22nd. September, 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 16.18% in the week of trade leading up to Tuesday 16th. September;  to register a net long position of 36,691 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 1.22%, to register a net long on the day of 46,294 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 20.13%, to register a net long of 26,986 lots on the day.   This net long position that is the equivalent of 7,650,411 bags has most likely been further decreased over the period of overall softer trade that has since followed and likewise, the net long position of the Managed Money Funds.

The firmer nature of the U.S. dollar is having its impact upon commodity markets in general, but in terms of the coffee markets that are weighted in terms of influence towards the more volatile New York arabica coffee market the combination of the prospects for a normal rain season in Brazil that is dampening speculative concerns for the next 2015 crop and the weaker Brazil real that is encouraging internal market sales and the negative effects of price fixation hedge selling, is impacting negatively upon the market.    The issue of the quality of the new rain season is of course still to be determined and remains until such time as the rains are actually forthcoming in good volume a factor that can still be market supportive, but the steady selling within Brazil of the combination of both past crop and new crop stocks does make one question if the farmers new rains aside, truly believe in the earlier reports that the trees were damaged to a degree that they shall impact severely upon the prospects for the next arabica coffee crop.

One would comment that with the sophisticated nature of the Brazil farming community, that if the farmers believed that there was rain aside good reason to forecast that the next 2015 arabica coffee crop shall be a very modest deficit crop and therefore giving them two years to sell their stocks, they would not be so aggressive in their selling activities.   Rather that they would be showing price resistance towards the countries exporters, which would manifest itself in firming differentials for new business, which is not really the case at present.

There is meanwhile little in the way of concern over medium to longer term robusta coffee supply, with the prospects for a large new Vietnam crop eliminating the ability of the internal markets in Vietnam, Indonesia and the African robusta producers to show price resistance.   Thus allowing for the softening London market to follow the New York market into softer territory last week and continuing offering the price sensitive consumer roasters good discounts to encourage the use wherever possible, of robusta coffees in their blends.   Making note that the surging market share that is being gained by the capsule sector of the developed consumer markets is conducive to the increased percentage usage of robusta coffees, as the extraction process of these capsule machines are somewhat friendly towards the robusta coffees.    

The arbitrage between the markets narrowed on Friday to register this at 90.00 usc/Lb., while this equates to a relatively attractive 50.56% 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 1,165 bags on Friday, to register these stocks at 2,391,528 bags.   There was meanwhile a similar in volume 1,285 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,565 bags.

The commodity markets ended the week on an overall softer note and with the macro commodity index losing its way, with the firmer nature of the U.S. dollar assisting to dampen spirits within many markets with the exception of the Cocoa markets, where speculators fear the Ebola problems in West Africa might disrupt internal market trade and delivery.   The Brent Oil did however buck the negative trend and show buoyancy, while the Cocoa market surge, but with the U.S. Oil, Natural Gas, Sugar, 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 that is made up from 17 markets is 0.86% lower; to see this Index registered at 489.29.   The day starts with the U.S. Dollar steady and trading at 1.634 to Sterling and 1.286 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 96.90 per barrel.

The London market opened the day on Friday taking a soft stance in early trade, but with the New York market showing some modest buoyancy in thin trade.    The London market recovered some of its losses in the early afternoon, while the New York market retained its modest buoyancy, but with the New York market starting to lose its way as volume picked up during the afternoon and finally joining the London market in negative territory.   The New York market with the negative effects of the macro commodity index playing its part and joined by producer price fixation hedge selling triggered short term speculative sell stops which extended its losses, but tending to bounce off the lows as the day progressed.   The London market continued to end the day on as soft note and with 55.3% of the earlier losses of the day intact, while the New York market likewise ended the day on a soft note and with 66.7% of the earlier in the day’s losses intact.    This overall soft close is unlikely to inspire much better than a steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1930 – 36                                                         
NOV     1940 – 21                                                DEC     178.00 – 3.20
JAN      1953 – 21                                                MAR    182.20 – 3.15
MAR     1966 – 20                                                MAY    184.65 – 3.15
MAY     1980 – 16                                                 JUL    186.25 – 3.15
JUL      1992 – 13                                                 SEP    186.85 – 3.05
SEP      2000 – 12                                                DEC    187.20 – 3.15
NOV     2007 – 12                                                MAR    187.70 – 3.10
JAN      2012 – 10                                                MAY    188.20 – 3.10
MAR     1986 – 10                                                 JUL    188.65 – 3.15

19th. September, 2014.
Brazil somewhat rained on the market yesterday, with the forecasts for rain showers due over the weekend for the main arabica coffee districts and followed by more rains for later next week, dampened many speculative spirits within the market.   But more damaging for speculative confidence was the longer term forecast by the respected Brazilian meteorologists Somar, that rainfall for the spring and summer rainfall season is likely to be above average.   

The most noticeable factor in the coffee markets is the lacklustre nature of trade that prevails and at a time when the markets would traditionally be showing some early winter roasting season aggression, which is indicative of the suspicion on the part of many of the consumer market industry that the inherent damage done the partial drought early in the year to the coffee trees in the main central arabica coffee districts in Brazil, might not be as bad as many have been suggesting.   Therefore taking the stance that so long as the rains are normal for the coming spring and summer rain season for the country, that the 2015 crop shall not be severely threatened and with the combination of both the past months of free selling activity on the part of Brazils farmers who should know best and the latest weather forecasts, tending to support their reluctance to support the markets.   

The largely reported smaller coffee crops in Indonesia this year have been further illustrated by the coffee exports for the first six months of this year, as reported by Bank Indonesia.    They have in this respect, reported that the coffee exports for the first six months of the year were 27.65% lower than the same period in the previous year, at a total of close to 2.62 million bags.  

If one is to loosely apply the same discount figure to the annual export figure and with the Bank Indonesia exports for 2013 having been pegged at 8.85 million bags, it would indicate that the country’s coffee export potential for 2014 shall not exceed 6.4 million bags.   This figure would even seem a little high, as the indications from many private trade and industry players are already talking figures that might not be much more than 5 million bags.

Nevertheless with the weather conditions so far, all indications are for the coffee crops in Indonesia to recover for next year, which should likewise see their coffee exports improve by at a guess around 2 million bags of the coming year.   These exports of between 7.5 million to 8 million bags related to an approximate 81 to 19 ratio of robusta and arabica coffees.

The arbitrage between the markets narrowed yesterday to register this at 92.25 usc/Lb., while this equates to a relatively attractive 50.91% 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 2,945 bags yesterday, to register these stocks at 2,390,363 bags.   There was meanwhile a larger in volume 5,080 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,850 bags.

The Certified Robusta coffee stocks held against the London market were seen to increase by 163,833 bags in the two weeks of trade leading up to Monday 15th. September, to register these stocks at 1,615,500 bags.   These stocks with the free flow of robusta coffees still coming to the market and due to continue post the large new Vietnam crop, likely to steadily increase over the coming months.     

The commodity markets had another soft day yesterday; with the strong U.S. dollar continuing to dampen sprits within many markets, as does the prospects of slower growth in China contribute degree of lack of confidence.   The Cocoa and Orange Juice markets took a positive stance for the day and the north sea Oil and Corn markets were steady, while the U.S. Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Wheat, 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 1.04% lower; to see this Index registered at 493.54.   The day starts with the U.S. Dollar near to steady and trading at 1.645 to Sterling and 1.291 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 97.30 per barrel.

The London market opened the day yesterday tending softer, while the New York market showed some modest buoyancy and this remained the track into the afternoon.   Trade was however near to dormant and the London market was eventually joined within negative territory by the New York market, which picked up a little in volume and to take the market on a downside track.    Both the markets lacked volume, while with Brazil weather playing its part and along with the soft nature of the macro commodity index having an influence, never recovered and ended the day on a soft note and close to the lows of the day.    This overall soft close is unlikely to inspire confidence and one would think shall see the market experiencing some follow through softness for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1966 + 10                                                           
NOV     1961 – 16                                               DEC     181.20 – 3.65
JAN      1974 – 16                                               MAR    185.35 – 3.65
MAR     1986 – 14                                               MAY    187.80 – 3.60
MAY     1996 – 12                                                JUL    189.40 – 3.55
JUL      2005 – 11                                                SEP    189.90 – 3.55
SEP      2012 – 11                                               DEC    190.35 – 3.45
NOV     2019 – 12                                               MAR    190.80 – 3.40
JAN      2022 – 16                                               MAY    191.30 – 3.40
MAR     1996 – 17                                                JUL    191.80 – 3.40

18th. September, 2014.
The markets were devoid of fundamental news yesterday, with all main producer blocs with the exception of Brazil presently looking to rising coffee supply for the coming year and forwarding nothing in the way so far, of threatening weather forecasts.   This aside from the strong chance of a new El Nino developing within the Pacific Ocean in the coming months, but foreseen so long as it is only a mild one, to not cause a severe drought for the Pacific rim coffee countries.

Thus with a lack of market supportive news forthcoming from the majority of the producer blocs the focus remains on the forthcoming Brazil rain season and its influence over the next 2015 crop and with the somewhat exhausted speculative sector of the markets, waiting for some defining news with these forthcoming rains.  So far there are forecasts for rain showers in the coming days and on the medium terms, bouts of rain due during the coming month, but nothing extreme or persistent and one might expect that there shall be dry weather fears voiced from time to time over the next five to six weeks, albeit that some might be market manipulative in nature.

The possibility of such reports could perhaps be foreseen to be market supportive and with this in mind, the probability is that there is little likelihood for any market selloff dramatic dip in value and that the markets could hold within their present trading range, with prices presently tending towards the lower side of this range.   While with the consumer industry players presently taking a wait and see and almost hand to mouth buying stance, one might think that there is much more buying to come during the forthcoming higher volume winter season and therefore, an industry support factor to step in and counter any speculative dips in value.

One might question however what might happen should the Brazil rain season prove to be normal and conducive for a reasonable crop for Brazil next year, what shall be the effect upon the markets by the first quarter of next year and by when there shall be a flood of new crop coffees coming to the markets from Mexico, Central America, Colombia, Vietnam, India and East Africa.   This might well start to put some pressure upon the markets, which would perhaps start to dampen speculative spirits as investors look to alternative investments to coffee.

Overall however and with a Brazil dictated overall deficit coffee supply for the coming coffee year and despite a flat European market consumption, the modest steady growth in consumption in North America and the more impressive growth in consumption within the developing Asian markets the longer term perspective is modestly positive for the longer term markets.   Thus one might expect that even if there are no supportive weather issues forthcoming from Brazil, that there is little chance for more than a modest longer term negative correction to come with good weather reports from Brazil.

One might further comment in terms of sustainability of longer term coffee supply, that the present value of the coffee markets is in terms of the overall steadily rising costs of production for the majority of the producers, a relatively realistic value.   With such value necessary if the markets are to inspire the continued growth in overall production on the longer term, which shall be necessary to fuel the prevailing steady growth in world consumption.  

The arbitrage between the markets narrowed yesterday to register this at 95.17 usc/Lb., while this equates to a relatively attractive 51.48% 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 1,605 bags yesterday, to register these stocks at 2,387,418 bags.   There was meanwhile a larger in volume 4,400 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 20,930 bags.   

The commodity markets were mixed but mostly lacklustre in trade yesterday, with the muscle being shown by the U.S. dollar for the present, tending to create something of a ceiling within many markets.   While many players were focused on the prospects for last night’s announcements from the U.S. Federal Reserve Bank which as had been predicted, came forth with a dollar supportive hint at rising U.S. dollar interest rates by the second quarter of next year.   The Natural Gas, Sugar, Cocoa, Cotton, Wheat and Soybean markets had a day of buoyancy, while the Oil, Coffee, Copper, Orange Juice, Corn, 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 0.01% higher; to see this Index registered at 498.72.   The day starts with the U.S. Dollar steady and trading at 1.631 to Sterling and 1.286 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 97.10 per barrel.

