overall global coffee supply and therefore unless there are no further climatic problems for Brazil to further damage their 2015 crop potential and likewise for any of the other main producer blocs, the longer term global coffee supply through to the 2016 to 2017 coffee year looks to be only a little tighter, rather than a problem.

Meanwhile the rains continue to fall over the main coffee districts in Brazil and thus dampening the spirits of the bulls within the New York market, while side-lining the consumer market industry buyers, who look for new lows to inspire more aggressive buying activity.  While the much respected Brazilian analysts Safras and Mercado who have assessed this year’s new Brazil crop at a relatively in terms of many other reports high level of 48.9 million bags, have estimated that farmers have already sold to the trade and local industries approximately 65% of the new crop coffees.  These sales that are above average in terms of percentage terms but perhaps a little below average in terms of actual volume from a smaller crop for this time of the year, have been very much inspired by the weaker Brazil Real to the dollar that adds value in terms of internal prices.  The very nature of this aggressive selling activity might however also be seen to be an indication of the farmers belief and post the flowerings for the new crop, that a potential modest deficit is not enough reason to justify holding back stocks to gain additional value out of a dramatically tight supply post the next crop.
 
The arbitrage between the markets narrowed yesterday to register this at 87.27 usc/Lb., while this equates to a relatively attractive 49.47% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,960 bags yesterday, to register these stocks at 2,319,080 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,510 bags.

The commodity markets remained overall lacklustre in trade yesterday, but with a degree of stability within many of the markets.  The Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets showed buoyancy and the Brent Oil market was steady, while the U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.14% lower; to see this Index registered at 468.72.   The day starts with the U.S. Dollar steady and trading at 1.572 to Sterling and 1.239 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 62.55 per barrel.

The London and New York markets started the day yesterday on a hesitant steady to soft note and with both markets taking a slow soft track into the afternoon’s trade, with trade thin and lacklustre for the more volatile New York market, while the London market was a little more active.    The afternoon progressed with producer selling weighing down on a thinly traded New York market, which lacked anything in the way of volume from the industry to provide support and with both markets losing some more weight.  The London market continued to end the day on a soft note and with 94.1% of the losses of the day intact, while the New York market that experienced late in day partial recovery nevertheless ended the day on a soft note and with 58.9% of the losses of the day intact.   This overall soft close does little to inspire and one might expect to see at best only a steady start for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1938 – 37                                               DEC     175.40 – 2.15
MAR     1965 – 32                                               MAR    176.40 – 2.15
MAY     1982 – 32                                               MAY    178.95 – 2.05
JUL      1997 – 30                                                JUL    181.30 – 1.90
SEP      2010 – 29                                               SEP     183.55 – 1.85
NOV     2016 – 28                                                DEC    186.05 – 1.75
JAN      2021 – 27                                               MAR    187.50 – 1.65
MAR     2029 – 27                                               MAY    187.65 – 1.60
MAY     2038 – 27                                                JUL    187.00 – 1.75
JUL      2045 – 27                                                SEP    186.25 – 1.75

11th. December, 2014.
The Colombian Coffee Growers Federation celebrated its 80th. National Congress last week and with representatives from all of their coffee districts who represent the countries approximately 553,000 coffee farmers and representatives from the countries trade and industry players contributing to the event, which debated towards a program and policy for their industry for the next five years.   The Federation firstly celebrated the success of their farm rejuvenation program over the past five years, which has seen the replanting of farms with 3.2 billion new disease resistant and higher yielding trees and with the results already evident from the rising levels of production, which with many of the trees still to come to maturity, is likely to inspire further increases over the next couple of years.   Thus supporting the relatively short term target for an annual crop of fine washed arabica coffees of in excess of 14 million bags per annum, within the next two to three years.   

However with the farm rejuvenation program now well on track and well past the half way mark, the focus of the Federation is now leaning more towards the matters of agronomy and social, with programs planned to further improve the farm extension services to assist their farmers to improve their agricultural practices, along with social programs to assist in the improvement of the living conditions within their coffee industry.   These latter programs not only related to health and welfare, but also towards education for the rural communities and with the view to further strengthen the stability of the Colombian coffee farming industry and to maintain its dominant market share within the top end fine washed arabica coffee sector of the consumer markets.

The Association of Coffee Exporters and Industries in Indonesia have reiterated their confidence in the steady growth of the countries domestic market, with and ambitious forecast that domestic consumption within Indonesia which they say registered and impressive 15.4% growth this year, shall register a further 16.7% growth next year, to see domestic consumption rise to in excess of 5.8 million bags per annum.   These figures are very impressive and there is no doubt that domestic coffee consumption within Indonesia is indeed showing steady year by year growth, but one might think that there is some degree of market manipulation coming into play to inflate the numbers.   Mostly so as the growth is being reported within the context of what influence it shall have upon the coffee export potential for Indonesia who have a larger new crop to the fore, but are with the rise of domestic consumption unlikely to significantly increase export volumes.  Albeit that despite this recovery in Indonesia’s production, the Association of Coffee Exporters and Industries have forecasted that domestic consumption shall nevertheless dictate a 10% decline in exports.

In the meantime with the recovery in production levels in Colombia, they have stepped back up into third place in terms of world coffee production, behind the giants Brazil and Vietnam and with Indonesia having slipped back into fort position.  These four presently accounting for approximately 70% of world coffee production and consumer market supply, while the first three continue to dominate the raw material inputs for the larger roasting companies within the consumer markets, who require stable volume coffee supply to maintain their blend profiles and dominant share of the consumer markets.

The arbitrage between the markets narrowed yesterday to register this at 87.97 usc/Lb., while this equates to a relatively attractive 49.27% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 3,300 bags yesterday, to register these stocks at 2,321,040 bags.   There was meanwhile a similar in volume 3,375 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,510 bags.

The commodity markets were mixed yesterday, but with the macro commodity index tending negative with the influence of the soft Oil markets.  The Natural Gas, Sugar, Cotton, Orange Juice, and Silver markets showed buoyancy, while the Cocoa, Coffee, Copper, Wheat, Corn, Soybean, Gold and Platinum markets were softer and the Oil markets registered sharp losses for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.68% lower; to see this Index registered at 469.37.   The day starts with the U.S. Dollar marginally softer and trading at 1.571 to Sterling and 1.244 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 63.95 per barrel.

The London and New York markets started the day yesterday with the London market taking a steady stance and the New York market showing some degree of early buoyancy, but with the London market soon coming under a degree of pressure and taking a modestly softer track into the afternoon’s trade.    The New York market came under pressure during the afternoon and with sell stops coming into play, to reverse its positive trend that had peaked with gains of 1.75 usc/Lb., and head back into negative territory and with the London market adding to its losses.    There was however some degree of support at the lows and the markets both showed a degree of buoyancy within negative territory, to limit the losses for the day.  The London market ended the day on a soft note and with 48.3% of the losses of the day intact, while the New York market ended the day on a soft note and with 55.9% of the losses of the day intact.    This soft close and with a lack of supportive fundamental news coming to the markets is not very constructive and with the industry players stepping back to look for new lows as against producers chasing a thin and lacklustre market, one might expect to sell little better than a hesitantly steady to marginally softer start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1975 – 19                                               DEC     177.55 – 1.90
MAR     1997 – 14                                               MAR     178.55 – 1.90
MAY     2014 – 14                                               MAY     181.00 – 1.95
JUL      2027 – 16                                                JUL     183.20 – 2.10
SEP      2039 – 15                                               SEP     185.40 – 2.15
NOV     2044 – 12                                               DEC     187.80 – 2.20
JAN      2048 – 12                                               MAR     189.15 – 2.25
MAR     2056 – 12                                               MAY     189.25 – 2.20
MAY     2065 – 12                                                JUL     188.75 – 2.30
JUL      2072 – 12                                                SEP     188.00 – 2.50

10th. December, 2014.
The new Vietnam crop is in full swing and while there have been some rain interruptions to the harvest it is peaking and estimated are that well in excess of 65% of the crop harvested so far, to see a steady flow of new crop coffees now coming to the mills and export houses in Ho Chi Minh City.   There is however so far no aggression on the part of the farmers in terms of selling activity and the Vietnam trade remains only a slow and steady buyer, as they play the time game to see if the post-harvest selling activity might prove to inspire some more aggressive discounting of new crop coffees.

The forecast by the traditionally excessively conservative Vietnam Coffee and Cocoa Association for a 20% lower new crop remains largely ignored by the local and international coffee trade and for the present the perspective is still for a new crop of approximately 27.5 million bags, of which close to 96% shall be made up by robusta coffees.   There is however a growing domestic consumption and with some ambitious internal market forecasts indicating that this could rise in the coming year or two to something in the region of 2.7 million bags, but with Vietnam having a taken a large carryover stock into this new crop, it is unlikely to be a factor to impact negatively upon export volumes for the coming year.

With the New Mexican and Central American crops now picking up in volume and this regional harvest with some delays in cherry maturity having been experienced which would indicate improved quality, there has so far been no market supportive negative news coming forth from this leading fine washed arabica producer bloc and one can presume that with no news is good news, that the forecasts for increased regional coffee supply for the coming year are a matter of reality.    This is however having some impact upon the export differentials for the coffees from this region, but with the exception of the brand name origins of Guatemala, Costa Rica and Panama, where dedicated consumer market support from the North American and Japanese markets and with branding of these countries upon retail packets, continues to support significant premium differentials for their coffees.    Thus in terms of these select few, the negative nature of the softening prices of the reference prices of the New York market is not having so far the effect upon internal market prices, as it is for their neighbours.