The London market opened the day yesterday on a steady note, but with the New York market coming under a little bit of pressure in thin trade.   The afternoon saw the London market join the New York market in negative territory and with the markets remaining below par, while taking something of a sideways track.    There remained uncertainty within the markets and with the inability of the markets to sustain some modest recoveries, the markets drifted into a softer close.     The London market ended the day marginally softer and with 61.5% of the losses of the day intact, as did the New York market likewise end on a marginally softer note but having recovered 81.4% of the earlier losses of the day by the close.    The sideways nature of the markets yesterday and the relatively steady end to the day for the more volatile New York market might suggest something of a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1956 – 8                                                 SEP     180.65 + 0.05
NOV     1977 – 8                                                 DEC     184.85 – 0.40
JAN      1990 – 7                                                 MAR    189.00 – 0.35
MAR     2000 – 7                                                 MAY    191.40 – 0.40
MAY     2008 – 9                                                  JUL     192.95 – 0.40
JUL      2016 – 10                                                SEP     193.45 – 0.45
SEP      2023 – 11                                               DEC     193.80 – 0.30
NOV     2031 – 11                                               MAR     194.20 – 0.30
JAN      2038 – 11                                               MAY     194.70 – 0.30
MAR     2013 – 11                                                JUL     195.20 – 0.30

17th. September, 2014.
The official Brazil Agricultural Ministry Crop Supply Agency (CONAB) have raised their just coming to completion new crop figure, to a surprising for this traditionally conservative body, figure of 45.14 million bags.  But what is perhaps more surprising in their figure for the conilon robusta coffees remains a relatively modest 13.03 million bags, which is 4.2 million to 4.47 million bags lower than most other qualified and respected private trade and industry reports.   The report nevertheless hit the streets at face value and the 45.14 million bags new crop figure did prove to inspire some speculative interest and the resulting buoyancy for the New York market, which had spent the morning and early afternoon in the doldrums of negative lacklustre thin trade.

One might comment that if one is to take the normally conservative CONAB report for a new arabica crop of 32.11 million bags and add the largely accepted new conilon robusta coffee crop figure of at least 17 million bags, this latest official report would indicate reality to the more ambitious of the private trade and industry reports, that still talk of a new crop of in excess of 50 million bags.   While this adjusted for the conilon factor report, is already in agreement of the many reports at close to 49 million bags, which have been forwarded to the market.   Thus one can in terms of some of the earlier scare stories that have fuelled the speculative bulls within the market, see this latest CONAB report to be somewhat bearish on the longer term for market sentiment, albeit that in reality the real factor now remains the forthcoming rains rather than the size of this year’s crop.

With a carryover stock into the new Brazil crop this year of at least 12 million bags and with a new crop that is more and more looking like being in excess of 49 million bags, one has to see a 61 million bags Brazil coffee supply as against at the very highest a 55 million bags demand, to provide with a potential carry over stock of 6 million bags into the new 2015 crop, something of an insurance factor for next year’s crop.   So long as the rains are reasonable for the rest of this year and the first quarter of the coming year, the resulting new crop needs only to be something in the order of 52 million bags plus, to ensure steady Brazil coffee supply through to July 2016.   

The combination of rising winter roasting season demand within the main consumer markets and the pending start of the new crop harvest in Vietnam, has seen internal sales of past crop stocks starting to get a little more aggressive in the country.   Presumably as farmers and internal traders are keen to make space for the new crop coffees, which are expected to come forth in similar good volumes as was experienced for the previous crop. This has inspired traders to start forecasting exports of mostly robusta coffee for this month of approximately 1.67 million bags which would if proved to be true, result in exports for this October 2013 to September 2014 coffee year of in excess of 27.3 million bags.

In terms of the physical coffee market and with the main consumer market stocks relatively high, the short to medium term focus is on the start of a large new main washed arabica coffee crop for Colombia next month and likewise a large new robusta coffee crops for Vietnam and Uganda next month, which are soon followed by the start of a larger new washed arabica coffee crop from the producer bloc of Mexico and the Central Americans.   These crops to likewise be followed by forecasted larger new crops for India and Indonesia, where production is weighted towards robusta coffees and thus, there is little in the way of panic or buying aggression in play, as the majority of the industry players take a wait and see stance towards the market and there is only lacklustre physical trade in progress for the present.

The arbitrage between the markets broadened yesterday to register this at 95.21 usc/Lb., while this equates to a relatively attractive 51.4% 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 6,500 bags yesterday, to register these stocks at 2,389,023 bags.   There was meanwhile a smaller in volume 4,950 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 25,330 bags.   

The commodity markets were mixed but tended to show some overall modest buoyancy yesterday, with the macro commodity index showing some modest muscle through the day.  The Oil, Natural Gas, Cocoa, Coffee, Copper, Corn, Gold, Silver and Platinum markets had a day of buoyancy, while the Sugar, Cotton, Orange Juice, Wheat and Soybean 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% higher; to see this Index registered at 498.67.   The day starts with the U.S. Dollar steady and trading at 1.628 to Sterling and 1.295 to the Euro, while North Sea Oil is showing some buoyancy in early trade and is selling at $ 97.15 per barrel.

The London and New York markets started the day yesterday with both markets tending marginally softer in thin early trade, which was the track that was retained into the afternoon’s trade for the New York market, but with the London market having posted a modest recovery.   The afternoon progressed with the London market remaining steady and with the New York market albeit lacking volume, finally attracting speculative support in line with a more positive macro commodity index and the added input of the CONAB report, to move back up into positive territory.   This move in New York started to trigger buy stops, to add some more volume and to accelerate the somewhat unexpected rally for the market, but to soon hit a ceiling and taper off from the highs.   The London market continued to end the day on a positive note and with 53.3% of the gains of the day intact, while the New York market end the day on a likewise positive note and with 53% of the gains of the day intact.  This positive close did however lack significant muscle and one might expect little better than a cautiously hesitant steady start for early trade today against the prices set yesterday, as follows:   

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1964 + 9                                                 SEP     180.60 + 3.30
NOV     1985 + 8                                                 DEC     185.25 + 3.05
JAN      1997 + 8                                                 MAR    189.35 + 3.05
MAR     2007 + 8                                                 MAY    191.80 + 3.05
MAY     2017 + 9                                                  JUL    193.35 + 2.85
JUL      2026 + 8                                                  SEP    193.90 + 2.80
SEP      2034 + 8                                                 DEC    194.10 + 2.80
NOV     2042 + 8                                                 MAR    194.50 + 2.75
JAN      2049 + 8                                                 MAY    195.00 + 2.75
MAR     2024 + 8                                                  JUL    195.50 + 2.75

16th. September, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market increase their net long position within this market by 16.62% during the week of trade leading up to Tuesday 9th. September;  to register a net long position of 31,028 Lots on the day.  This net long which is the equivalent of 5,171,333 bags has most likely been marginally reduced during the period of mixed but overall negative trade, which has since followed.

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by a marginal 4,161 bags or 0.07% during the month of August, to register these stocks at 6,038,503 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 7,038,503 bags, it would have equated to at least a very safe 14.4 weeks of roasting activity and a very safe reserve, ahead of the higher volume winter roasting season.   This substantial stock situation assisting to maintain the complacent attitude that prevails within the physical coffee trade in North America, where industry buyers maintain a wait and see attitude towards the prospects for the forthcoming spring and summer rain season in Brazil, which shall dictate the prospects for the next 2015 Brazil crop.

So far it has been an overall dry period for the main central and south Brazil, but with some rain showers forecasted for later this week and so too, for the coming week.   Therefore for the present, the situation in Brazil remains positive, in terms of the prospects for a normal start to the rain season and for the follow on flowerings for the next crop.   These rains however once they start, shall need to be regular from thereon, if the flowerings are to set and there are to be no further voices of concern towards the prospects for the follow on 2015 crop that shall need to exceed 53 million bags, so as to secure longer term steady coffee supply for the 2015/2016 coffee year.

The Vietnam Customs Authorities have reported that the countries coffee exports of mostly robusta coffees for the month of August totalled 1.63 million bags, which was 10.3% higher than the previous month.  This figure they report has seen the countries cumulative coffee exports for the first eleven months of the present October 2013 to September 2014 coffee year being 13.2% higher than the same period in the previous coffee year, at a total of 25,666,667 bags.   A figure that tends to confirm the estimates for the last crop, which many have estimated to have been close to 28 million bags and one that shall be followed with the new harvest due to start in four to five weeks’ time, by a similar in size new crop.   This is a factor that with rising robusta coffee supply due for Indonesia, India and Uganda, is proving to be somewhat bearish for sentiment within the related London robusta coffee market.  

The National Union of Coffee Agribusiness and Farm Enterprises in Uganda remain positive for an increase in coffee production and exports for the coming October 2014 to September 2015 coffee year, with a target for exports of approximately 3.6 million bags.   This they say, follows good rains for most districts during this year and unless there might be some unforeseen negative weather conditions in the coming year, the farm yields are expected to be positive.  

The arbitrage between the markets narrowed yesterday to register this at 92.52 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 increase by 4,510 bags yesterday, to register these stocks at 2,382,523 bags.   There was meanwhile a larger in volume 6,610 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 30,280 bags.   

The commodity markets tended to steady yesterday, with the influential Oil markets halting their slide and tending to bring some buoyancy to the macro commodity index.  The Oil, Natural Gas, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Cocoa market was steady, while the Sugar, Coffee, Cotton, Copper, Orange Juice 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 0.14% lower; to see this Index registered at 496.99.   The day starts with the U.S. Dollar steady and trading at 1.622 to Sterling and 1.294 to the Euro, while North Sea Oil is showing some buoyancy in early trade and is selling at $ 97.15 per barrel.

The London and New York markets started the day yesterday with both markets tending softer in thin early trade, which was the track that was retained into the afternoon’s trade.    There was some degree of bounce during the afternoon for both markets but not sufficient to take the markets out of their negative trading range and with both markets tending to take a sideways negative track, through the day.   The London market continued to end the day on a soft note and with 87% of the earlier losses of the day intact, while the New York market that was taking some pressure from a weak Brazil real at 2.34 to the dollar and the resulting price fixation hedge selling out of Brazil ended on a likewise soft note and with 71.2% of the losses of the day intact.   This overall soft close does little to inspire and with the industry somewhat bearish in nature at present and the prospects for rains in Brazil, one would expect to see another steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1955 – 20                                               SEP     177.30 – 2.35
NOV     1977 – 20                                               DEC     182.20 – 2.35
JAN      1989 – 18                                               MAR    186.30 – 2.30
MAR     1999 – 19                                               MAY    188.75 – 2.25
MAY     2008 – 19                                                JUL    190.50 – 2.20
JUL      2018 – 18                                                SEP    191.10 – 2.20
SEP      2026 – 19                                               DEC    191.30 – 2.30
NOV     2034 – 17                                               MAR    191.75 – 2.30
JAN      2041 – 17                                               MAY    192.25 – 2.30
MAR     2016 – 17                                                JUL    192.75 – 2.30

15th. September, 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 0.41% in the week of trade leading up to Tuesday 9th. September;  to register a net long position of 43,776 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 0.81%, to register a net long on the day of 45,736 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 3.32%, to register a net long of 33,787 lots on the day.   This net long position that is the equivalent of 9,578,465 bags has most likely been marginally decreased over the period of overall softer trade that has since followed and likewise, the net long position of the Managed Money Funds.

The European Coffee Federation have reported that the continents port warehouse stocks increased during the month of July by 5.1% to a one year high, to see these stock registered at 11,652,030 bags.   These stocks that are related to the coffee warehouse reports from the ports of Antwerp, Barcelona, Bremen, Hamburg, Genova, Le Havre an Trieste do not of course include the bulk container transit coffees and on site roaster inventory stocks, which one might suggest with the combination of West and East Europe consumption of approximately 836,000 bags per week, would have been close to 3 million bags.    

Therefore with European stocks most probably close to 14.5 million bags, the equivalent of a very secure 17.3 weeks of stocks, ahead of the higher volume winter roasting season for the northern hemisphere industries and a contributing factor to the prevailing lacklustre physical coffee trade that prevails.    This stock factor allowing the industry buyers to step back from the price resistant demands for increased value, which comes from the majority of the producers, which the exception of the free selling that still prevails from the major players such as Brazil and Colombia, in terms of the higher value arabica coffees.

The situation is apparently little different in North America, where physical coffee trade is likewise slow and steady and not experiencing the usual post Labour Day holiday early winter increase in industry buying aggression.   But with the Mexicans and Central Americans who would normally be relatively aggressive forward sellers of their pending new crop coffees at this time of the year, not yet showing any panic and tending to step back to await some more certainty over the longer term prospects for the next Brazil crop, than to step forth to gain value from the prevailing market, as a hedge against the possibility of good spring and summer rains for Brazil to secure an after all market dampening reasonable crop from Brazil.

The Agricultural Ministry in Peru and with the countries new fine washed arabica coffee crop mostly harvested, have blamed the Roya or Leaf Rust infestation as reason for a further dip in their new crop forecast, that has resulted in the ministry looking at a crop that shall not make it earlier 4.5 million bags forecast.   This figure is however still well in excess of the commercial Peru Coffee Association, who is talking in terms of a relatively dismal new crop of between 4.1 million and 4.2 million bags.    These latest reports which nevertheless still exceed some earlier private trade and industry forecasts do not however have much impact upon market sentiment, as a lower Peru crop has long since been accepted and discounted by the market players, who concentrate rather upon the surging coffee supply from neighbouring Colombia.