The arbitrage between the markets broadened yesterday to register this at 89.23 usc/Lb., while this equates to a relatively attractive 49.45% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,051 bags yesterday, to register these stocks at 2,317,740 bags.   There was meanwhile a smaller in volume 570 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,885 bags.

These stocks remain dominated as is traditional for the stock by the Central and South American producers, who account for 83.65% of the stocks.  The Mexico, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua bloc accounting for 1,327,036 bags or 57.26% of the stocks, Peru accounting for 463,382 or 19.99% of the stocks, Colombia accounting for 140,474 bags or 6.06% of the stocks and Brazil accounting for a modest 7,980 bags or 0.34% of the stocks.

The balance are related to India and the African bloc and with coffees from Burundi, Rwanda, Tanzania and Uganda accounting for 319,403 bags or 13.78% of the stocks, while India accounts for a relatively modest 59,465 bags or 2.57% of the stocks.   One might however assume that with a larger new crop harvest now coming in for Mexico and Central America that by the second quarter of this year that their share of the stocks shall start to increase and that by the second half of 2015 and with the new Peru crop also in play, that there shall be a modest increase in the overall Central and South American share of these stocks.

The U.S. dollar tended to come of its recent highs yesterday with some corrective trade in the dollar in play, which was a supportive factor with most of the commodity markets.   But with the U.S.A. aside the consumer markets that are dominated by Europe, China and Japan presently forwarding relatively soft longer term demand forecasts, the renewed buoyancy for the macro commodity index remained modest.   The U.S. Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and Brent Oil was steady, while the London robusta Coffee and Wheat markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.16% lower; to see this Index registered at 472.60.   The day starts with the U.S. Dollar steady and trading at 1.569 to Sterling and 1.240 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 65.35 per barrel.

The London and New York markets started the day yesterday with the London market tending softer and the New York market taking a steady track and with the New York market coming under some short term pressure to join the softer London market in thin early afternoon trade.    The New York market and with the positive influences of the macro commodity index in play did however regain some support and move back into positive territory, while the London market maintained its softer stance.   The London market continued to end the day on a soft note and with 82.1% of the losses of the day intact, while the New York market ended the day on a positive note and with 64.9% of the earlier gains of the day intact.   This mixed close provides little in the way of signal for the markets, but one might with the positive close in New York expect to see some buoyancy coming into play for the London market and a steady start for the New York market for early trade today, against the price set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      1994 – 20                                               DEC     179.45 + 2.40
MAR     2011 – 23                                               MAR    180.45 + 2.40
MAY     2028 – 23                                               MAY    182.95 + 2.35
JUL      2043 – 24                                                JUL     185.30 + 2.30
SEP      2054 – 24                                               SEP     187.55 + 2.25
NOV     2056 – 22                                                DEC    190.00 + 2.25
JAN      2060 – 18                                               MAR    191.40 + 2.50
MAR     2068 – 17                                               MAY     191.45 + 2.80
MAY     2077 – 15                                                JUL     191.05 + 2.70
JUL      2084 – 15                                                SEP     190.50 + 2.55

9th. December, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market decrease their net long position within this market by 5.35% in the week of trade leading up to Tuesday 2nd. December;  to register a net long position of 22,248 Lots on the day.   This net long position that is the equivalent of 3,708,000 bags has most likely been marginally reduced over the period of mixed but overall more negative trade that has since followed.

The Brazilian Coffee Exporters Association have come forth with their more detailed coffee export figures for the month of November, to report that the green coffee exports for the month were 367,036 bags or 14.99% higher than the same month last year, at a total of 2,816,264 bags.   Added to this were the value added exports of soluble coffee calculated in terms of their green coffee equivalent which resulted in the overall coffee exports for the month of November being a slightly more modest 313,238 bags or 11.62% higher than the same month last year, at a total of 3,009,118 bags.

In terms of value however and with much of this export performance for the month of November having been related to relatively good value price fixed coffees, the November exports were 211.2 million U.S. dollars or 55.09% higher than the same month last year, at a total of 594.6 million U.S. dollars.   This relatively good value and with the firming U.S. dollar which assists to increase the internal market prices for the coffees, does much to continue to inspire the farmers to remain relatively aggressive and easy sellers of the combination of past crop arabica coffee stocks and new crop arabica and conilon robusta coffee stocks.

The question still remains why with even relatively good currency inspired value aside, are the Brazilian farmers remaining active sellers, as by the very nature of this activity they the farmers, are tending to indicate that they do not foresee as much of a disastrous next 2015 arabica coffee crop as many have indicated.   Thus having no reason to show selling and price restraint so as to hold back arabica coffee stocks to join a significant deficit new 2015 crop, which would need to carry consumer market supply through to the third quarter of 2016.  Thus supporting the view of many less concerned forecasts, who have been talking about a follow on 2015 arabica coffee crop that might in fact match to perhaps even marginally exceed this year’s deficit arabica coffee crop.   A crop that with significant carryover arabica coffee stocks, has not resulted in an overall deficit arabica coffee supply through to the next crop and with arabica coffee stocks to carry over into the next crop, which might be as high as 6 million bags.

This factor along with the firmer nature of the U.S. dollar and the relatively good prevailing rains in Brazil and with the consumer markets lacklustre in nature, is assisting to dampen speculative spirits within the volatile and influential New York market.   The question remains however and with the early in this year’s crop damaging partial drought over the main arabica coffee districts in Brazil, what shall be the rainfall for the first quarter of 2015, as any hiccups in this summer rain season and with the experiences of what happened this year still fresh in mind, would undoubtedly bring forth a host of market supportive scare stories.    Thus while the New York market and with the London market following in a less aggressive manner is tending to develop a speculatively bearish stance, one would expect a degree of caution to come to the fore on the part of the speculative sector of the market, until there is some more defining rainfall and new crop forecast data on the table, over the first two months of the coming year.  This factor might tend to limit the present downside track that the charts are indicating, for at least the short term.   

The arbitrage between the markets narrowed yesterday to register this at 85.79 usc/Lb., while this equates to a relatively attractive 48.18% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 840 bags yesterday, to register these stocks at 2,318,791 bags.   There was meanwhile a larger in volume 1,235 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,315 bags.

The U.S. dollar retained its muscle yesterday, to continue to dampen spirits within many markets and with the strong dollar accompanied by poor economic numbers from Japan that is suffering through a recession and indicators of slowing demand from the internal market in China.  The Sugar, Cocoa, Cotton, Orange Juice and Wheat markets nevertheless showed some buoyancy, while the Oil, Natural Gas, Coffee, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.79% lower; to see this Index registered at 467.20.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.231 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 64.80 per barrel.

The London and New York markets started the day yesterday on a relatively steady sideways track, but with the London market soon turning south, while the New York market tended to show some modest buoyancy in thin trade.   The markets continued with this stance into the afternoon’s trade and with the New York market maintaining a positive stance and London market just below par.  As the afternoon progressed however and with a lack of industry support under the markets, the New York market lost its stability and headed back into negative territory and with the London market losing a little more weight.  The London market continued to end the day on a soft note and with 90.5% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 66.1% of the earlier losses of the day intact.   This overall soft close and with little in the way of supportive fundamental news in play, is likely to set the markets for little better than a near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2014 – 24                                               DEC     177.05 – 2.05
MAR     2034 – 19                                               MAR     178.05 – 2.05
MAY     2051 – 15                                               MAY     180.60 – 2.05
JUL      2067 – 14                                                JUL     183.00 – 2.00
SEP      2078 – 16                                               SEP     185.30 – 1.95
NOV     2078 – 16                                                DEC    187.75 – 1.90
JAN      2078 – 16                                               MAR     188.90 – 1.80
MAR     2085 – 16                                               MAY     188.65 – 1.65
MAY     2092 – 16                                                JUL     188.35 – 1.55
JUL      2099 – 16                                                SEP     187.95 – 1.45

8th. December, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 5.42% in the week of trade leading up to Tuesday 2nd. December;  to register a net long position of 35,783 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 1.09%, to register a net long on the day of 40,090 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 11.90%, to register a net long of 31,217 lots on the day.   This net long position that is the equivalent of 8,849,881 bags has most likely been further decreased over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The Ethiopian Coffee Exporters Association have voiced their confidence in their countries coffee export prospects for the present July 2014 to June 2015 financial year, following a 5.88% increase in exports for the first four months of this financial year compared to the same period in the previous year, with exports for the period registered at approximately 900,000 bags.   This improved performance they say is even more impressive, in terms of the value of the exports having been 34.43% higher than the same period in the previous financial year, at a total of 231.9 million U.S. dollars.

Following this good start for their coffee industry for this present financial year, the Ethiopian Coffee Exporters Association have forecasted that their exports for the financial year might well prove to be 23.68% higher than the previous financial year, to total 3,916,667 bags.   These exports they estimate shall generate coffee export income for the country that shall be 2.5% higher than the previous financial year, at approximately 862 million U.S. dollars.   This relatively ambitious export target in terms of rising volumes of exports are not matched by a similar ambitious forecast in terms of value, which might make one comment that the association has objectively addressed the declining value of the international coffee prices that have hit a four and half month low for the New York market, on Friday.  