The arbitrage between the markets narrowed on Friday to register this at 93.97 usc/Lb., while this equates to a relatively attractive 50.92% 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 2,050 bags on Friday, to register these stocks at 2,378,013 bags.   There was meanwhile a larger in volume 2,965 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 36,890 bags.   

The commodity markets continued to suffer in trade on Friday, with the macro commodity index remaining on a negative track.  The Natural Gas, Cocoa, London robusta Coffee, Copper, Soybean and Silver markets nevertheless showed some buoyancy, while the Oil, Sugar, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Gold 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 0.33% lower; to see this Index registered at 497.67.   The day starts with the U.S. Dollar steady and trading at 1.624 to Sterling and 1.295 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 95.55 per barrel.

The London and New York markets started the day on Friday taking a softer stance, but with the London market starting to recover in the early afternoon’s trade.     The New York market continued to stay under pressure and with the negative effects of the macro commodity index seemingly having some influence upon sentiment, to lose some further weight as the afternoon progressed.   The softer nature of the New York market was finally matched by the London market likewise moving back into negative territory, but both markets bouncing off their lows and to see the London market move back over par and the New York market recover some of its earlier losses.   The London market continued to end the day on a modestly positive note and with 69.2% of the gains of the day intact, while the New York market ended the day on a softer note but having recovered 81.2% of the earlier losses of the day by the close.   This close provides little in the way of direction and one might expect to see a hesitantly 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.
                                                  
SEP      1975 + 5                                                 SEP     179.65 – 0.90
NOV     1997 + 9                                                 DEC     184.55 – 0.90
JAN      2007 + 9                                                 MAR    188.60 – 0.90
MAR     2018 + 10                                               MAY    191.00 – 0.90
MAY     2027 + 9                                                  JUL     192.70 – 0.70
JUL      2036 + 9                                                  SEP     193.30 – 0.70
SEP      2045 + 9                                                 DEC     193.60 – 0.85
NOV     2051 + 9                                                 MAR     194.05 – 0.80
JAN      2058 + 9                                                 MAY     194.55 – 0.70
MAR     2033 + 9                                                  JUL     195.05 – 0.70

12th. September, 2014.
The National Coffee Council of El Salvador have reported that the countries coffee exports for the month of August were 73,051 bags or 87.87% lower than the same month last year, at a total of 10,080 bags.  This dismal performance which follows a much lower October 2013 to March 2014 harvest and likewise modest export volumes through the year has contributed to the countries cumulative exports for the first eleven months of the October 2013 to September 2014 coffee year being 644,906 bags or 57.17% lower than the same period in the previous coffee year, at a total of 483,215 bags.

One has to comment however that while this dip in production and exports from El Salvador is very much related to the devastating effects of the Roya or Leaf Rust infestation, that with approximately 70% of coffee farming in El Salvador being related to commercial rather than smallholder farmers, that many commercial farmers had taken steps to apply aggressive retuning or stumping of their trees in 2013, to more easily counter the effects of Roya.   Thus accentuating the decline in production that came with the disease and that already the coming new crop can be expected to be 60% larger and followed by a much larger 2015/2016 crop.

In terms of regional fine washed arabica coffee supply from the producer bloc of Guatemala, Honduras, El Salvador, Costa Rica and Nicaragua and without the august export figures having been reported from Nicaragua as of yet, the exports for the first eleven months of the present October 2013 to September 2014 coffee year from the region and including the first ten months factor from Nicaragua, are 1,450,224 bags lower than the same period in the previous coffee year.    There is however not expected to be a big dip in exports from Nicaragua for the month of August and therefore, one can compare this close to 1.5 million bags dip in the Central American exports to the fact that over the same eleven month period, the Colombian exports increased by a very impressive 2,011,000 bags.   To see Colombia grab back a significant market share within the quality sector of the consumer markets, which it lost over the previous four years of El Nino and La Nina influenced lower crops.   

The traditionally conservative government crop supply agency in Brazil that has indicated this year’s partial drought affected crop at around 44.57 million bags, has forecasted that with unforeseen weather problems aside, that the country shall producer a 9.6% larger new crop in 2015 of approximately 48.83 million bags.   This might be seen to be a bearish for the market figure as if one is to adjust the figure in terms of the conservative nature this agency’s figures, it would equate to a forecast of around 54 million bags.    The agency is however promising a further forecast next week and followed by a more defining forecast in January next year, post the evidence of the spring and summer rain season and with a developing new crop on the trees.

Meanwhile with the good volumes of exports over the recent months from Brazil, the cumulative coffee exports for the past twelve months from September 2013 to August 2014 are registered at a record 35.3 million bags and if one is to apply a domestic consumption of approximately 20 million bags, an estimated coffee demand for the twelve month period of approximately 55.5 million bags.    If Brazil were to maintain such volumes of exports for the coming twelve months which have been influenced more by the discount for Brazil natural arabica coffees against the washed arabica coffees over the period, it would dictate the necessity for a new 2015 crop to exceed 56 million bags if it is to maintain steady coffee supply into the follow on 2016 crop.  However with a larger new Mexican and Central American crop due to come to the market in volume by the first quarter of 2015 and steadily rising supply from Colombia, one might expect that the discount for the natural arabica coffees from Brazil shall narrow and that consumer market demand for these latter Brazil coffees might taper off and that perhaps a 2015 crop of around 54 million bags shall be sufficient for the security of longer term world coffee supply.

Most market forecasts with the new Vietnam crop due to start in approximately four to five weeks, are talking a new crop of around 28 million bags and matching the previous October 2013 to January 2014 harvest.  There was however a forecast yesterday coming to the market from the commodity trade house Sopex, who have forecasted this new crop at 30 million bags.   The report did little to assist the London market, where damp speculative spirits prevail and with the market struggling to maintain its buoyancy.

The arbitrage between the markets broadened yesterday to register this at 95.28 usc/Lb., while this equates to a relatively attractive 51.38% 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 256 bags yesterday, to register these stocks at 2,375,963 bags.   There was meanwhile a larger in volume 1,375 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 39,855 bags.   

The commodity markets continued to suffer in trade yesterday, with the macro commodity index remaining on a negative track.  The U.S. Oil, New York arabica Coffee and Cotton markets nevertheless had a day of buoyancy, while the Brent Oil, Sugar, Cocoa, London robusta Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets having a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.70% lower; to see this Index registered at 499.32.   The day starts with the U.S. Dollar steady and trading at 1.622 to Sterling and 1.292 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 97.10 per barrel.

The London market opened the day yesterday on the back foot and immediately within negative territory, while the New York market somewhat predictably opened the day with underlying industry price fixation buying, showing early buoyancy.    Both markets retained this structure into the afternoon’s trade and with the London market extending its losses, while the New York market maintained its buoyancy and this remained the track for the rest of the day’s trade.   The London market ended the day on a soft note and with 76.9% of the 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 and with the ability for the New York market to hold onto most of its corrective muscle, might well assist to inspire some buoyancy for the London market but with perhaps little better than a 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.
                                                  
SEP      1970 – 26                                               SEP     180.55 + 3.55
NOV     1988 – 30                                               DEC     185.45 + 4.20
JAN      1998 – 30                                               MAR    189.50 + 4.20
MAR     2008 – 31                                               MAY    191.90 + 4.25
MAY     2018 – 30                                                JUL     193.40 + 4.10
JUL      2027 – 31                                                SEP     194.00 + 3.95
SEP      2036 – 29                                               DEC     194.45 + 3.70
NOV     2042 – 27                                               MAR     194.85 + 3.70
JAN      2049 – 27                                               MAY     195.25 + 3.65
MAR     2024 – 27                                                JUL     195.75 + 3.65

11th. September, 2014.
The weather conditions over Indonesia’s main coffee producing island of Sumatra are for the present overall favourable for the development of the new crop for the coming year, with many farms having flowered early this year, with the rains in July and August.  Internal market comments do however remain cautious as they look to the 65% chance for an El Nino phenomenon developing in the Pacific Ocean over the coming months, which would bring with it drier weather and might lessen the crop potential.

So far however the El Nino if it should develop is not foreseen to be strong one and one would think that a modest one shall not be threatening to the countries crop potential and for the present, one would think that Indonesia shall be in line for a much improved coffee crop for the coming year.   This crop is due to join, in terms of the dominant 86% robusta coffees contribution to the crop, a forecasted follow on large new crop from Vietnam and to guarantee good robusta coffee supply for the foreseeable future.  

Thus with the prospects of a larger new robusta coffee crop developing in India and follow through good robusta coffee crops due from Uganda and Tanzania, while West African crops as steady and Brazil has just completed a larger new conilon robusta crop, the related London market is buoyed only by hanging on to the coat tails of the value of the New York market rather than being supported by market fundamentals.   This latter New York arabica coffee market that is presently trading at double the value of the London market, does however continue to encourage the more price sensitive consumer market brands to find ways to make use of the more competitive robusta coffees in their blends.   

The overall buoyancy for coffee prices over the year has resulted in flat to even negative coffee consumption within many of the main consumer markets for the year so far, with leading consumers such as Germany reporting dips in volume.  One might however suggest that with the surging market share that is being taken by the single serve capsule machines that are in terms of cup costs significantly more expensive than the filter and instant coffee alternatives, that this has influenced consumers to be more parsimonious in their attitude towards coffee and thus the combination of perhaps a few less cups and the relatively low weight of coffee that is related to each cup, has been the factor that has mostly impacted negatively upon consumption in the higher income traditional markets.

Yesterday was yet another day with fundamental Brazil news off the front page of coffee news and with the growing Colombian, Mexican and Central America coffee supply more so making the headlines, along with the good new Asian robusta crops on the horizon, the speculative sector of the markets tended to show some degree of exhaustion.   This along with the prospects for a weaker Brazil real and less price resistance on the part of farmers possible as the country gets closer to recession, having a more marked influence upon the markets.  Thus with the buying activity of the consumer industries under the markets remaining somewhat cautious and muted, it allowed for speculative profit taking liquidation to have an accentuated negative influence upon prices.   But one might expect that following yesterday’s sell off in the more volatile New York market, that it shall not be long before there shall be some further market manipulative comments related to a potentially small 2015 crop coming forth from Brazil to try to bring the bulls back into the market.

The arbitrage between the markets narrowed on Friday to register this at 89.71 usc/Lb., while this equates to a relatively attractive 49.5% 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 1,635 bags yesterday, to register these stocks at 2,376,219 bags.   There was meanwhile a smaller in volume 550 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 38,480 bags.   

The commodity markets remained lacklustre in nature yesterday, with the now more robust U.S. dollar continuing to impact within many markets.  The Cotton, Copper, Corn, Soybean and Silver markets retained some buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Orange Juice, Wheat, Gold 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 0.61% lower; to see this Index registered at 502.84.   The day starts with the U.S. Dollar steady and trading at 1.619 to Sterling and 1.291 to the Euro, while North Sea Oil is near to tending softer in early trade and is selling at $ 96.40 per barrel.

The London and New York markets opened on a softer note yesterday and with both markets maintaining this stance in thin trade through to the early afternoon, but with the New York market posting a short term recovery during the afternoon to soon join London back in negative territory and with both markets triggering sell stops and extending their losses.   The London market did however halt its slide once it had taken this sharp dip and spent the rest of the day on a sideways track, while the New York market continued on a steady downside track for the rest of the day’s trade.    The London market continued to end the day on a soft note and with 87.7% of the losses of the day intact, while the New York market ended the day on a very soft note and with 93% of the losses of the day intact.   This very soft close shall do little to inspire speculative support, but one might think that there might be some opportunist industry price fixation buying activity coming to the table against the usual thin morning trade, which might bring with is some modest buoyancy in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1996 – 50                                               SEP     177.00 – 11.10
NOV     2018 – 50                                               DEC     181.25 – 11.35
JAN      2028 – 50                                               MAR    185.30 – 11.30
MAR     2039 – 49                                               MAY    187.65 – 11.25
MAY     2048 – 50                                                JUL    189.30 – 11.05
JUL      2058 – 48                                                SEP    190.05 – 11.00
SEP      2065 – 48                                               DEC    190.75 – 10.90
NOV     2069 – 50                                               MAR    191.15 – 10.95
JAN      2076 – 50                                               MAY    191.60 – 11.00
MAR     2053 – 50                                                JUL    192.10 – 11.15

10th. September, 2014.
The trade in Vietnam is forecasting exports for the month of September of mostly robusta coffees to be between 1.67 million and 2 million bags.    This is a higher figure than the approximately 1.5 million bags exported in August, but understandable in terms of coffee supply rising to the main consumer markets as head into the higher volume winter roasting season.   One would expect however that the majority of these exports would be related to fulfilment of forward contract commitments, rather than new business.

The internal market in Vietnam has been more active over the past couple of weeks, as farmers and internal traders look to liquidate stocks ahead of next month’s start of another large new crop and with this harvest due to be triggered as and when the present summer April to September rain season comes to a close.   This harvest being forecasted to be in excess of 27 million bags, of which close to 96% shall be robusta coffees.

There was no striking news from Brazil yesterday, while the coffee districts bask in early spring sunshine and await the forecasted rains that are seen to be due in about a weeks’ time.   But in the meantime with the Brazil Real trading at a weaker 2.285 to the U.S. dollar, it is assisting to inspire internal market new crop coffee sales and likewise, the remaining 2013 crop arabica coffee stocks.    

Thus for the present and while the Mexicans and Central Americans ahead of their new crops remain somewhat price resistant in the forward selling activity with the exception of Honduras, the Colombians and Peru are active sellers of new crop fine washed arabica coffees, with Brazil an active seller of their natural arabica coffees and Vietnam and Uganda active sellers of their robusta coffees.   Thus providing the consumer markets with a good mix of coffees and while the consumer markets are not aggressive buyers, there is slow and steady winter roasting season physical coffee trade in play for the present.  

The arbitrage between the markets narrowed on Friday to register this at 98.80 usc/Lb., while this equates to a relatively attractive 51.3% 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 decline by 16,570 bags yesterday, to register these stocks at 2,374,584 bags.   There was meanwhile a larger in volume 18,150 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 39,030 bags.   

The producer bloc of Mexico and Central America continue to dominate these New York stocks as is tradition and contribute 1,378,208 bags or 58.04% of the stocks, which is followed by Peru with 481,916 bags or 20.29% of the stocks and the African bloc of Burundi, Rwanda, Tanzania and Uganda with 333,745 bags or 14.05% of the stocks and Colombia with 114,222 bags or 4.81% of the stocks.   The balance made up by 63,633 bags of Indian coffees and 2,860 bags of washed arabica coffees from Brazil.

Meanwhile the European based warehouses of the exchange in Antwerp, Barcelona, Bremen and Hamburg account for 1,742,775 bags or a dominant 73.39% of these stocks and 36,190 bags or 92.72% of the coffees pending grading for the exchange.    With little chance for much growth in these stocks until perhaps the second quarter of the coming year, by when there shall be an overall larger new crop coffee supply from Mexico and Central America coming to the markets and in competition to good coffee supply from Colombia and Peru.  Meanwhile the modest nature of these stocks while not a major factor, does assist to maintain some degree of buoyancy for market sentiment for the New York market, which is mostly buoyed by the concerns over the prospects for the next 2015 Brazil crop.

The commodity markets were again mostly lacklustre in nature, but with the U.S. dollar halting its gains, there was some degree of stability returning to many markets.   The overall macro commodity index was however only close to steady and providing little excitement for sentiment, which is somewhat sideways in nature.    The Cocoa, Cotton, Orange Juice and Silver markets showed some buoyancy and the U.S. Oil, London robusta Coffee, Soybean and Gold markets were steady, while the Brent Oil, Natural Gas, Sugar, New York arabica Coffee, Copper, Wheat, Corn and Platinum markets had a softer days trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.20% lower; to see this Index registered at 505.90.   The day starts with the U.S. Dollar a little softer and trading at 1.612 to Sterling and 1.293 to the Euro, while North Sea Oil is near to tending softer in early trade and is selling at $ 97.80 per barrel.

The London and New York markets opened on a softer note yesterday and with both markets maintaining this stance in thin trade through to the early afternoon, when the London market recovered while the New York market stayed within the doldrums of erratic negative trade until mid-afternoon, when this market finally recovered and started to post modest gains.    This was however short lived and the New York market once again came under pressure and headed back into negative territory and followed by the shedding of its gains within the London market.   The London market continued to end the day on only a steady note, while the New York market ended the day on a softer note and with 63.8% of the earlier gains of the day intact.  This is a close that does not inspire little better than hesitantly cautions sideways trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2046 – 5                                                 SEP     188.10 – 1.55
NOV     2068 – 1                                                 DEC     192.60 – 1.85
JAN      2078 + 1                                                 MAR    196.60 – 1.90
MAR     2088 + 2                                                 MAY    198.90 – 1.85
MAY     2098 + 4                                                  JUL    200.35 – 1.95
JUL      2106 + 3                                                  SEP    201.05 – 2.00
SEP      2113 + 3                                                 DEC    201.65 – 1.80
NOV     2119 + 3                                                 MAR    202.10 – 1.80
JAN      2126 + 3                                                 MAY    202.60 – 1.85
MAR     2103 – 3                                                  JUL    203.25 – 1.85

9th. September, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market increase their net long position within this market by 16.07% during the week of trade leading up to Tuesday 2nd. September;  to register a net long position of 26,606 Lots on the day.  This net long which is the equivalent of 4,434,333 bags has most likely been marginally reduced during the period of mixed but overall negative trade, which has since followed.

No news is good news it would seem, in terms of the industries view of the coffee markets as over the past couple of days free of dismal crop forecasts from Brazil has allowed the markets to settle back a little.   But one might suggest that at least until the rains start and presuming that they shall come in time and in normal volumes that it is unlikely that the markets shall settle back too aggressively, but shall rather only move back to the lower levels of the present trading range.    But they are very sensitive to repots and volatile and particularly so the more Brazil weather related New York market, which makes it very difficult to accurately predict direction for the present.

All indications are that aside from some small volumes that the new Brazil harvest is completed and with new crop coffees steadily flowing into the mills for grading, which shall in terms of assessment of yield outturns from good volumes of new crop coffees, soon see some more accurate new crop reports coming to the market player.   Albeit that these figures that shall regularly come to the market are always questioned and in the end, it is only the longer term export volume that shall provide some reality to what the size of this crop actually is.

The reality in the meantime is that for the first eight months of this year the coffee exports from Brazil are reported as being approximately 20% higher than the same period last year, which is a confirmation of the large stocks that were being held in Brazil.   While one would suggest that the free flow of coffees from the commercial farms and cooperative stocks does not indicate that the farmers so far have a view towards a medium term shortage of Brazil coffee supply and that while the new crop is unquestionably smaller, that it is not as small as some forecasts have suggested.

There remains dispute over the prospects for the new Indian coffee crop that shall start being harvested later this year, with the Coffee Board of India having forecasted a larger new crop of 5.74 million bags, while the countries coffee farmers are still talking in terms of a new crop of between 4.83 million bags and 5 million bags.   These latter conservative reports from the farmers are being related to the combination of disease problems over many farms and to the negative effects of heavy monsoon rains within some districts, but one might question the latter heavy rains factor, as they are seasonal and not especially unusual for this time of the year.

The physical coffee markets have yet to pick up any significant steam ahead of the higher volume winter roasting season for the main northern hemisphere markets, with industry players remaining cautious in their buying activity.   Thus trade remains relatively lacklustre for the present and can be expected to remain so, for the coming weeks and until such time as the Brazil rain season weather reports start to dictate some more defining data as related to next year’s Brazil crop.    

The arbitrage between the markets narrowed on Friday to register this at 100.60 usc/Lb., while this equates to a relatively attractive 51.74% 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 decline by 1,100 bags yesterday, to register these stocks at 2,391,154 bags.   There was meanwhile a similar in volume 940 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 20,880 bags.    Noting that yesterday’s dip in the stocks follows and unreported earlier dip on Friday of 6,182 bags, while the change reported in the pending grading stocks was calculated against their volume on Thursday last week.

The commodity markets were mostly lacklustre in nature and with the stronger U.S. dollar tending to dampen spirits within many markets and with the overall macro commodity index tending softer.   The Natural Gas, Cotton, Copper and Platinum markets showed some buoyancy, while the Oil, Sugar, Cocoa, Coffee, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.51% lower; to see this Index registered at 506.91.   The day starts with the U.S. Dollar steady and trading at 1.609 to Sterling and 1.289 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 99.20 per barrel.

The London market predictably opened on a softer note yesterday, which was followed by a softer start for the New York market, with both markets entering the afternoon on a modestly softer track.   The New York market started to come under further pressure and presumably with producer price fixation selling having some added influence, to see the New York market post sharper losses, but with the London market keeping on a more modest softer track.    The New York market did however bounce back partially as the afternoon progressed further and with the London market likewise recovering some of its losses, but while the London market maintained some stability at its modestly lower levels through the rest of the day, the New York market once again came under negative pressure and slipped back in value.   The London market continued to end the day on a softer note and with 45.4% of the losses of the day intact, while the New York market ended the day on a soft note and with 63.7% of the losses of the day intact.   This overall soft close and the lack of supportive news  is unlikely to inspire speculative interest and one might think that the markets are due for a hesitantly 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.
                                                  
SEP      2051 – 10                                               SEP     189.65 – 3.20
NOV     2069 – 10                                               DEC     194.45 – 3.60
JAN      2077 – 11                                               MAR    198.50 – 3.60
MAR     2086 – 10                                               MAY    200.75 – 3.50
MAY     2094 – 10                                                JUL    202.30 – 3.30
JUL      2103 – 9                                                  SEP    203.05 – 3.25
SEP      2110 – 9                                                 DEC    203.45 – 3.45
NOV     2116 – 10                                               MAR    203.90 – 3.40
JAN      2123 – 10                                               MAY    204.45 – 3.40
MAR     2106 – 10                                                JUL    205.10 – 3.45

8th. September, 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 4.65% in the week of trade leading up to Tuesday 2nd. September;  to register a net long position of 43,956 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 1.18%, to register a net long on the day of 45,369 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 6.11%, to register a net long of 34,946 lots on the day.   This net long position that is the equivalent of 9,907,036 bags has most likely been marginally decreased over the period of overall softer trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Coffee Federation of Colombia have reported that the countries coffee production for the month of August was 381,000 bags or 49.48% higher than the same month last year, to total 1,151,000 bags.    While the countries coffee exports for the month were 31,000 bags or 3.37% lower than the same month last year, at a total of 889,000 bags.

This improved production performance and following many improved months has contributed to the Colombian cumulative production for the first eleven months of the present October 2013 to September 2014 coffee year being 2,149,400 bags or 23.71% higher than the same period in the previous coffee year, at a total of 11,216,400 bags.   Likewise the countries cumulative exports for the first eleven months of the present coffee year are 2,011000 bags or 24.77% higher than the same period in the previous coffee year, at a total of 10,130,000 bags.

Based on the previous year’s performance and with Colombian production steadily rising, one might guess that the last month of the present coffee year shall produce at least 800,000 bags and therefore, see Colombia produce approximately 12.2 million bags during the present coffee year.   Therefore to fuel exports of approximately 10.8 million bags, for the present coffee year.   This much improved performance from Colombia and with exports for the coffee year increasing by in excess of 2 million bags, has countered the negative effects of the Roya or Leaf Rust assisted dip in Mexican and Central American production and the corresponding exports into the supply chain of fine washed arabica coffees, for the present coffee year.

What has to be noted is that despite these very impressive production and export figures from Colombia, that the Colombian Coffee Federation report that the country now has 930,000 hectares of coffee farms, which would only indicate a yield per hectare of 787 Kgs.   Thus the Federation is discouraging the establishment of new coffee farms but is rather encouraging and funding the continued replacement of aged trees and improved farm inputs and husbandry to increase yields.

Thus if one considers that from experience and with over 3 billion new trees planted over the past few years that these yields are theoretically able to be increased by at least 50% and with unforeseen weather conditions aside, that it is not impossible to see Colombian production significantly increased over the coming five years.   This would indicate a longer term 2019/2020 production potential from the existing Colombian coffee farms of in excess of 18 million bags per annum of fine washed arabica coffees, which has in fact been the target production levels of the Colombian Coffee Federation from a decade ago and prior to the devastating effects of an El Nino weather phenomenon drought, which was followed by a strong La Nina and the corresponding excessive rains.   

The arbitrage between the markets narrowed on Friday to register this at 103.75 usc/Lb., while this equates to a relatively attractive 52.39% 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 not reported on Friday following Thursdays report where these stocks were seen to have increased by 5,155 bags yesterday, to register these stocks at 2,398,436 bags.   There was meanwhile a larger in volume 6,830 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 19,940 bags.

The Certified Robusta coffee stocks held against the London market were seen to increase by 50,000 bags or 3.57% over the two weeks of trade leading up to Monday 1st. September, when these stocks were registered at 1,451,667 bags.  This small rise is despite the prevailing more than adequate world robusta coffee supply, as price resistance on the part of producers and good consumer market demand for these well discounted coffees, is not conducive to trade buying and certification of modestly surplus world robusta coffee supply.