This softening of the coffee markets being related to the day by day rainfall reports from Brazil, which are accompanied by forecast for more rains to come over the next couple of weeks.   While in the meantime with the rains falling in Brazil and with most of the main producer bloc’s looking forward to either steady to increased new crop production levels, there are no further fundamental supportive reports coming to the coffee markets.  While the with the relatively well stocked consumer markets relatively complacent in their buying activity, there is little underlying support coming from the industry and leaving market support very much in the hands of the unpredictable fund sector of the markets.

This decline in the value of the markets albeit partially countered by the prevailing stronger value of the U.S. dollar, is becoming something of a concern for the arabica coffee producers and particularly so for the Mexicans and Central Americans, who have larger overall volumes of new crop coffees to sell in the coming months.   These farmers mostly having experienced significant increases in production costs, as they come out of two years of increased inputs that have been related to the battle against Roya or Leaf rust and with reference prices of the New York market starting to drift back to levels that do not offer much in the way of profitability for many farmers.

The arbitrage between the markets narrowed on Friday to register this at 86.98 usc/Lb., while this equates to a relatively attractive 48.30% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 4,919 bags on Friday, to register these stocks at 2,317,951 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,550 bags.

The U.S. dollar was buoyed on Friday by the news of better than expected rising employment figures and this impacted within many of the commodity markets, with the macro commodity index taking a softer track to end off the week on a soft note.   The Brent Oil, Natural Gas, Cocoa, Wheat, Corn and Soybean markets nevertheless showed buoyancy and the Orange Juice market was steady, while the U.S. Oil, Sugar, Coffee, Cotton, Copper, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.28% lower; to see this Index registered at 470.93.   The day starts with the U.S. Dollar steady and trading at 1.556 to Sterling and 1.229 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 67.65 per barrel.

The London and New York markets started the day on Friday on a relatively steady note and with some hesitant buoyancy in thin trade, but this was short lived and the markets started to lose their way and they took a softer track into the afternoon’s trade.   The negative influences of the firmer dollar and the softening nature of the macro commodity index saw both markets extend their losses as the afternoon progressed, but with underlying support coming into play later in the day to bring forth a degree of corrective buoyancy for both markets.    The London market continued to end the day on marginally softer note and with 43.7% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 67.1% of the losses of the day intact.   This overall soft close does little to inspire, but one might expect to see some degree of hesitancy and perhaps a cautiously steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2038 – 10                                               DEC     179.10 – 2.45
MAR     2053 – 7                                                 MAR    180.10 – 2.35
MAY     2066 – 7                                                 MAY    182.65 – 2.35
JUL      2081 – 4                                                  JUL     185.00 – 2.35
SEP      2094 – 1                                                 SEP     187.25 – 2.30
NOV     2094 – 1                                                  DEC    189.65 – 2.10
JAN      2094 – 1                                                 MAR     190.70 – 2.10
MAR     2101 – 1                                                 MAY     190.30 – 2.25
MAY     2108 – 1                                                  JUL     189.90 – 2.20
JUL      2115 – 1                                                  SEP     189.40 – 2.30

5th. December, 2014.
The rains continue in Brazil and with many positive reports coming forth to the market, in terms of the condition of the trees and likewise, the development of the new crop cherries.  These reports and with very little in the way of qualified reports to counter the evidence of positive steps now being taken towards the development of the next 2015 Brazil crop, continue to dampen speculative spirits within the New York market.

Meanwhile despite the softening of the reference prices of the New York market against which the Brazil arabica coffees are sold and mostly at discounted differentials, the farmers remain active sellers of the combination of past crop and new crop arabica coffees.   These sales are of course assisted by the presently weak nature of the Brazil Real that is presently trading at 2.59 to the U.S. dollar, which is taking some of the bite out of the negative nature of the international dollar prices for coffee at present.    

One has to question however in terms of this continued selling activity on the part of the farmers, their belief in the prospects for a dramatically low new 2015 crop as has been predicted by a number of analysts as surely if the farmers who would know best do have the same perspective, they would be showing a greater degree of price resistance and holding back stocks to sell over the next eighteen months.   This is however so far not the case and one might think from this continued easy selling policy on the part of the Brazilian arabica coffee farmers that they are presently looking towards only a modest deficit crop for the coming year, rather than a sharp dip in production.

The new Central American crop is now in harvest but with many districts having experienced relatively cold weather, which has been slowing the maturity of the cherries.   This is however seen to be a more positive than negative factor, as the slower the development to maturity for the cherries, the better shall be the overall cup quality.   While with more than sufficient fine washed arabica coffee supply within the markets at present and assisted by the good levels of Colombian new crop coffees coming to the market, there is no panic over the delay in the delivery of the new Central American and Mexican crops.

Adding to the lack of concern over the small delay in new crop deliveries from Central America, is prevailing the lacklustre nature of the consumer markets, where stocks remain good and cautious roasters look towards the possibility of softening price levels, to maintain a slow and steady rather than an aggressive longer term buying policy.   Thus with large volumes of new crop fully washed arabica coffees from Mexico, Central America and Colombia hanging over the market and likewise, new crop Vietnam, Indian and Ugandan coffees now coming to the market, while Brazilian natural arabica coffee sales are active, it remains for the present more a buyers rather than a sellers’ market.     

Following the recent forecasts from Australasia that foresee the strong possibility for the development of a new El Nino phenomenon within the Pacific Ocean, the U.S.A. based Climate Protection Agency have forecasted a 65% chance for an El Nino to come into play for the first quarter of 2015 and to continue into the second quarter.   These forecasts are all so far in agreement that if it does materialise that it would be only a modest El Nino and therefore not threatening to the prospects for the Colombian, Peru and Indonesian coffee crops, while it would be supportive for fair rains for the Brazil coffee districts.    Therefore the El Nino or the prospects for its development remains a side-line factor, in terms of coffee market sentiment.      

The arbitrage between the markets narrowed yesterday to register this at 89.01 usc/Lb., while this equates to a relatively attractive 48.79% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 13,610 bags yesterday, to register these stocks at 2,322,870 bags.   There was meanwhile a larger in volume 15,025 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 18,550 bags.

The commodity markets tended to take a sideways track within many markets yesterday, but with little in the way of supportive economic news coming to the markets for the present, the overall commodity index struggled to maintain its modest buoyancy for the day.   The Natural Gas, Sugar, Cocoa, Cotton, Copper, Wheat, Silver and Platinum markets had a day of buoyancy, while the Oil, Coffee, Orange Juice, Corn, Soybean and Gold markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.14% higher; to see this Index registered at 472.27.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.238 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 68.50 per barrel.

The London market predictably started the day yesterday on a softer track, but followed by a steady start for the New York market.  This seemed to have its influence and the London market soon recovered to join the New York market on a thinly traded steady track into the afternoon.  This did not last however and as the afternoon progressed and with trade remaining relatively thin and lacklustre, the New York market started to drift lower and with the London market likewise losing some weight.    The London market continued to end the day on a modestly softer note but with only 30% of the earlier losses of the day intact and followed by the New York market that registered a partial recovery late in the day to nevertheless end the day on a soft note and with 47.1% of the earlier losses of the day intact.   This overall soft and lacklustre close for the markets and with little in the way of striking fundamental news to provide direction, is likely to see the markets set for slow and steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2048 – 3                                                 DEC     181.55 – 1.00
MAR     2060 – 3                                                 MAR    182.45 – 1.20
MAY     2073 – 4                                                 MAY     185.00 – 1.15
JUL      2085 – 5                                                  JUL     187.35 – 1.15
SEP      2095 – 6                                                 SEP     189.55 – 1.15
NOV     2095 – 4                                                  DEC    191.75 – 1.10
JAN      2095 – 2                                                 MAR    192.80 – 1.05
MAR     2102 – 1                                                 MAY    192.55 – 1.05
MAY     2109 – 1                                                  JUL     192.10 – 1.05
JUL      2116 – 1                                                  SEP     191.70 – 1.00

4th. December, 2014.
The National Coffee Council in El Salvador and with the new crop having started to be harvested, have forecasted that they expect this new crop to be 65% larger than the previous crop, at a total of 889,333 bags.  This increase they appropriate to the fact that the country had taken strong measures to counter the devastating effects of Roya or Leaf Rust over the past two years, which has resulted in approximately 92% of the coffee farms to have Roya completely under control.

One might comment that with the El Salvador coffee industry dominated by commercial farms and with many having pruned back their coffee trees during 2012 in a radical bid to control Roya, that these trees shall start coming back towards full production during next year.   Therefore unless there are no further unforeseen climatic or disease issues coming forth in the coming year, the country shall potentially return to crop levels of in excess of 1 million bags by the follow on 2015/2016 crop.