The commodity markets are under some pressure from lower than expected employment growth figures from the U.S.A. and disappointing Japanese economic data, as they are from the new found muscle of the U.S. dollar.  The overall macro commodity index nevertheless had a steady end to the week.   The Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy on Friday, while the Oil, Natural Gas, Sugar, Cocoa, Coffee and Cotton markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.21% higher; to see this Index registered at 509.51.   The day starts with the U.S. Dollar steady and trading at 1.618 to Sterling and 1.293 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 99.75 per barrel.

The London and New York markets started the day on Friday with modest losses, which was the track taken into the afternoons trade, when some support started to come to the markets and to see them recover to register some modest buoyancy.   This was however short lived as very soon the New York market moved back into negative territory and followed by the London market and while the London market did manage to bounce back a little and restrain its losses, the New York market continued on a relatively thinly traded softer track for the rest of the day.  The London market continued to end the day softer and with 50% of the earlier losses of the day intact, while the New York market ended the day on a soft note and with 87.1% of the losses of the day intact.   This relatively soft close for the New York market is unlikely to inspire confidence and one might expect to see  softer start for the London market and perhaps at best a steady start for the New York market for early trade today, against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2061 – 8                                                 SEP     192.85 – 4.60
NOV     2079 – 12                                               DEC     198.05 – 4.40
JAN      2088 – 12                                               MAR    202.10 – 4.35
MAR     2096 – 12                                               MAY    204.25 – 4.30
MAY     2104 – 11                                                JUL    205.60 – 4.40
JUL      2112 – 11                                                SEP    206.30 – 4.55
SEP      2119 – 11                                               DEC    206.90 – 4.45
NOV     2126 – 11                                               MAR    207.30 – 4.40
JAN      2123 – 11                                               MAY    207.85 – 4.40
MAR     2125 – 11                                                JUL    208.55 – 4.40

5th. September, 2014.
On the Brazil front there are continued trade and industry forecasts on the new crop coming to the fore and with the majority tending to vary between 17.3 million to 17.5 million bags of conilon robusta coffee and 29 million to 31 million bags of arabica coffees.   These reports and including the 47 million voiced by Volcafe yesterday are coming from industry players who are buying in and milling the new crop coffees, would in terms of their ability to accurately assess the yield outturns from new crop coffees, be seen to be relatively reliable.   Thus to indicate perhaps some reality to a view for a new crop of approximately 48 million bags that once added to the approximate 12 million bags of carry over arabica coffee stocks, an overall Brazil coffee supply of 59 million to 60 million bags.

The contribution of these stocks does indicate an approximate 5 million to 6 million bags of surplus Brazil coffee supply through to the new crop that shall start to come into play during the middle of next year, but this new crop unless it is well in excess of 50 million bags, would very quickly tighten up coffee supply for the second half of 2015 and the first half of 2016.   Thus focus is very much for the present upon the weather reports out of Brazil and more specifically the rainfall reports and the resulting flowerings and setting of these, which shall dictate by the end of November, some better accuracy on the prospects for this new crop.  But in the meantime these issues of the 2015 crop potential from Brazil shall undoubtedly cause continued volatility for the rollercoaster in nature, New York market.  

There are new forecasts of a 60% to 65% chance for a mild El Nino phenomenon developing in the Pacific ocean during the last quarter of the year out of the U.S.A., which might have some effect upon less rainfall for Colombia and Indonesia, but increased rainfall for the main south and central arabica coffee districts in Brazil.   This would not be so long as the phenomenon is indeed mild too threatening for the coffee crops and would in fact in terms of Brazil and the need for a good rain season, something of a positive factor.

Following a relatively poor coffee crop in Sumatra this year, there have been scattered rains in experienced over the past two months and these have resulted in flowerings towards the next crop, but dry weather has returned and more rains shall be needed later this month, if the new crop is to set and the cherries start developing.  Thus if there are no rains forthcoming over the next three to four weeks, one might expect to hear reference to the potential for an El Nino and the threat of dry weather damage to the next crop potential emanating from Indonesia, but it is early days as of yet and for the present this next and potentially larger new crop is not threatened.

Despite something of a late and erratic start, the Indian monsoon season is now coming in with regularity and with the reservoir levels while only at 71% as opposed to 82% at the same time last year, due to soon catch up with the forecasted continued rains for the coming week.  This is beneficial for the developing larger new coffee crops for India, with this larger new crop that is a ratio of 73 to 27 robusta and arabica coffees, being forecasted to exceed 5.7 million bags.

Meanwhile with the dip in value for the international coffee markets during the second quarter of this year and only recently recovering while the consumer market were operating during the relatively quiet summer holiday season, the coffee exports from India have been slow.  This has resulted in exports being reported at 3.7 million bags for the first eight months of this year, but with expectations that with the higher volume winter roasting season for the main consumer markets to the fore, that there shall be increased buying interest for Indian coffees for the last quarter of this year.  But there is no shortage of competition from the other producers and thus the prevailing price resistance and demands for premium differentials for new business that is being experienced out of India, might not actually see prices match the expectations of the countries farmers and exporters.

The arbitrage between the markets narrowed yesterday to register this at 107.60 usc/Lb., while this equates to a relatively attractive 53.15% 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 have increased by 5,155 bags yesterday, to register these stocks at 2,398,436 bags.   There was meanwhile a larger in volume 6,830 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 19,940 bags.

The commodity markets came under some pressure from the firmer nature of the U.S. dollar and particularly so against the Euro, which dipped against the cut in the finance rates of the European Central Bank.   The Copper and Coffee markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, 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 0.67% lower; to see this Index registered at 508.47.   The day starts with the U.S. Dollar steady and trading at 1.631 to Sterling and 1.293 to the Euro, while North Sea Oil is showing some buoyancy in early trade and is selling at $ 100.85 per barrel.

The London market started the day yesterday on a softer note and followed by a marginally softer start for the New York market, but with the New York market soon registering a modest recovery in thin and hesitant early trade and with the London market following suit with a recovery back into positive territory, as the morning progressed.    Both markets entered the afternoon showing a degree of recovery, which was further extended for the New York market as the afternoon progressed, with this latter market presumably gaining some support for sentiment from the Volcafe Brazil crop figure.  The London market continued to end the day on a positive note and with 87.9% of the gains for the day intact, while the New York market lost its way near to the end and ended the day with only 5.2% of the gains of the day intact.   The close might be seen to be a positive indicator for the markets but with the late in the day dip in New York, it might well result in a softer start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2069 + 21                                               SEP     197.45 + 0.15
NOV     2091 + 29                                               DEC     202.45 + 0.15
JAN      2100 + 30                                               MAR    206.45 + 0.20
MAR     2108 + 32                                               MAY    208.55 + 0.30
MAY     2115 + 32                                                JUL    210.00 + 0.90
JUL      2123 + 33                                                SEP    210.85 + 1.65
SEP      2130 + 33                                               DEC     211.35 + 1.50
NOV     2137 + 31                                               MAR     211.70 + 1.50
JAN      2144 + 29                                               MAY     212.25 + 1.50
MAR     2136 + 29                                                JUL     212.95 + 1.55

4th. September, 2014.
The National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of August were 50,698 bags or 15.96% lower than the same month last year, at a total of 267,029 bags.  This has contributed to the countries cumulative exports for the first eleven months of the present October 2013 to September 2014 coffee year being 482,101 bags or 14.08% lower than the same period in the previous coffee year, at a total of 2,940,750 bags.

This has been a predictable dip in the Guatemalan exports for the present coffee year, as it has been El Salvador and Guatemala who has been the most effected by the devastating Roya or Leaf Rust infestation over the past two year, which has impacted upon their production and export potential.  But both countries do have much improved control measures in play and their new crops that are due to start being harvested in a couple of months’ time are expected to be on the road to recovery and with an increased export potential for the coming October 2014 to September 2015 coffee year.

There were reports of widespread rains over the main central and south Brazil arabica coffee districts yesterday and albeit only mostly light rains, they are occurring relatively early in the new spring and summer rain season for these districts and tended to dampen not only the coffee farms but also, some speculative spirts for the day.   These districts are however expected to encounter a dry weekend and with these dry conditions to carry on for the coming week and follow on weekend, but with further rains forecasted to occur during the week after next, with the advent of a new cold front coming in from the south.

One might expect that with this gap in the rains and with this bout of scattered showers triggering some flowering that there shall be comments on the ability of the relatively dry farms following a dry August month to allow these flowerings to set, which shall see reports that indicate continued caution over the prospects for the next Brazil crop.   The forecast though for further rains for the second half of September are something of a settling factor for short term sentiment, as it would indicate that the new rain season is potentially looking to be a normal one and therefore positive for the development of the next 2015 Brazil arabica coffee crop.

It is however early days still and one can expect that the debate over the potential for this next Brazil crop is due to continue for the foreseeable future and with voices of concern expected to continue to impact upon market sentiment, as agronomists and farmers within Brazil debate how much damage has been caused to the potential of the trees productivity following the early in the year partial drought.   Such reports most likely to limit the downside potential of the New York market over the coming weeks, as the funds take a longer term view towards world coffee supply and even if the last quarter of the years rains are good and prove to be modestly negative for the market, the experiences of this year’s first two months of partial drought shall most likely see many players cautious over the weather prospects for the first quarter of next year.   

The message from the consumer market industry players would appear to be that the problems are to be truly believed when it hasn’t rained in Brazil, rather than before it should rain and there is no incentive to jump in and buy when the markets are speculatively hot.    Thus the majority of the consumer industry roasters are tending to maintain a cautious view towards the markets and one would expect to maintain a slow and steady buying policy for all but the discounted coffees that are coming to the market, to contribute to lacklustre overall physical coffee trade for the present.  

The arbitrage between the markets narrowed yesterday to register this at 108.77 usc/Lb., while this equates to a relatively attractive 53.77% 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 registered no change yesterday, to register these stocks at 2,393,281 bags.   There was meanwhile also no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 26,770 bags.

The commodity markets had a mixed day yesterday, but with the overall macro commodity index tending softer for the day.   The Oil, Cotton, Orange Juice, Gold, Silver and Platinum markets nevertheless had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Copper, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.37% lower; to see this Index registered at 511.88.   The day starts with the U.S. Dollar near to steady and trading at 1.646 to Sterling and 1.315 to the Euro, while North Sea Oil is showing some buoyancy in early trade and is selling at $ 101.10 per barrel.

The London market started the day yesterday on a predictably softer note and with light producer price fixation selling coming into play and followed, by a predictable softer start for the New York market and with the London market losing all the previous day’s gains and the New York market half of the previous day’s gains.  Both markets moved into the afternoon’s trade with volumes relatively thin and maintaining a negative track but with the New York market showing a partial recovery to limit the losses for a brief moment.   The negative effects of speculative liquidation did however return to further pressure New York to lower levels and matched by a late in the day sell off within the London market.  The London market continued to end the day on a very soft note and with 98% of the losses of the day intact, while the New York market ended the day on a soft note and with 85.1% of the earlier in the day’s losses intact.   This overall soft close is not very supportive for market sentiment, but one might expect that there are many who are not ready to throw in the towel as of yet and that the markets might prove to be hesitantly steady for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2048 – 42                                               SEP     197.30 – 7.15
NOV     2062 – 50                                               DEC     202.30 – 7.15
JAN      2070 – 47                                               MAR    206.25 – 7.15
MAR     2076 – 48                                               MAY    208.25 – 7.00
MAY     2083 – 47                                                JUL    209.10 – 6.75
JUL      2090 – 47                                               SEP     209.20 – 6.70
SEP      2097 – 47                                              DEC     209.85 – 6.10
NOV     2106 – 46                                               MAR    210.20 – 6.00
JAN      2115 – 46                                               MAY    210.75 – 5.95
MAR     2107 – 44                                                JUL    211.40 – 5.85

3rd. September, 2014.
It was once again a day of mostly Brazil yesterday; with the New York market opening up to renewed speculative buying against the prospects of the possibility of a further deficit arabica coffee crop for Brazil next year.   This sentiment supported by the prevailing dry weather in Brazil that whilst seasonally so and would not normally be seen to be a problem, would become so if the new spring and summer rain season does not come into play and with good regular showers, by the end of the month.   

This sentiment buoyed the New York market, but with the roasters seemingly mostly side lined and watching the developing buoyancy, with buy stops and perhaps some hedge lifting coming into play, to accentuate the gains.   The excitement in New York did however only trigger a modest positive response within the London market which added $ 25.00 per metric ton or up 1.2% in value as against New York adding the equivalent of $ 188.00 per metric ton or 4.25% in value, with the speculative sector within the London market probably looking towards the large new Vietnam crop on the horizon, which provides little reason for concern over longer term robusta coffee supply.