The Colombian President Juan Manuel Santos gave a speech at a Colombian National Coffee Federation and presumably voicing the views of the Federation, to announce his confidence in the prospects for the Colombian coffee industry to have a good year and to register earnings of 2.4 billion U.S. dollars.    But furthermore and in terms of the short term future, he has confirmed the Federations confidence that with a large percentage of the country’s coffee farms still covered by young and yet to fully mature trees, that their annual crop that dipped to 7.8 million bags in 2009 and topped 12 million bags for the October 2013 to September 2014 coffee year, shall soon achieve levels in excess of 14 million bags per annum.    This forecast in terms of private trade and industry opinions is seen to be realistic and with many already forecasting an October 2014 to September 2015 crop of fine washed arabica coffees that shall already exceed 13 million bags.

The leading Brazil coffee cooperative Cooxupe with the new 2015 crop cherries starting to develop has forecasted that due to the early in the year drought damage to the trees, that they foresee the next 2015 crop to potentially be marginally close to 1% lower than the just completed 2014 crop.   This report is not nearly as dramatic as some of the reports that have come to the market and if it were to be correct, would indicate a 2015 crop of around 47 million bags and therefore, a not too difficult to live with in terms of world stocks deficit of around 6 million bags.   One might suggest however as forecasts from the cooperative tend to be relatively conservative, that this Cooxupe forecast might already indicate an even smaller forthcoming 2015 deficit crop and therefore is a forecast that is more neutral rather than supportive for the market.

The subject of El Nino has once again come to the fore, with further indications for the probability of a weak El Nino phenomenon to soon develop within the Pacific Ocean.    This by nature of being foreseen to be a weak event is however not threatening for the Pacific rim coffee producers and most importantly Colombia, Indonesia and Peru, while traditionally an El Nino is supportive for improved rains for the coffee districts in Brazil and thus somewhat reducing any threat of a repeat dry spell for the first quarter of the coming year.

Meanwhile following reasonable rains for the majority of the Brazil coffee districts during the past month, the forecasts are indicating that fair rains shall be forthcoming for the next two weeks and therefore, to further support the development of the next 2015 Brazil crop.   Thus for the present there are no further weather concerns forthcoming from Brazil and the debate remains rather, over how much damage the early in the year partial drought and the late start to the present rain season might have done, to the potential of this next crop.

The arbitrage between the markets narrowed yesterday to register this at 90.07 usc/Lb., while this equates to a relatively attractive 49.04% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 1,875 bags yesterday, to register these stocks at 2,336,480 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,525 bags.

The commodity markets tended to take a sideways track within many markets yesterday, but with the overall commodity index nevertheless tending softer for the day.   The U.S. Oil, Coffee, Cotton, Orange Juice, Gold and Platinum markets showed buoyancy, while the Brent Oil, Sugar, Cocoa, Copper, Wheat, Corn, Soybean and Silver markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% lower; to see this Index registered at 471.60.   The day starts with the U.S. Dollar steady and trading at 1.567 to Sterling and 1.230 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 69.75 per barrel.

The London market started the day yesterday on a softer track, but followed by some modest buoyancy for the New York market.  This seemed to have its influence and the London market recovered to set a steady track into the afternoon, while the New York market retained its modestly positive stance.    Trade remained thin but with the New York market adding some further value and the London market starting to show some renewed confidence and buoyancy, as the afternoon progressed.   The upside track for the New York market was however not sustained and while the London market held on to its gains, the New York market started to falter later in the day.  The London market ended the day on a positive note and with 76% of the earlier gains of the day intact, while the New York market ended the day showing only modest buoyancy and with only 9.4% of the gains of the day intact.   This close does little to inspire and one might expect to see a marginally softer start for the London market and a close to steady start for the New York market for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2051 + 17                                               DEC     182.55 + 0.25
MAR     2063 + 19                                               MAR     183.65 + 0.25
MAY     2077 + 20                                               MAY     186.15 + 0.25
JUL      2090 + 20                                                JUL     188.50 + 0.20
SEP      2101 + 21                                               SEP     190.70 + 0.20
NOV     2099 + 21                                                DEC    192.85 + 0.35
JAN      2097 + 21                                               MAR    193.85 + 0.40
MAR     2103 + 21                                               MAY    193.60 + 0.40
MAY     2110 + 21                                                JUL    193.15 + 0.35
JUL      2117 + 21                                                SEP    192.70 + 0.35

3rd. December, 2014.
The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of November were 13,024 bags or 28.27% lower than the same month last year, at a total of 33,048 bags.   This slow start to the new coffee year has contributed to the countries cumulative exports for the first two months of the present October 2014 to September 2015 coffee year to being 18,953 bags or 23.51% lower than the same period in the previous coffee year, at a total of 61,663 bags.

The Coffee Growers Federation in Colombia have reported that the countries coffee production for the month of November was 2,000 bags or 0.18% higher than the same month last year, at a total of 1,115,000 bags.   This contributes to the countries cumulative production for the first two months of the present October 2014 to September 2015 coffee year to be 45,000 bags or 2.07% higher than the same period in the previous coffee year.

Meanwhile the Colombian Coffee Growers Federation have reported that the countries coffee exports for the month of November were 78,000 bags or 7.1% lower than the same month last year, at a total of 1,022,000 bags.    This dip nevertheless follows a more active month of exports in October and therefore the cumulative exports for the first two months of the present October 2014 to September 2015 coffee year are still 5,000 bags or 0.25% higher than the same period in the previous coffee year, at a total of 1,988,000 bags.     

The new Vietnam harvest has experienced some light rain interruptions, which has slowed the delivery of the new crop robusta coffees to the exporters, but with good carryover stocks in hand this has not really disrupted a steady flow of robusta coffees to the consumer markets.  While approximately 40% of the new crop harvest now completed, one can expect that the flow of new crop coffees shall start to build and for the present it is very much business as usual from this leading robusta producer.

Meanwhile the traditional seasonal scare stories are coming forth from the Vietnam Coffee and Cocoa Association, who talk about the new crop to potentially be up to 20% lower than the last crop.  Followed by the Vietnam governments Coordinating Board forecasting a new crop of only 21.67 million bags, which is a rather dramatically modest figure.  But this differs little from the official forecasts and reports in previous years that come to the market during and shortly post the harvest and for the present and thus, such market manipulative reports are not taken seriously.   While albeit early in the month, the trade is talking of December exports of mostly robusta coffee from Vietnam of between 2 million and 2.5 million bags.  

With the new arabica coffee crop well into its new crop harvest in India and the new robusta coffee crop soon to follow, the farmers are disputing the official new crop forecasts and indicate that they foresee the new arabica coffee crop to be 20% lower than the past crop.   This unofficial forecast does not however detract from many other private trade and industry forecasts who foresee that while there has been the usual problems of white stem borer for the arabica coffee farmers, that the new crop shall potentially match the previous arabica crop of approximately 1.6 million bags.   While the general view is that the new Indian robusta crop shall be at least 20%larger than the past crop, at approximately 4 million bags.    Thus the unofficial trade forecasts presently are close to the official Coffee Board of India forecast, which has forecasted a combined new Indian crop of approximately 5.74 million bags.  

The arbitrage between the markets narrowed yesterday to register this at 90.69 usc/Lb., while this equates to a relatively attractive 49.45% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 2,800 bags yesterday, to register these stocks at 2,338,355 bags.   There was meanwhile a larger in volume 4,920 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,525 bags.

The commodity markets had a day of reversal yesterday, with the renewed muscle of the U.S. dollar coming forth to dampen spirits within many markets and to once again pressure the macro commodity index lower.  The Cotton market held steady, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.55% lower; to see this Index registered at 473.22.   The day starts with the U.S. Dollar steady and trading at 1.564 to Sterling and 1.237 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 70.40 per barrel.

The London market started the day with a degree of buoyancy, while New York market started the day modestly softer, with London market maintaining its positive track into the afternoon and the New York market maintaining its negative track.   The New York market continued to take a downside track for the rest of the day and finally had its influence upon the London market, which shed its gains and moved down into negative territory.   The London market continued to end the day on a soft note and with 95.7% of its losses of the day intact, while the New York market shed 3.68% in value for the day and ended the day on a very soft note and with 97.2% of the losses of the day intact.    This very soft overall close does little to inspire and one might expect to see little better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2034 – 29                                               DEC     182.30 – 7.05
MAR     2044 – 22                                               MAR     182.40 – 7.00
MAY     2057 – 22                                               MAY     185.90 – 7.00
JUL      2070 – 20                                                JUL     188.30 – 6.95
SEP      2080 – 19                                               SEP     190.50 – 6.90
NOV     2078 – 19                                                DEC    192.50 – 6.90
JAN      2076 – 19                                               MAR     193.45 – 6.90
MAR     2082 – 19                                               MAY     193.20 – 6.90
MAY     2089 – 19                                                JUL     192.80 – 6.85
JUL      2096 – 19                                                SEP     192.35 – 6.85

2nd. December, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 4,16% in the week of trade leading up to Tuesday 25th. November;  to register a net long position of 37,835 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 6.77%, to register a net long on the day of 39,656 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 15.95%, to register a net long of 35,433 lots on the day.   This net long position that is the equivalent of 10,045,098 bags has most likely been reduced over the period of mixed but overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market increase their net long position within this market by 2.49% in the week of trade leading up to Tuesday 25th. November;  to register a net long position of 23,505 Lots on the day.   This net long position that is the equivalent of 3,917,500 bags has most likely been marginally reduced over the period of mixed but overall more negative trade that has since followed.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of November were 5,889 bags or 5.97% higher than the same month last year, at a total of 104,611 bags.    However in terms of a corrected lower figure for November last year, this increase was a more impressive 116.47% factor.   If one is to go with the corrected figure for November last year, the cumulative exports from Honduras for the first two months of this new October 2014 to September 2015 coffee year are 33,102 bags or 34.51% higher than the same period in the previous coffee year, at a total of 129,024 bags.

The preliminary coffee exports from Brazil for the month of November indicate that the country exported 152,300 bags or 5.62% more bags during this last month than the same month last year, to total 2,864,100 bags for the month.   Thus for the present and despite the lower new crop that has been largely pegged at marginally below 48 million bags, the significant carryover stocks of in excess of 12 million bags of arabica coffees into this new harvest, allow for Brazil to maintain its significant market share within the consumer markets.

The Colombian National Coffee Federation remain confident that the country shall produce at least 12.5 million bags of fine washed arabica coffees during the present October 2014 to September 2015 coffee year, due to the positive effects of a return to normal weather conditions and the increased yields from the high percentage of farms that have replaced aged trees over the past five years.   This figure is very much in agreement with most private trade and industry forecasts and with many already talking the figure higher and it is not impossible that by the end of this new coffee year, that the production might even exceed 13 million bags.

While the fundamental news from most of the producer bloc is related to higher production and is somewhat bearish in nature, the issue of Brazil remains on the board and particularly so the longer term world coffee supply that shall be related to the next 2015 Brazil crop.    With the market in receipt of the Rabobank forecast for an approximate 6 million to 11 million bags deficit 2015 Brazil crop of between 42 million to 47 million bags and followed by the Citi Bank forecast for an approximate 8.3 million bags deficit crop of 44.7 million bags.   While the Citi Bank forecast is that there shall be an approximate 10 million bags deficit in world coffee supply, by 2016.   These reports came to the fore during trade yesterday in time to buoy some speculative spirits within the New York market, where the charts were taking something of a negative track.  

The arbitrage between the markets broadened yesterday to register this at 96.69 usc/Lb., while this equates to a relatively attractive 50.78% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 625 bags yesterday, to register these stocks at 2,335,555 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 8,445 bags.

The commodity markets had an overall hesitant soft start yesterday, following the rather dramatic sell off within many markets on Friday.   There was however as the day progressed and with the U.S. dollar losing some weight something of a return to confidence and with the volatile Oil markets taking the lead, to influence a positive stance for the macro commodity index.   The Oil, Cocoa, New York arabica Coffee, Copper, Wheat, Gold, Silver and Platinum markets had a day of buoyancy and the Sugar and Corn markets ended the day on a steady note, while the Natural Gas, London robusta Coffee, Cotton, Orange Juice and Soybean markets had a softer days trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.63% higher; to see this Index registered at 480.66.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.572 to Sterling and 1.247 to the Euro, while North Sea Oil is relatively steady in early trade and is selling at $ 71.35 per barrel.

The London and New York markets started on the back foot in thin and hesitant trade, but with both markets posting a modest recovery for a brief period, prior to heading back below par and taking a negative track for early afternoon trade and with sell stops extending the losses within the markets, as the afternoon progressed.   There was however a late in the day reversal in sentiment and with the New York market taking a sudden positive turn to trigger stops and to shoot back up into unexpected positive territory, while the London market posted a partial recovery.  The London market continued to end the day on a marginally softer note but with 33.3% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 88.1% of the gains of the day intact.   This late in the day recovery in New York might well set the markets for a cautiously steady start, as players await some further direction from the markets and against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2063 – 11                                               DEC     189.35 + 2.70
MAR     2066 – 4                                                 MAR     190.40 + 2.95
MAY     2079 – 3                                                 MAY     192.90 + 3.00
JUL      2090 – 2                                                  JUL     195.25 + 3.10
SEP      2099 – 1                                                 SEP      197.40 + 3.25
NOV     2097 – 2                                                  DEC     199.40 + 3.40
JAN      2095 + 1                                                 MAR     200.35 + 3.50
MAR     2101 + 1                                                 MAY     200.10 + 3.70
MAY     2108 + 1                                                  JUL      199.65 + 4.00
JUL      2115 + 8                                                  SEP      199.20 + 4.30

1st. December, 2014.
With the month of November over the Indonesian island of Sumatra which dominates the nations robusta coffee production has reported that the islands robusta coffee exports for the month of November were 643,432 bags or 74.80% lower than the same month last year, at a total of 216,789 bags.   This follows a relatively dismal performance in October and therefore the cumulative robusta exports from Sumatra for the first two months of the present new October 2014 to September 2015 coffee year are 1,014,923 bags or 63.52% lower than the same period in the previous coffee year, at a total of 583,000 bags.

This relatively poor performance on the part of robusta coffee supply from Sumatra is of course related to a relatively poor weather related crop this year and one can expect that for the short term and ahead of the new crop that starts to come into play during the second quarter of next year, that the figures shall continue to be relatively modest for the next four to five months.   However the weather conditions have been much improved and the prospects are for a much improved new crop, which should see the Sumatran robusta coffee exports start to pick up and become more aggressive by the third quarter next year and therefore, the last quarter of the present coffee year.

Meanwhile there is another large new Vietnam robusta coffee crop now starting to come to the market and this over and above a good carryover stock of past crop coffees, which shall ensure that there should be no foreseeable hiccups in terms of consumer market robusta coffee supply, albeit that with limited short term competition from Indonesia, the Vietnamese can afford to be restrained and relatively price supportive, in their approach to the market.   Even though with the prospects for improved Indian, Ugandan and West African robusta supply, there shall be some improved volumes of robusta coffee coming from these producers during the first quarter of the coming year.

These additional volumes of Indian and African robusta coffees are however compared to the volumes that are related to Vietnam and Indonesian production, relatively negligible and have little impact upon the overall market prices for robusta coffees.    Likewise the steadily improving volumes of conilon robusta coffee supply within Brazil that is in reality the world’s second largest robusta coffee producer, as these Brazilian robusta coffees by nature of the competitive price to arabica coffees, are mostly absorbed within the countries domestic market and do not have a marked impact upon consumer market robusta coffee supply.  They rather by nature of filling the gap within Brazilian domestic coffee demand, more of an influence upon the supply of export arabica coffees from Brazil and provide some degree of insurance against the recent weather related dip in Brazils arabica coffee crop.

Meanwhile the main arabica coffee districts have experienced good overall November rains and they are due to continue into this month, with the short to medium term weather forecasts so far providing no threat to the prospects for the development of the next 2015 Brazil arabica coffee crop.   Albeit that due to some degree of irreversible damage from the early in 2014 partial drought and the late start to the rains, this next arabica coffee crop can be expected to be nothing better than relatively modest in nature.   They do however in line with the generally soft nature of the macro commodity index, assist to dampen some speculative spirits within the related and still reasonably positive in value, New York arabica coffee market.    

The arbitrage between the markets narrowed on Friday to register this at 93.56 usc/Lb., while this equates to a relatively attractive 49.91% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 3,977 bags on Friday, to register these stocks at 2,336,180 bags.   There was meanwhile a smaller in volume 2,565 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 8,445 bags.

The commodity markets returned to a full team on Friday, following Thursday’s Thanksgiving Holiday for the U.S.A., but with many players taking a long weekend and trade somewhat dulled.   The direction for the overall macro commodity index was however with the Oil markets heading to new five year lows not so lacklustre in nature, with this index coming under severe pressure.   The Orange Juice and Cotton markets did however have a relatively steady day, but with the Oil, Natural Gas, Cocoa, Sugar, Coffee, Copper, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets experiencing a soft end to the shortened week.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 2.53% lower; to see this Index registered at 475.26.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.562 to Sterling and 1.245 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 67.20 per barrel.

The London market started the day on Friday on a hesitantly steady note in thin and lacklustre trade, with the New York market tending softer from the start of the days likewise lacklustre trade.   The negative nature of the New York market which was coming under pressure from the speculative sector that was reacting to both the Brazilian weather news and to the demise of the macro commodity index, did however soon have its influence and the London market likewise headed back into negative territory and a downside track.   The London market continued to end the day on a soft note and with 91.7% of the losses of the day intact, while the New York market ended the day on a very soft note and with 88.9% of its significant losses of the day intact.   This overall weak close does little to inspire and one might expect to see buyers stepping back to wait and see and thus, a steady to soft start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
JAN      2074 – 22                                               DEC     186.65 – 6.85
MAR     2070 – 26                                               MAR     187.45 – 6.80
MAY     2082 – 23                                               MAY     189.90 – 6.70
JUL      2092 – 21                                                JUL      192.15 – 6.75
SEP      2100 – 20                                                SEP     194.15 – 6.55
NOV     2099 – 20                                                DEC     196.00 – 6.50
JAN      2094 – 25                                               MAR     196.85 – 6.40
MAR     2100 – 25                                               MAY     196.40 – 6.30
MAY     2107 – 24                                                JUL     195.65 – 6.35
JUL      2107 – 24                                                SEP     194.90 – 6.55

28th. November, 2014.
It was a very quiet day for the industry yesterday; with the dominant New York arabica coffee market closed for the Thanksgiving Holiday and with most industry players within the rest of the world side-lined by matters of administration, rather than trade.   Leaving the London market to wallow in the doldrums of thin and disinterested trade, as the trade and industry await the return to work of the Americans today, albeit that many shall be taking today as an extended long weekend pre-Christmas shopping holiday.