The Conilon robusta crop that is related to mostly the northern coffee districts of Brazil has long since been completed and has been estimated by the private trade and industry reports, to have been between 17.2 and 17.5 million bags.   While the new arabica coffee crop from the central and southern coffee districts of Brazil is close to completion with indications that this new arabica coffee crop that still remains under question and with many varied forecasts in play, is due to be completed in the next couple of weeks.

Meanwhile late in the day yesterday and too late to have any influence upon yesterday’s positive market sentiment, the prominent Brazilian trading company Interagricola the local arm of the international Ecom Agroindustrial Corporation came to the market with a report that with the new Brazilian crop 98% complete, that they see this new crop to have been between 53 to 55 million bags.   This figure that would indicate that with the large carryover stocks aside the crop is sufficient to fulfil domestic and consumer market demand for Brazil coffees for the coming year, is well in excess of just about every other new crop forecast that has come to the market and while it might be supportive for some of the other less dramatic higher forecasts that indicate a modestly deficit crop of between 48 million to 49 million bags, is perhaps a forecast under the circumstances of the early in the year partial drought, too much to believe.

The same Interagricola report did however say that they would really only know the size of the present crop, from the evidence of the medium term to longer term export figures, which for the present one would comment, are with the contribution of the large volumes of carryover arabica coffee stocks, impressive in their volume.  While the report did also address the prospects for the next 2015 Brazil crop, which they indicate that depending on normal spring and summer rains, could come in at a marginally deficit crop of between 50 million and 53 million bags.  

The new Central American crop is developing well and apparently so, despite some bouts of dry weather over the summer season and with the prevailing reasonable rain conditions which are conducive for the application of additional rounds of fertiliser application, can still be expected to be an overall improved crop.  This new crop to potentially add from the producer bloc of Mexico and Central America, an additional 1 million bags to the worlds fine washed arabica coffee supply.

With the new crop coffees starting to come to the market, the Tanzanian Coffee Board have forecasted that this new crop shall be 105,167 bags or 12.96% larger than the previous 2013/2014 harvest, at a total of 916,667 bags.  This positive forecast one might comment is a relatively conservative forecast, as many private trade and industry players have been forecasting the new crop to be in excess of 1 million bags.   

The arbitrage between the markets broadened yesterday to register this at 113.65 usc/Lb., while this equates to a relatively attractive 54.26% 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 decline by 17,205 bags yesterday, to register these stocks at 2,393,281 bags.   There was meanwhile a smaller in volume 12,975 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 26,770 bags.

The commodity markets returned from the U.S.A. Labour Day long weekend holiday taking mostly a negative stance, with the new found muscle of the U.S. dollar tending to dampen spirits within many markets, with the exception of the significant rally within the New York arabica coffee market.  The Sugar, Coffee, Orange Juice and Soybean markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Cotton, Copper, Wheat, Corn, 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 0.59% lower; to see this Index registered at 513.78.   The day starts with the U.S. Dollar steady and trading at 1.646 to Sterling and 1.313 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 99.65 per barrel.

The London market started the day yesterday on a quietly positive note and followed by a positive start for the New York market, with the New York market triggering buy stops and adding value into the afternoon’s trade, which was followed by a firmer trend being set within the London market.   The New York market which had run well ahead of the London market encountered some negative pressure as the afternoon progressed and shed half of the earlier gains, while the London market maintained its firmer positive track.   The London market continued to end the day on a positive note and with 93.9% of the gains of the day intact, as did the New York market pick up steam once more late in the day and to end on a very strong note with 94.3% of the earlier in the day’s gains intact.   This very strong close might however and with the Ecom report in mind, attract some corrective producer price fixation and speculative profit taking selling for early trade today against the positive prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2090 + 31                                               SEP     204.45 + 8.70
NOV     2112 + 31                                               DEC     209.45 + 8.25
JAN      2117 + 30                                               MAR    213.40 + 8.30
MAR     2124 + 30                                               MAY    215.25 + 8.25
MAY     2130 + 29                                                JUL    215.85 + 7.80
JUL      2137 + 28                                               SEP     215.90 + 7.50
SEP      2144 + 26                                               DEC    215.95 + 7.25
NOV     2152 + 28                                               MAR    216.20 + 7.15
JAN      2161 + 30                                               MAY    216.70 + 7.05
MAR     2151 + 34                                                JUL    217.25 + 7.10

2nd. September, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market decrease their net long position within this market by 3.3% during the week of trade leading up to Tuesday 26th. August;  to register a net long position of 22,923 Lots on the day.  This net long which is the equivalent of 3,820,500 bags has most likely been increased during the period of mixed but overall positive trade, which has since followed.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of August were 1,758 bags or 2.75% lower than the same month last year, at a total of 62,160 bags.  This has contributed to the countries cumulative exports for the first eleven months of the present October 2013 to September 2014 coffee year being 136,481 bags or 10.1% lower than the same period in the previous coffee year, at a total of 1,218,560 bags.  

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of August were 8,052 bags or 5.58% higher than the same month last year, at a total of 152,310 bags.  This has contributed to the countries cumulative exports for the first eleven months of the present October 2013 to September 2014 coffee year being 151,445 bags or 3.53% lower than the same period in the previous coffee year, at a total of 4,139,040 bags.

The evidence of these relatively modest dips in exports from these Central American countries are however not an issue for the consumer markets, as over the same eleven months there has been an approximate 2 million bags increase in exports of fine washed arabica coffees from Colombia.  These exports and despite a relatively slow performance from Peru this year, more than compensating for tighter washed arabica coffee supply from Mexico and the Central American countries.   This scenario of adequate but modestly tight fine washed arabica coffee supply due according to present forecasts to ease further in the coming months, along with an approximate 10% larger overall Mexican and Central American crop that shall start impacting upon market supply by December this year.

The preliminary coffee export figures from Brazil have seen the countries coffee exports for the month of August being 291,100 bags or 12.14% higher than the same month last year, at a total of 2,689,700 bags.   These exports that are dominated by the natural arabica coffees, continuing to buoy consumer market stocks of Brazil coffees ahead of the higher volume winter roasting season within the main northern hemisphere consumer markets.

With the Labour Day holiday over in the U.S.A. and the Mediterranean Rim countries of Europe coming back to work this week, one could say that the lacklustre summer holiday season is now over and this should see the physical coffee trade start to pick up some volume.   The big question is however for the market is what direction shall it take over the coming months, as with the uncertainty over the real situation in Brazil in terms of this year’s smaller harvest and the prospects for the next 2015 crop, there is no certainty in terms of medium term market direction.   Thus one might think that buying interest shall remain cautious for a few weeks more, as the producers hold back for better relative value, while consumer industries take something of a wait and see stance in their buying activity.

The arbitrage between the markets narrowed yesterday to register this at 106.81 usc/Lb., while this equates to a relatively attractive 53.09% 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 with the market closed for the Labour Day holiday yesterday are unchanged from Friday when they were seen to decrease by 1,575 bags, to register these stocks at 2,410,486 bags.   There was meanwhile a larger in volume 2,160 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 13,795 bags.

The commodity markets were quiet yesterday, with the dominant U.S.A. markets side lined by the Labour Day long weekend holiday.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets was 0.43% higher on Friday; to see this Index registered at 516.85.   The day starts with the U.S. Dollar steady and trading at 1.658 to Sterling and 1.312 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 100.35 per barrel.

The London market started the day yesterday on a quietly positive note in thin solo trade, with the holiday in New York tending to dampen any trading spirits.    This positive start for the day set market for a steady positive track into the afternoon’s trade, with reasonable value being added to the market, as the afternoon progressed.   The market progressed to hold on to its gains and ended the day of thin and lacklustre positive trade with 96.3% of the gains of the day intact and therefore, close to the highs of the day.   This positive close and following the positive end to the week that was registered in New York on Friday, is likely to be a supportive factor for sentiment in early trade today against the prices set on Friday in the New York market and yesterday in the London market, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2059 + 26                                               SEP     195.75 + 1.10
NOV     2081 + 26                                               DEC     201.20 + 1.20
JAN      2087 + 25                                               MAR    205.10 + 1.20
MAR     2094 + 25                                               MAY    207.00 + 1.35
MAY     2101 + 25                                                JUL    208.05 + 1.35
JUL      2109 + 25                                                SEP    208.40 + 1.25
SEP      2118 + 25                                                DEC   208.70 + 1.15
NOV     2124 + 24                                                MAR   209.05 + 1.20
JAN      2131 + 24                                                MAY   209.65 + 1.20
MAR     2117 + 24                                                 JUL   210.15 + 1.10

1st. September, 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 3.32% in the week of trade leading up to Tuesday 26th. August;  to register a net long position of 42,002 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 44,840 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 5.03%, to register a net long of 32,933 lots on the day.   This net long position that is the equivalent of 9,336,360 bags has most likely been marginally increased over the period of overall steady to positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

Government export statistics from Sumatra the main coffee producing island of Indonesia have reported that the islands robusta coffee exports in August were 171,284 bags or 31.85% lower than the same month last year, at a total of 366,438 bags.    This modest total follows relatively modest robusta coffee export totals for the preceding five months and therefore the cumulative robusta coffee exports from Sumatra for the first eleven months of the present October 2013 to September 2014 coffee year are 1,497,159 bags or 29.91% lower than the same period in the previous coffee year, at a total of 3,507,853 bags.

This lower performance does despite rising domestic consumption within Indonesia that is impacting upon coffee stocks available for export, assist to provide some confirmation for the many reports that have indicated a lower new coffee crop for Sumatra this year.   With relatively low export volumes expected to continue for the next seven to eight months and until such time as the potentially larger new crop shall start to come into play, so long as there are no unforeseen for the present weather problems for the island.

There have been reports of partial drought in some of the lower altitude districts of Central America, which has fuelled speculation that while not really affecting the higher altitude districts where the coffee farms are located, that it might have some negative effect on the potential for the developing new crop.  It is noted however that while these dry conditions have likewise been reported by their neighbouring countries in Central America, that none of the others so far have made any indication that is shall have a negative effect upon the prospects for their new coffee crops that are due to start being harvested in two months’ time.   But one might expect that should the reference prices of the New York market encounter any dip in value, that this subject might start to impact upon market reports, albeit that drier rather than drought conditions are positive in the fact that they reduce the incidences of Roya or Leaf Rust, which has been the regional problem over the past two years.

The International Coffee Organisation has reported that World coffee exports for the month of July were 3.7% higher than the same month last year, at a total of 9.73 million bags.  They do report however that following some lower volume months that the cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year are still 2% lower than the same period in the previous coffee year, at a total of 92.26 million bags.   This one would think would be an indication of declining consumer market stocks over the period, but this is not being supported by the stock figures in Europe, North America and Japan which are seen to be relatively steady and might make one question the extent of the positive growth in consumption forecasts.  

The arbitrage between the markets broadened on Friday to register this at 107.99 usc/Lb., while this equates to a relatively attractive 53.67% 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 1,575 bags on Friday, to register these stocks at 2,410,486 bags.   There was meanwhile a larger in volume 2,160 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 13,795 bags.

The commodity markets were mixed in trade on Friday ahead of today’s long weekend Labour Day holiday in the U.S.A., which brings to an end the summer holiday season for the northern hemisphere countries and might bring with it some more activity within many markets in the coming weeks.  The Oil, Natural Gas, Coffee and Copper markets showed some buoyancy, while the Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets tended softer.  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 516.85.   The day starts with the U.S. Dollar steady and trading at 1.661 to Sterling and 1.312 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 100.20 per barrel.

The London market started the day on a positive note on Friday and with the New York market taking a positive track and with both markets entering the afternoons trade on positive note, but with the New York market coming under some negative pressure, as the afternoon progressed.    The London market continued to show some muscle and was finally joined by a recovery for the New York market, which regained the earlier in the day buoyancy.   The London market continued to end the day on a positive note and with 69.6% of the gains of the day intact, while the New York market likewise ended the day ended the day on a positive note and with 64.9% of the gains of the day intact.   This positive end to the week is likely to be supportive for a steady start for London market which shall trade solo for today and therefore likely to register thin trade, against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2033 – 3                                                 SEP     195.75 + 1.10
NOV     2055 + 16                                               DEC     201.20 + 1.20
JAN      2062 + 18                                               MAR    205.10 + 1.20
MAR     2069 + 18                                               MAY    207.00 + 1.35
MAY     2076 + 18                                                JUL    208.05 + 1.35
JUL      2084 + 17                                               SEP     208.40 + 1.25
SEP      2093 + 17                                               DEC    208.70 + 1.15
NOV     2100 + 17                                               MAR    209.05 + 1.20
JAN      2107 + 24                                               MAY    209.65 + 1.20
MAR     2093 + 16                                                JUL    210.15 + 1.10

29th. August, 2014.
With the rally in the reference prices of the New York market over the past couple of weeks albeit hesitant at times, there is evidence of some increase in internal market selling activity of mostly arabica coffees in Brazil.   This is ahead of the return to work next week of the southern European industries who are very supportive consumers of Brazil coffees, which would be expected to provide some catch up increase in demand for Brazil coffees.   