Meanwhile on the weather front in Brazil the forecasters are looking to the presently overall wet week for the country’s main coffee districts to be concluded with a wet and weekend, with the rains due to weaken for the coming week, but to nevertheless see widespread scattered showers occurring for the coming week.   Likewise into the middle of the following week, to contribute to building ground water retention levels for the coffee farmers and to the steady development of the immature new crop cherries for the coming year.

The question is in terms of the now very normal weather conditions is what shall be the prospects for the forthcoming Brazil crop in 2015, with so many earlier reports speculating that it has been irreversibly damaged and shall in terms of the present 20 million bags plus per annum domestic consumption and export volumes that are expected to be between 31 million and 34 million bags for the coming year, which shall result in a deficit production factor through to the second quarter of 2016.   These deficit forecasts have however somewhat dried up of late and those few that come to the market seemingly now fall upon deaf ears, as players await more reliable data that shall come early in the New Year and based upon new crop developing cherry counts, which shall better define the prospects for this new crop.  

Thus with the rain issues in Brazil for the present not proving to be a matter of concern and the forecasts for the coming month not indicating any reason to fear any further short term weather threat, one can expect to see the Brazil new crop factor to be less influential upon the markets for the coming weeks.   But one might expect following this year’s rather dramatic partial drought over the main arabica coffee districts, expect to see some degree of caution on the part of the speculative sector of the market, until they see how the weather shall perform for the start of the first quarter of 2015.

Meanwhile the larger new Central American crops are starting to be harvested and with a large new Colombian main crop already in play, to see fine washed arabica supply at levels more than sufficient to satisfy consumer market demand.   This is likewise the case with robusta coffee supply where despite the usual scare stories that emanate at this time of the year in terms of the new Vietnam crop, most industry players are still banking on the presently in harvest new Vietnam crop to be another good one and to be supported next year by improved levels of robusta coffee production from India, Uganda and Indonesia.

There remains however in terms of new crop supply a deficit supply from Brazil of natural arabica coffees, but with this deficit being countered by the large volumes of Brazil carryover 2013 stocks, there remains for the present no threat to short to medium term supply.  Thus while for the present the longer term in nature speculative sector of the coffee markets remain cautiously bullish, the physical trade is less confident and is overall cautions and short term in nature.  This contributing to somewhat unseasonal lacklustre physical coffee trade, with good volumes of new coffees on offer and chasing a market, which lacks aggressive buying demand.

The arbitrage between the markets albeit against a closed previous days value in New York narrowed yesterday to register this at 99.27 usc/Lb., while this equates to a relatively attractive 51.10% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 116 bags on Wednesday, to register these stocks at 2,340,157 bags.   There was meanwhile a larger in volume 3,160 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 5,880 bags.

The commodity markets which are dominated by the U.S.A. based markets were mostly closed yesterday, but with the London markets operating in thin trade.    The London Cocoa market showed some buoyancy in thin trade with the perspective of tight longer term supply providing some degree of support, while the prospects for good rains in Brazil dampened spirits within the London Sugar market and the London robusta Coffee market remained relatively steady.  The London Brent Oil market was however an item, as this market collapsed against the news that there will not be any cutting of supply from the OPEC producers, while the Gold, Silver and Copper markets also had a softer day.  There was of course no change to the Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets (with many closed); to see this Index registered at 485.26.   The day starts with the U.S. Dollar showing early buoyancy and trading at 1.571 to Sterling and 1.245 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 71.55 per barrel.

The London market started the day yesterday with early buoyancy in thin trade, to take a marginally positive sideways track into the afternoon.   There was however with thin trade accentuating any moves a short dip below par in the afternoon but with the market soon recovering and finally ending the day on a hesitantly steady note.  This provides little indication for direction for today but one might expect that with the firmer nature of the U.S. dollar and the lack of supportive weather related fundamental news from Brazil, that the markets shall tend towards a negative track for early trade today against the close yesterday in London and on Wednesday in New York, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2096 + 1                                                 DEC     193.50 – 0.75
JAN      2096 unch                                             MAR     194.25 – 0.80
MAR     2094 – 3                                                 MAY     196.60 – 0.75
MAY     2105 – 4                                                  JUL     198.90 – 0.75
JUL      2113 – 4                                                  SEP     200.70 – 0.75
SEP      2120 – 4                                                 DEC     202.50 – 0.65
NOV     2119 – 5                                                 MAR     203.25 – 0.50
JAN      2119 – 5                                                 MAY     202.70 – 0.50
MAR     2125 – 5                                                  JUL     202.00 – 0.45
MAY     2131 – 5                                                  SEP     201.45 – 0.40

27th. November, 2014.
The well respected United States Department of Agriculture have dampened some new found bullish spirits that came with some forecasts for a smaller new crop of mostly robusta coffees from Vietnam that is presently heading into its peak harvest, with their assessment that this new crop shall only be marginally lower at a total of a still impressive 29.3 million bags.   This forecast is close to 2 million bags higher than some of the recent trade forecasts that have come to the market and is a report that indicates business as usual from Vietnam, for this new October 2014 to September 2015 coffee year and with the report forecasting exports for the coffee year to potentially be in the region of a steady 26.6 million bags.

The Indonesian Coffee Exporters and Industries Association have increased their earlier assessment of this year’s coffee crop and have reported that nevertheless due to the poor weather conditions late last year and earlier this year, that the country’s coffee crop for 2014 was 9.46% to 12.16% lower than the previous year’s crop, at a total of between 10.83 million to 11.17 million bags.  This figure is 833,330 bags to 1,166,667 bags higher than their earlier in the year forecast, while it is a figure that is significantly better than some of the earlier trade and industry reports that had indicated this year’s Indonesian crop to be approximately 9 million bags and with some even talking it a bit lower.   The same AEKI report has also reconfirmed that due to much improved weather conditions for the second half of this year that the crop for the forthcoming year shall most probably exceed 11.6 million bags, but still lower than the broadly accepted 2013 crop of 12.33 million bags.

As against this more positive production forecast from Indonesia the report has forecasted that domestic coffee consumption shall continue to rise and shall potentially be in the region of 5.83 million bags of the coming year, which would indicate that despite the potential for improved production, it shall not impact in any dramatic manner upon the countries coffee export potential for 2015.  Albeit that within the countries impressive domestic consumption, they estimate that Indonesia shall import approximately 1.67 million bags of low value robusta coffees to supplement the internal market demand and to allow for additional volumes of higher value Indonesian robusta coffees to be exported.

What remains a matter of concern in Indonesia is that with and indicated 1.3 million hectares of coffee farms and under normal weather conditions a production of approximately 12.33 million bags or 740,000 metric tons per annum that average coffee yields are still at a very modest 569 Kgs. per hectare, while this year the weather affected crop produced even lower average yields.   The question is how soon the wide range of state and private industry farm extension and support services shall start to impact upon improved farm husbandry and inputs and finally yields, so as to see Indonesia even from its existing coffee farms to look to raise production levels of in excess of 18 million bags per annum.    It shall take time, but with the additional support of a vibrant domestic consumption, one might expect to see the country start to get closer to such a target in the coming 7 to 10 years.   

The Uganda Coffee Development Authority have reported that year on year coffee exports for the month of October were 18,886 bags or 8.97% higher than the same month last year, at a total of 229,438 bags.   Further to this they have reported that the value of these October 2014 coffee exports was US$ 7,930,885.00 or 34.88% higher than the same month last year, at a total of US$ 30,669,004.00.   This latter value factor and with the free market nature of the Ugandan coffee industry that provides for fast cash flow for the farmers, continues to inspire the countries farming community and is evident by the significant numbers of new coffee trees that are being planted out throughout the main coffee districts of the country.  Thus indicating that the country potentially shall be looking to increase it coffee exports that are presently and approximate 78 to 22 mix of robusta and arabica coffees and are around 3.5 million bags per annum, to levels that should exceed 4 million bags per annum within the next three to five years.   

The arbitrage between the markets narrowed yesterday to register this at 99.13 usc/Lb., while this equates to a relatively attractive 51.03% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 116 bags yesterday, to register these stocks at 2,340,157 bags.   There was meanwhile a larger in volume 3,160 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 5,880 bags.

The commodity markets were generally lacklustre and mixed yesterday, as players started to look to today’s Thanksgiving Holiday in the U.S.A., which shall be extended into a long weekend for many players.   The Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Gold, Silver and Platinum markets showed buoyancy and the London robusta Coffee market was steady for the day, while the Oil, Natural Gas, New York arabica Coffee, Copper and Soybean markets had a softer days trade.    The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% lower; to see this Index registered at 485.26.   The day starts with the U.S. Dollar steady and trading at 1.579 to Sterling and 1.251 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 75.90 per barrel.

The London market started the day yesterday with early buoyancy and likewise the New York market, but this latter New York market very quickly lost its way and headed back into negative territory, while the London market retained its buoyancy.     This remained the track into the afternoon’s trade with London remaining above par and New York below par and within an environment of thin and lacklustre pre-holiday trade.   The London market did however lose its way late in the day and shed its gains to end close to par, while the New York market posted a partial recovery and ended the day on as soft note but with only 23.9% of the earlier losses of the day intact.    The New York market is closed for the day and one might expect that this shall side-line the majority of the players within the London market, which can be expected to encounter thin and lacklustre erratic trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2095 unch                                              DEC     193.50 – 0.75
JAN      2096 + 1                                                 MAR     194.25 – 0.80
MAR     2097 unch                                              MAY     196.60 – 0.75
MAY     2109 unch                                               JUL     198.90 – 0.75
JUL      2117 – 1                                                  SEP      200.70 – 0.75
SEP      2124 – 1                                                  DEC     202.50 – 0.65
NOV     2124 – 1                                                  MAR     203.25 – 0.50
JAN      2124 – 1                                                  MAY     202.70 – 0.50
MAR     2130 – 1                                                   JUL     202.00 – 0.45
MAY     2136 – 1                                                   SEP     201.45 – 0.40

26th. November, 2014.
With export registrations in hand for the month, the General Statistics Office in Vietnam have forecasted that the country’s exports of mostly robusta coffees during the month of November shall be 18% higher than the same month last year, at a total of approximately 1.58 million bags.   This figure they report would result in the countries cumulative exports for the first two months of this new October 2014 to September 2015 coffee year being 34.8% higher than the same period in the previous coffee year, at a total of 3.18 million bags.

This official November export figure is however somewhat lower than the private trade and industry forecasts from within the country, who had been looking a s sharply higher export performance for the month of between 2 million and 2.5 million bags.    Thus one might suggest that with the trade and industry who hold the export contracts being somewhat higher in their perspective of the months exports, that one might expect to see the official figure amended a little higher post the close of the month.

The debate over the deficit coffee supply for the present October 2014 to September 2015 coffee year continues and with the world demand factor being questioned as much as the figure for this year’s Brazil crop, which fuels supply for the period.    Presently the usually more reliable trade and industry perspective is for a Brazil crop that has been between 47 million and 48 million bags and thus fuelling a coffee year crop and supply of approximately 144 million bags, but with some still talking a Brazil 2014 crop number as low as 43 million bags and some of over 50 million bags.   Thus contributing to a degree of confusion and therefore, to a broad range of coffee supply figures for this new coffee year.

It is likewise the world demand that is proving really very difficult to estimate and with forecast estimates that vary between 147 million bags and 154 million bags and with around 150 million bags being seen to be realistic for many within the market, but with questions to be asked over the prospects for both stability of consumption within the leading European and North American markets and the prospects of consumption within some of the leading producer internal markets, where economic pressure might dent potential.   In this respect one would suggest that from the evidence of consumption levels from some of the leading Western European markets this year and with economic issues dampening purchasing power within some Eastern European markets that Europe might struggle to maintain its demand of approximately 51 million bags per annum, while the North American market might not expect to see much in the way of growth and likewise the leading producer consumer Brazil, where economic problems continue to suppress purchasing power.

Meanwhile there are a wide range of deficit forecasts coming forth within the market that vary between 4 million and 13 million bags and a range one would say, that leaves a good degree of confusion within the market.  Albeit that with Brazil alone having brought a carryover stock of past crop coffees of approximately 12 million bags into their new crop, there is presently no reason to be concerned over short to medium term coffee supply.   There remains however good reason to be concerned over the prospects for the 2015 Brazil crop and the speculation over this crop continues to have its influence, with the prevailing fair to good rains in Brazil being ignored by many forecasters, who look to the negative influences of irreversible damage caused by the early in the year partial drought and the late start to the new Brazil rain season to result in a relatively low 2015 Brazil crop.   This speculation that presently indicates a good chance for tightening coffee supply for the follow on 2015 to 2016 coffee year is assisting to support the sentiment of the speculative bulls within the market and likewise, to see the New York market remain within its present relatively firm trading range.

The arbitrage between the markets broadened yesterday to register this at 99.93 usc/Lb., while this equates to a relatively attractive 51.23% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 11,005 bags yesterday, to register these stocks at 2,340,273 bags.   There was meanwhile a smaller in volume 1,920 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 9,040 bags.

The commodity markets were mixed yesterday, with the stalled rise in the value of the dollar assisting many markets to show a degree of stability, but with the Oil markets remaining with their negative sentiment.  The Natural Gas, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Sugar and London robusta Coffee markets were near to steady, while the Oil, Cocoa, Copper and Orange Juice markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.40% higher; to see this Index registered at 485.36.   The day starts with the U.S. Dollar steady and trading at 1.571 to Sterling and 1.248 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 77.30 per barrel.

The London market started the day on a soft note, but with the New York market showing early buoyancy following the previous day’s late dip in confidence.   The New York market came under some pressure to dip back into negative territory during the afternoon but soon recovered and with technical support and thin producer price fixation selling volumes assisting the market to return to a steady upside track, while the London market retained its softer stance.   The London market did however recover most of its losses as the afternoon progressed and ended the day near to steady and having recovered 78.9% of the earlier losses of the day, while the New York market ended the day on a firm note and with 77.1% of the gains of the day intact.   This overall steady to positive close is perhaps supportive for sentiment, but one can expect little excitement for trade today ahead of tomorrow’s Thanksgiving Holiday for the New York market, with many players likely to extend this into a long weekend, but one might expect to see a thinly traded near to steady start of the markets for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2095 – 2                                                  DEC     194.25 + 4.60
JAN      2095 – 4                                                 MAR     195.05 + 4.55
MAR     2097 – 3                                                 MAY     197.35 + 4.45
MAY     2109 – 3                                                  JUL      199.65 + 4.50
JUL      2118 – 3                                                  SEP      201.45 + 4.50
SEP      2125 – 3                                                  DEC     203.15 + 4.50
NOV     2125 – 4                                                  MAR     203.75 + 4.45
JAN      2125 – 3                                                  MAY     203.20 + 4.40
MAR     2131 – 3                                                   JUL     202.45 + 4.35
MAY     2137 – 3                                                   SEP     201.85 + 4.30

25th. November, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market reduce their net long position within this market reduce their net long position within this market by 10.02% in the week of trade leading up to Tuesday 18th. November;  to register a net long position of 22,933 Lots on the day.   This net long position that is the equivalent of 3,822,167 bags has most likely been little changed to perhaps marginally higher over the period of mixed but overall more positive trade that has since followed.

The United States Department of Agriculture has forecasted that with rising domestic coffee demand within Indonesia and based on this year’s more modest weather affected crop, that the countries prospects for coffee exports over the October 2014 to September 2015 coffee year shall be 4.35% lower than the previous coffee year, at a total of 6.9 million bags.   One might comment however that with the prospects so far for more normal weather conditions for the foreseeable future, that one might expect that the country shall see export volumes start to pick up during the last few months of this coffee year and potentially with unforeseen weather problems aside, to recover for the follow on 2015 to 2016 coffee year.

In this respect to see Indonesia bring in a 2 million to perhaps as much as 3.5 million bags larger new crop, which shall add significantly to its export potential, with these larger new crop starting to impact upon exports from as early as June 2015.   Thus based on the export potential indicated by the United States Department of Agriculture, one might expect to see Indonesian coffee exports for the follow on October 2015 to September 2015 coffee year potentially being in the region of 7.5 to 9 million bags.   These exports heavily weighted towards an approximate 77% share of robusta coffees, with robusta coffee still dominating the countries production.

The question still remains however in terms of Indonesia, as to when their farmers shall upgrade their farm husbandry and farm inputs, as they presently operate with a great degree of inefficiency.    Many in this respect foresee a potential for the country to very easily look to increase overall yields and with the potential to add 4 to 6 million bags per annum to their present production levels that with normal weather conditions are around 12 to 13 million bags per annum, but the inspiration for such improvements are likely to still take a few years to come to fruition.  Albeit that there are many state and private industry programs now in play within Indonesia that are designed to increase the countries coffee farm yields, which must ultimately prove to be successful and especially so, as the farmers shall be further inspired by the support of a growing domestic consumption.

The new Vietnam crop is presently in full swing and with approximately 30% already harvested, but with these new crop coffees still to impact in significant volume within the mills and export houses in Ho Chi Minh City.  There is no doubt however that these coffees shall start to come into play by the end of the year and despite some reports that this new crop of mostly robusta coffees might be a little lower than the last crop, there are still forecasts in play, for another large new crop.

Overall for the present and with good steady rains in Brazil in play, larger new Colombian and Central American crops having started and still some questions over modestly negative figures from Asia, the markets are lacking strong supportive news to fuel the speculative bulls.   While with the majority of the consumer market industries relatively well stocked and mostly only looking to cover small volumes of fill in stocks, the physical coffee traded remains lacklustre in nature.   This scenario one would think with the large U.S.A. market due its annual thanksgiving holiday on Thursday 27th. November and with many to extend this into a long weekend, shall see the markets remain slow into the coming week.

The arbitrage between the markets narrowed yesterday to register this at 95.25 usc/Lb., while this equates to a relatively attractive 50% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 2,700 bags yesterday, to register these stocks at 2,351,278 bags.   There was meanwhile a larger in volume 9,600 bags decline in the number of bags pending grading for this exchange; to register these pending grading stocks at 7,120 bags.