Farmers in the main central Brazil arabica producing regions are however reported to be not showing very much exuberance over the windfall of improved prices over the past couple of months, as with steadily rising costs of production and related to a lower yielding new crop, their profits are not in reality very high.   This some have commented shall impact negatively upon investment into the development of the new crop and result in normal rather than increase inputs over the coming months post the spring and summer rains, which might add fuel to the speculation for a follow on modest 2015 Brazil arabica coffee crop.    

There has meanwhile been slow internal market trade within India for the remaining stocks of new crop coffees, as it would seem that anticipating the return of the Southern European coffee industries to the market, that many farmers have been showing price resistance to the bids by the countries exporters.  This has been slowing new internal market and export business activity from India over the recent weeks, with the potential for catch up selling activity on the part of the Indian farmers due post todays Ganesh Chaturthi long weekend holiday.  But one might suggest that with the relatively high value of the reference prices of the international market that the farmers might find that the windfall of catch up buying from their post summer holiday traditional buyers might not be offering the value that shall match some of their ambitious expectations.

While there remain many questions as to the size of the new Brazil crop which has been pegged by most of the less emotive market players at close to 48 million bags, there is no doubt that with this new crop due to fuel the statistics for the forthcoming October 2014 to September 2015 coffee year, that with World coffee demand seen to be approximately 150 million bags for the same period, that there shall be a deficit coffee supply over the period of something in the order of 8 million bags.

Thus while such a deficit shall be countered by approximately 23 million bags of consumer market stocks and the approximate 12 million bags of stocks that Brazil brought into their new crop, there is no doubt that the reality of supply and demand factors and with the activities of the speculative sectors of the markets aside, that the markets are due for buoyancy for the foreseeable future.   But with the funds and the speculative sectors of the markets already relatively well invested into the markets and the weight of new crop coming forth over the next six months from Mexico, Central America, Colombia, Vietnam, India, Ethiopia and Uganda and along with the carryover stocks to buoy Brazils smaller new crop, the deficit supply will not start to become felt until perhaps the second quarter of next year.

This may well be a factor that shall contribute in terms of the related active producer selling and so long as Brazil has no further weather problems to fuel the speculative sector further, to providing something of a ceiling for the medium term market.    But it is early days still and one might expect a good degree of market volatility for the coming two months and until there is more clarity out of Brazil, in terms of both the size of the present crop and the prospect for the next 2015 crop.

The arbitrage between the markets broadened yesterday to register this at 107.51 usc/Lb., while this equates to a relatively attractive 53.75% 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 3,911 bags yesterday, to register these stocks at 2,412,061 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,955 bags.

The commodity markets were mostly steady yesterday and with the markets due today to square away some positions ahead of Mondays Labour Day long weekend holiday for the U.S.A., which will close off the lacklustre summer holiday season.   The Natural Gas, Cocoa, New York arabica Coffee, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and the Oil markets were steady, while the Sugar, London robusta Coffee, Cotton, Copper and Orange Juice markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% higher; to see this Index registered at 514.65.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.658 to Sterling and 1.316 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.90 per barrel.

The London and New York markets started the day yesterday with modest losses, but with the New York market recovering in early afternoons trade and moving back into positive territory and followed by the London market as the afternoon progressed and the with the New York market adding some more weight.    Both markets did however come under pressure and dip back into negative territory as the afternoon progressed but with a further recovery coming into play for the relatively thinly traded New York market which had some influence upon the London market.  The London market continued to nevertheless end the day on a softer note and with 52.9% of the losses of the day intact, while the New York market ended the day on a positive note and with 46.2% of the gains of the day intact.   This rather mixed close but with the New York market showing some degree of muscle is likely to buoy spirits for the London market and to inspire a steady start for the New York market in early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2036 + 6                                                 SEP     194.65 + 2.25
NOV     2039 – 9                                                 DEC     200.00 + 1.85
JAN      2044 – 12                                               MAR    203.90 + 1.85
MAR     2051 – 11                                               MAY    205.65 + 1.90
MAY     2058 – 11                                                JUL    206.70 + 2.05
JUL      2067 – 10                                                SEP    207.15 + 2.40
SEP      2076 – 9                                                 DEC     207.55 + 2.70
NOV     2083 – 11                                                MAR    207.85 + 2.75
JAN      2083 – 11                                               MAY     208.45 + 2.75
MAR     2077 – 11                                                JUL     209.05 + 2.70

28th. August, 2014.
The National Coffee Organisation of Guatemala has forecasted that with the new crop cherries in development that the forthcoming new crop shall only be 5.5% higher than their previous relatively small Roya or Leaf Rust damaged crop, at approximately 3.27 million bags.   This is a dip from their earlier forecast that their new crop would be close to 8% larger than the last crop, but they refer to some dry spells during the summer rain season as reason to lower their new crop estimates.

The Vietnam internal market trade has been relative slow over the past few weeks, but with the new found buoyancy of the reference prices of the London market and with another large new crop due to start coming into harvest in six to seven weeks, one might expect that farmers might be more willing sellers of their remaining past crop stocks.  This might with the resulting price fixation hedge selling on the part of exporters, provide something of a nearby ceiling to the London market.

There is however no certainty as to what might happen with the somewhat nervous and volatile New York market, which reacts sharply to reports from Brazil and if this market should break out to the positive from the present trading range, it would of course pull London higher and despite selling activity on the part of robusta coffee producers.  The question is however, how much appetite the funds and the speculative sector of the New York market have in building up their already significant longs, until such time as the start of the new Brazil spring and summer rain season shall provide some fundamental indications on the prospects of the next 2015 Brazil crop.

The forthcoming rain season aside and with Brazil’s crop loss problems for this year related really only to the arabica coffee farmers and likewise, any damage done to trees during the early in the year partial drought, one has to still question why the Brazilian arabica coffee farmers remain relatively aggressive sellers of their past and new crop coffees.   If one is to put aside the 17.3 million bags of conilon robusta coffee production this year, the forecasts that have come out of various state and private industry players have indicated the new arabica crop at between 25 million to 32 million bags.   These with an estimated 12 million bags of arabica coffee carryover stocks, would indicate an arabica coffee supply of between 38 million to 44 million bags.

Against this there is a traditional consumer market demand of approximately 26 million to 27 million bags of Brazil arabica coffees per annum and a Brazil domestic market demand for approximately 8 million bags of arabica coffee per annum, which would indicate Brazil arabica demand at approximately 34 million to 35 million bags per annum.  This is not a problem in terms of the indicated 38 million to 44 million bags arabica coffee supply, but if one is to believe in the many forecasts for the next 2015 Brazil arabica coffee crop at only 27 million to 28 million bags, which would wipe out any post 2015 harvest arabica coffee stocks by the time of the start of the 2016 crop.  One would have to believe in longer term rising internal market prices for arabica coffees, in Brazil.

Thus with the Brazilian farmers who should know best the situation on the ground mostly having good state and private financial support to carry stocks, one would expect them to be more reticent sellers of their existing past crop and new crop arabica coffee stocks than they are at present, if they truly believed in the lower end of the estimates for this year’s crop and that even with a good rain season, that next year’s crop potential is most definitely going to be as low as many suggest.   Thus one might still speculate that so long as the rains are good and knowing that the prevailing prices are supportive of good inputs for this crop, that the 2015 arabica crop potential is not as low as many of the market supportive reports are presently indicating.

But of course, it still has to rain as otherwise if the new rain season is not a good one, there surely is a significant problem for overall world coffee supply by the second half of 2015 and the first half of 2016.   While one would think that if there should there be poor rains over the last quarter of this year, one would see Brazilian farmers finally start to show price resistance for their remaining stocks from the new crop, which would result in the combination for both firmer reference prices in New York as a reaction to the rain reports and firmer differentials for Brazil arabica coffees, over and above the firming international prices.   

The arbitrage between the markets narrowed yesterday to register this at 105.25 usc/Lb., while this equates to a relatively attractive 53.12% 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 5,594 bags yesterday, to register these stocks at 2,415,972 bags.   There was meanwhile a smaller in volume 612 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,955 bags.

The commodity markets were mixed in trade yesterday and generally with little excitement, but with an overall steady perspective.   The Oil, Natural Gas, Coffee, Cotton, Orange Juice and Wheat markets showed buoyancy and the Corn, Gold and Platinum markets were close to steady, while the Sugar, Cocoa, Copper and Soybean markets tended easier.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.16% higher; to see this Index registered at 512.91.   The day starts with the U.S. Dollar tending slightly easier and trading at 1.659 to Sterling and 1.321 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.30 per barrel.

The London market started the day yesterday on a positive note, while the New York market was near to steady, but with both markets entering the afternoon on a positive track.  There was a short term dip however in the early afternoon’s trade and with the London market losing most of its gains, while the New York market move back into negative territory, but this was short lived and with both markets soon moving back into positive territory and with the New York market attracting some strong support.   The London market continued to end the day on a relatively strong note and with 77.8% of the gains of the day intact, while the New York market shed came under some pressure and ended the day on only a modestly positive note and with only 13.3% of the earlier in the day’s gains intact.   This close might suggest 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.
                                                  
SEP      2030 + 23                                               SEP     192.40 – 0.70
NOV     2048 + 21                                               DEC     198.15 + 0.70
JAN      2056 + 22                                               MAR    202.05 + 0.85
MAR     2062 + 23                                               MAY    203.75 + 0.65
MAY     2069 + 24                                                JUL     204.65 + 0.40
JUL      2077 + 24                                                SEP     204.75 + 0.20
SEP      2085 + 23                                               DEC     204.85 unch
NOV     2094 + 23                                                MAR    205.10 – 0.10
JAN      2094 + 23                                                MAY    205.70 – 0.10
MAR     2088 + 23                                                 JUL    206.35 unch

27th. August, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market decrease their net long position within this market by 9.51% during the week of trade leading up to Tuesday 19th. August;  to register a net long position of 23,706 Lots on the day.  This net long which is the equivalent of 3,951,000 bags has most likely been increased during the period of mixed but overall positive trade, which has since followed.

Brazil came to the fore again during afternoon’s trade yesterday, with the Brazilian Coffee Industry Association coming forth with a new crop forecast for this year nearly completed new Brazil crop, which they now peg at between 45 million to 47 million bags.   This new forecast albeit still well above the earlier forecast of a new crop of between 40.1 million to 43.3 million bags that was forwarded by the traditionally conservative Brazil National Coffee Council, was nevertheless modest enough to set a small fire under the more volatile New York market.

The same report from the Brazilian Coffee Industry Association also indicated that following last year’s dip in domestic coffee consumption that they forecast a 3% increase for this year, with domestic coffee consumption to come close to 21 million bags.   This indicating that with export demand of approximately 33 million bags, that overall demand for Brazil coffee shall be approximately 54 million bags and therefore, in terms of their new forecast for the new crop, an approximate 7 million to 9 million bags deficit crop that would have the potential to liquidate most of the carryover stocks at hand ahead of this new crop, by the start of next year’s 2015 crop.

Thus the question remains if this new forecast proves to be realistic as to what is the potential for the next 2015 Brazil crop that would presumably have to exceed 54 million bags; if it is to be sufficient enough to maintain steady Brazil coffee supply to the consumer markets through to the third quarter of 2016.   Which is a factor that is very much supportive for the market, with many already commenting that due to the damage done to the trees by the earlier in the years partial drought within the main arabica coffee districts and the evidence of some aggressive pruning on the part of many farmers, that the next crop might struggle to achieve anything close to 50 million bags.   A factor that also played its part in yesterday’s market rally, with an unconfirmed by the Neumann Kaffee Gruppe report that came to the market post the Brazil Coffee Industry Association report, that this well respected coffee trade company foresees a 2015 crop of only a very modest 45 million bags.

If these 2015 Brazil crop forecasts prove to be true, it would be a Brazil deficit supply that despite some potential increase in washed arabica and robusta coffee supply for the coming year, would be sufficient a dip in Brazil supply to severely tighten overall world coffee supply through to the end of 2016.  Thus aside from the fact that the world of coffee is now completely focused upon the forthcoming new spring and summer rain season in Brazil that comes into play in four weeks’ time, the questions over the potential for this next Brazil crop are due to maintain volatility and most probably leaning to the positive side for the speculative New York market, for the foreseeable future.