The commodity markets tended to shrug off their positive stance that came into play at the end of last week, to see the macro commodity index start to wane later in the day yesterday.   The Cocoa, London robusta Coffee, Orange Juice, Wheat and Platinum markets had a day of buoyancy and the New York arabica Coffee and Gold markets fell back to barely hold steady, while the Oil, Natural Gas, Sugar, Copper, Wheat, Corn, Soybean and Silver markets had a softer day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.44% lower; to see this Index registered at 483.44.   The day starts with the U.S. Dollar steady and trading at 1.569 to Sterling and 1.243 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 78.80 per barrel.

The London and New York markets started the day yesterday showing early buoyancy and with both markets building on their gains into the afternoon, albeit within and environment of thin trade.  The London market added and impressive $ 34.00 per Mt. or 1.64% in value and the New York market with buy stops being triggered an even more impressive 7.10 usc/Lb. or 3.72% in value, but with trade remaining thin the markets hit a ceiling and took a sideways positive track as the afternoon progressed.  The London market continued to end the day on a positive note and with 61.8% of the earlier in the day gains intact, but the New York market faltered and came under late in the day pressure and shed all its gains to end the day marginally below par.    This rather dismal close for the influential New York market does little to inspire confidence and one might expect to see a follow through steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2097 + 21                                               DEC     189.65 + unch
JAN      2099 + 21                                              MAR     190.50 – 0.20
MAR     2100 + 20                                              MAY     192.90 – 0.20
MAY     2112 + 19                                               JUL     195.15 – 0.20
JUL      2121 + 18                                               SEP     196.95 – 0.15
SEP      2128 + 18                                               DEC    198.65 – 0.05
NOV     2129 + 18                                               MAR    199.30 – 0.20
JAN      2128 + 18                                               MAY    198.80 – 0.20
MAR     2134 + 18                                                JUL    198.10 – 0.25
MAY     2140 + 18                                                SEP    197.55 – 0.15

24th. November, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 3.39% in the week of trade leading up to Tuesday 18th. November;  to register a net long position of 36,324 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 2.12%, to register a net long on the day of 44,536 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 9.12%, to register a net long of 30,560 lots on the day.   This net long position that is the equivalent of 8,663,625 bags has most likely been little changed to perhaps marginally lower over the period of mixed but overall marginally negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Centre in Nicaragua have reported that the countries coffee exports for the month of October were 59,021 bags or 148.39% higher than the same month last year, at a total of 98,796 bags.  They have at the same time forecasted that they can expect that with the new crop harvest already starting, that they can expect that this new crop shall be approximately 7% higher and therefore, to fuel increased export volumes for this new October 2014 to September 2015 coffee year.

The National Cocoa and Coffee Board of the Cameroun who work on a December to November robusta coffee year have reported that robusta coffee exports for the first eleven months of the present 2013 to 2014 coffee year were 64,500 bags or 26.37% higher than the same period in the previous coffee year, at a total of 309,050 bags.  Meanwhile with the countries smaller arabica coffee crop being reported on the basis of a more conventional October to September coffee year and following a 13.76% lower export performance of a modest 36,250 bags for the 2013 to 2014 coffee year, that the exports in October this year were 1,883 bags or 1,127.54% higher than the same month last year, at a total of 2,050 bags.  

Weather forecasts from Brazil indicate that the country’s main arabica coffee districts shall be in receipt of fair to good overall rains for this week, to assist to end off the month with more than sufficient rainfall to support the development of the new 2015 crop.    This does not however change the general perspective that due to the partial drought over many of the arabica coffee districts for the first two months of this year and followed by a two to three week delay to the start of the new spring and rain season in Brazil, that the next 2015 Brazil crop is likely to be relatively modest.    However the forecasts for this new crop remain mixed, with some having indicated next year’s crop to possibly be as low as 43 to 45 million bags, while others have forecasted that it might well exceed 50 million bags and with many private trade and industry players indicating that it is still too early to provide and accurate forecast for this next Brazil crop.

The coffee trade house Volcafe and E D & F Man have reported that they have reduced their forecast for the new Vietnam crop that they had previously assessed to be close to 30 million bags to a more modest figure of 27.4 million bags, while they have assessed the just completed new Brazil crop to have been 47 million bags.  These factors they foresee shall result in a global deficit coffee supply for the present October 2014 to September 2015 coffee year of approximately 10 million bags.   They do however note within the report that this deficit shall be countered by their assessment that there was an overall 11 million bags surplus in global coffee supply over the previous two coffee years, which shall counter this deficit.  Therefore one might comment that the face value market supportive nature of this report that came to the table on Friday and despite the possibility that while a smaller Vietnam crop of mostly robusta coffees might tighten up medium term robusta coffee supply, that the report indicates that there is unlikely to be any reason for concern until post the next and still questionable 2015 Brazil crop.  

The March to March 2015 arbitrage between the markets broadened on Friday to register this at 96.35 usc/Lb., while this equates to a relatively attractive 50.52% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire 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 decrease by 750 bags on Friday, to register these stocks at 2,348,578 bags.   There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,720 bags.

The commodity markets gained some degree of support on Friday from the news that China is lowering interest rates to assist to buoy their economic growth and likewise that the European Central Bank is planning to take steps to provide finance, so as to stimulate the presently flat Euro zone economy.   The Brent Oil, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and the London robusta Coffee market was steady, while the U.S. Oil, Natural Gas, Sugar and Cocoa markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.43% higher; to see this Index registered at 485.57.   The day starts with the U.S. Dollar tending easier and trading at 1.567 to Sterling and 1.240 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 79.85 per barrel.

The London market started the day on Friday on a softer track, while the New York market started with a degree of buoyancy, but to move back to join the London market below par in the afternoon’s trade.   The New York market did however attract support at the lows and recover to move back into positive territory as the afternoon progressed and with the London market finally following suit, to recover its losses of the day by the close.  The London market ended the day on a steady note, while the New York market retained its positive stance to end the day with 77.1% of the earlier gains of the day intact.   This overall positive close to the week and with a marginally softer U.S. dollar in play is likely to be supportive for a steady to buoyant start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV      2076 + 1                                                 DEC     189.65 + 1.95
JAN      2078 unch                                              MAR     190.70 + 1.85
MAR     2080 + 1                                                  MAY     193.10 + 1.90
MAY     2093 + 2                                                   JUL     195.35 + 1.95
JUL      2103 + 2                                                   SEP     197.10 + 2.00
SEP      2110 + 2                                                  DEC     198.70 + 2.05
NOV     2111 unch                                               MAR     199.50 + 2.05
JAN      2110 unch                                               MAY     199.00 + 2.10
MAR     2116 unch                                               JUL      198.35 + 2.15
MAY     2122 unch                                               SEP      197.70 + 2.15

21st November, 2014.

The arbitrage between the markets narrowed yesterday to register 94.60 usc/Lb., while this equates to a relatively attractive 50.09% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire 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 decrease by 525 bags yesterday, to register these stocks at 2,349,328 bags. The number of bags pending grading for the exchange registered was unchanged on the day, at a total of 16,720 bags pending grading for exchange. 

The commodity markets tended to steady yesterday, with the influential Oil markets halting their slide and tending to bring some buoyancy to the markets, ahead of the OPEC meetings set to take place next week. There was a round of lower than expected economic growth data from China however which weighed in on sentiment, while the US Dollar slipped back against other major currencies on the day.  It was a positive day for Oil, Gold, Silver, Platinum and Palladium markets, Corn, Soybean, Wheat, Sugar, Orange Juice were firmer.  It was however a softer day for Sugar, Cocoa, Coffee, Cotton and Copper.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.42% higher; to see this Index registered at 483.51.  The day starts with the U.S. Dollar steady and trading at 1.5682 to Sterling and 1.249 to the Euro, while North Sea Oil is steady in early trade and selling at US$ 76.97 per barrel.  

The London market started the day on a softer note and followed by a lower opening in New York, although London found some underlying support in very thin trade to see this market move into positive territory in the early part of the day.  The tone in New York was mildly negative with some underlying fixation activity propping up the floor, both markets moved in the afternoons trade with volumes relatively modest with an absence of sturdy speculative buying support the market quickly gapped lower to set a new floor for the afternoon trade which once touched attracted speculative buyer support back into the fray and a steady rise back to the middle of the days trading range.  The London Robusta market took some time to respond although finally succumbed to the lower sentiment on this much more muted market.  The latter half of the day however found New York once more lacking in impetus and fundamental news, with positive production reports dampening speculative sentiment and the earlier partial recovery in New York was once more met with speculative liquidation, to see this market end the day on the lows of the session.  The London robusta market managed a modest recovery from the lows in this market, close to the end of the session and an overall softer day for the markets yesterday, to set the close as follows:  

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

NOV 2075 – 13 DEC 187.70 – 10.15
JAN 2078 – 13 MAR 188.85 – 10.25 
MAR 2079 – 13 MAY 191.20 – 10.25
MAY 2091 – 11 JUL 193.40 – 10.10 
JUL 2101 – 8 SEP 195.10 – 10.00
SEP 2108 – 8 DEC 196.65 –   9.95 
NOV 2111 – 8 MAR 197.45 –   9.85 
JAN 2110 – 7 MAY 196.90 –   9.75 
MAR 2116 – 7 JUL 196.20 –   9.50 
MAY 2122 – 7 SEP 195.55 –   9.45