The Government authorities in Vietnam have reported that with the evidence of export registrations so far, that the country can expect to export 1.5 million bags of mostly robusta coffee during the month of August.   This figure that is 7.5% higher than the country’s exports during the same month last year, would see the countries cumulative exports for the first eleven months of the present October 2013 to September 2014 coffee year being 10.22% higher than the same period in the previous coffee year, at a total of close to 25 million bags.   

The arbitrage between the markets broadened yesterday to register this at 105.51 usc/Lb., while this equates to a relatively attractive 53.43% 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 increase by 2,217 bags yesterday, to register these stocks at 2,421,566 bags.   There was meanwhile a larger in volume 3,165 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,343 bags.

The commodity markets were mixed in trade yesterday and with little excitement, with the exception of the rally experienced within the coffee markets.   The Sugar, Coffee, Cotton, Orange Juice, Wheat, Gold, Silver and Platinum markets had a day of buoyancy and the Oil and Cocoa markets were close to steady, while the Natural Gas, Copper, Corn 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 0.80% higher; to see this Index registered at 512.10.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.655 to Sterling and 1.317 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.25 per barrel.

The London market started the day post its Monday holiday yesterday on a near to steady note, while the New York market started the day on a steady to buoyant note.   The London market soon recovered and both markets took a modestly positive track into the afternoon’s trade and to encounter the reports from Brazil, which firstly buoyed value in New York and soon followed by the London market and with volume picking up in New York and accompanied by buy stops, to accentuate the gains.   The London market continued to end the day on a positive note and with 90.9% of the gains of the day intact, while the New York market ended the day on a strong note and with 94.7% of the gains of the day intact.   This overall strong close for the markets and near to their highs of the day, might be expected to inspire a follow through steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2007 + 21                                               SEP     193.10 + 10.35
NOV     2027 + 30                                               DEC     197.45 + 9.80
JAN      2034 + 29                                               MAR    201.20 + 9.80
MAR     2039 + 27                                               MAY    203.10 + 9.65
MAY     2045 + 25                                                JUL     204.25 + 9.40
JUL      2053 + 25                                                SEP     204.55 + 8.95
SEP      2062 + 25                                               DEC     204.85 + 8.60
NOV     2071 + 25                                               MAR     205.20 + 8.50
JAN      2071 + 36                                               MAY     205.80 + 8.55
MAR     2065 + 30                                                JUL     206.35 + 8.55

26th. August 2014

The fine washed arabica coffee producer bloc of Central America, Dominican Republic, Colombia and Peru have reported that their combined coffee exports for the month of July were 5.9% higher than the same month last year, at a total of 2.4 million bags.  This figure does not include Mexico who has not reported coffee export figures for the past couple of months, but one might guess from historical July figures that Mexico might have exported at least 250,000 bags and therefore, the overall regional exports for the month would have been approximately 2.65 million bags.   Noting in terms of these figures, that 36.6% of this would have been related to Colombian coffees, which once again as they have done historically, dominate he consumer market supply of fine washed arabica coffees.

This improved performance in the producer blocs exports in July and with the exception of Mexico who would usually be included, would indicate that the bloc’s cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year are now only 2% lower than the same period in the previous coffee year, at a total of 24.1 million bags.  If one were to add a relatively conservative estimated export performance of approximately 2.2 million bags from Mexico, it would bring this figure up to approximately 26.3 million bags and a seemingly tight but sufficient supply for the consumer markets so far this coffee year.  

What is interesting is that early in the coffee year the forecasts were that this producer bloc and including Mexico would export approximately 27.2 million bags for the October 2013 to September 2014 coffee year and that this figure is now most probably less than a million bags higher than the exports over the first ten months of the coffee year.  This would indicate that with the potential for exports from this producer bloc over the last two months of the coffee year being at least 3 million bags, that the bloc’s performance shall be in excess of 7% higher than initial forecasts and one might comment, due mainly to the much improved performance by Colombia.

With the early forecasts ahead of the new Mexican and Central American crops that start during the last quarter of this year positive, conservatively indicating and with unforeseen weather issues aside, a further 5% to 10% increase in supply from this fine washed arabica coffee producer bloc for the forthcoming October 2014 to September 2015 coffee year.  This would however by no means be seen to be a surplus supply factor for the markets and one that would be significantly negative for the markets, but it might by the second quarter of next year start to add some coffees back to the much depleted certified stocks of the New York market and should Brazil not add some further negative supply factors to buoy market sentiment, contribute to a dampening of speculative spirits within the market during the coming year.

The National Cocoa and Coffee Board of the Cameroun have announced that the countries robusta coffee exports for month of July were 30,417 bags or 101.39% higher than the same month last year, at a total of 60,417 bags.  This has contributed to the countries cumulative exports for the first eight months of their robusta coffee year from December 2013 to November 2014 being 26,583 bags or 12.8% higher than the same period in the previous coffee year, at a total of 234,900 bags.

In terms of the Cameroun’s smaller arabica coffee crop their July exports were 117 bags or 1.82% higher than the same month last year, at a total of 6,517 bags.   This contributes to the countries arabica coffee exports for the first ten months of their October 2013 to September 2014 arabica coffee year being 8,817 bags or 24.25% lower than the same period in the previous coffee year, at a total of 27,550 bags.  But the official comment is that these dismal figures do not account for the coffees being smuggled into neighbouring Nigeria and in reality, one cannot really assess the size and exports of the Cameroun arabica coffee crop.    

The arbitrage between the markets broadened yesterday to register this at 97.07 usc/Lb., while this equates to a relatively attractive 51.73% 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 903 bags yesterday, to register these stocks at 2,419,349 bags.   There was meanwhile a smaller in volume 120 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,508 bags.

The commodity markets with the London markets closed yesterday for the August bank holiday were only partially active and provided little excitement, while with the forthcoming holiday next Monday in the U.S.A. for Labour Day and the many players still ending off their summer holidays, one might not expect much excitement for the rest of this week.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.13% lower; to see this Index registered at 508.02.   The day starts with the U.S. Dollar showing steady and trading at 1.659 to Sterling and 1.321 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.75 per barrel.

The London market was closed yesterday and the New York market started the day later for a shorter days trade on a hesitantly near to steady note that soon took it back onto a softer track, but with support coming forth to see the market recover during the afternoon and adding some modest value to the board, but this support faltered near to the end of the day and the market ended on a positive note but with only 11.8% of the gains of the day intact.   This close provides little in the way of direction and one might expect to see only a cautiously near to steady start for early trade today against the prices set in London on Friday and New York yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1986 + 4                                                 SEP     182.75 + 1.15
NOV     1997 + 9                                                 DEC     187.65 + 0.30
JAN      2005 + 13                                               MAR    191.40 + 0.25
MAR     2012 + 13                                               MAY    193.45 + 0.25
MAY     2020 + 13                                                JUL    194.85 + 0.10
JUL      2028 + 12                                                SEP    195.60 + 0.15
SEP      2037 + 12                                               DEC    196.25 + 0.15
NOV     2046 + 13                                               MAR    196.70 + 0.10
JAN      2035 + 13                                               MAY    197.25 + 0.15
MAR     2035 + 13                                                JUL    197.80 + 0.20

25th. August, 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 0.36% in the week of trade leading up to Tuesday 19th. August;  to register a net long position of 40,654 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 0.7%, to register a net long on the day of 45,263 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 4.49%, to register a net long of 31,357 lots on the day.   This net long position that is the equivalent of 8,889,571 bags has most likely been marginally increased over the period of overall steady to positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The physical coffee market remained quiet for most of last week, with most of the industry players still partially on holiday mode and likely to remain so for this week and until post the forthcoming Labour Day long weekend that shall come with next Mondays holiday in the U.S.A., by when the Europeans shall also mostly all be back at work.   In terms of what business that is being concluded, the volumes are dominated by purchasing out of Brazil and Colombia in terms of arabica coffees, with these origins offering good volumes of coffees that cover both the natural arabica and fine washed arabica sectors of the consumer market demand.

With the example of the success of the Vietnam coffee industry over the past two decades that has seen this relatively small country become the second largest world producer and now producing twice as much per annum than the entire African continent, their neighbours are steadily being encouraged to follow suit.  This was highlighted last week by a report that state agencies and private industry players in Laos who are still a relatively small producer, are doing considerable research into coffee varieties and coffee farming practices, with a view to significantly increasing their coffee farming activities over the coming years.  

There was no further striking news coming from Brazil on Friday to end off the week, with the exception of some forecasts for rains to come into the southern arabica coffee districts during this week, which seemingly side lined fund and speculative activity within the more volatile New York market, which experienced an extremely thin days trade, while the London market ploughed along with more reasonable relatively good volumes of trade.   Albeit with this latter market it might have been related more towards the rolling of contracts ahead of the first notice day for the September contract at the end of this week, rather than anything more significant.

One might suggest however that with the arbitrage between the New York and London market still of significant value and therefore offering a likewise significant price discount for the robusta coffees, that the London market might be seen to be the more attractive and potentially profitable speculative buy.  The good value offered by robusta coffees to the mainstream industries that are often as not directed by accountants rather than emotional coffee persons, indicating that there shall be no reason to fear any dip in demand for the robusta coffees for the foreseeable future.   

The arbitrage between the markets narrowed on Friday to register this at 96.77 usc/Lb., while this equates to a relatively attractive 51.65% 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 increase by 14,256 bags on Friday, to register these stocks at 2,420,252 bags.   There was meanwhile a smaller in volume 6,775 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,388 bags.

The commodity markets were mixed and generally lacklustre in trade on Friday, with the overall macro commodity index tending to lean towards a softer stance.   London robusta Coffee, Cotton, Copper, Wheat, Corn, Soybean and Gold markets retained some buoyancy, while the Oil, Natural Gas, Cocoa, Sugar, New York arabica Coffee, Orange Juice, Silver and Platinum markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.07% lower; to see this Index registered at 508.70.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.656 to Sterling and 1.319 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.05 per barrel.

The London market started the day on Friday on a steady note, but with the New York market having a softer start for the day.    The New York market did however finally in the early afternoon recover its losses and both market markets showed some buoyancy as the afternoon progressed, but with the New York market lacking volume and soon coming under renewed pressure to head back into negative territory.  The London market continued to end the day on a positive note and with 50% of the gains of the day intact, while the New York market ended the day on a soft note and with 81.8% of the losses of the day intact.   This soft close for the New York market is not very supportive for sentiment and one might think to see a hesitantly steady to soft start for the markets for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1986 + 4                                                  SEP     181.60 – 2.15
NOV     1997 + 9                                                  DEC     187.35 – 2.25
JAN      2005 + 13                                                MAR    191.15 – 2.20
MAR     2012 + 13                                                MAY    193.20 – 2.25
MAY     2020 + 13                                                 JUL    194.75 – 2.25
JUL      2028 + 12                                                 SEP    195.45 – 2.25
SEP      2037 + 12                                                DEC    196.10 – 2.20
NOV     2046 + 13                                                 MAR   196.60 – 2.20
JAN      2035 + 13                                                MAY    197.10 – 2.15
MAR     2035 + 13                                                 JUL    197.60 – 2.20

22nd. August, 2014.
The National Coffee Institute in Costa Rica have forecasted that with the new crop cherries developing and following improved farm inputs and controls for the Roya or Leaf Rust infestation, that the countries new coffee crop shall be 4.5% larger than the past crop, at a total of 1.56 million bags.   This report is very much in line albeit to the modest side, with the many forecasts for an overall 10% increase in the new crop for the regional Mexico and Central American producer bloc.

The Colombian Coffee Federation has announced that with the prospects for a mild El Nino phenomenon in the south Pacific ocean on the cards for late this year and into the new year, that it would bring with it drier weather for the coffee farmers.    They do however concede that this is less of a threat than excessive rains in terms of coffee production while one might comment that while overly dry weather would be damaging for crop potential, that mildly drier weather is conducive to lower incidences of Leaf Rust and would be beneficial for the crop.  A crop that has recovered over the past couple of years from its lows of below 8 million bags, to target production of in excess of 12 million bags for the coming October 2014 to September 2015 coffee year.

The Brazilian analysts Safras e Mercado have calculated that on the basis of their new Brazil crop forecast of 48.9 million bags that by the end of last week 38% of this new crop had been sold, with these sales made up by a 67.3 to 32.7 ratio of arabica and conilon robusta coffees.  Thus if one is to go with the now generally accepted new conilon robusta coffee crop of 17.3 million bags, it would indicate that only 35.5% of these coffees were sold by the end of last week, whereas there had been more aggression in terms of new crop arabica coffee sales.

But perhaps with the arbitrage between the reference prices of the New York arabica coffee market and the London robusta coffee market offering a big discount for the London robusta coffee market, one might expect that there would have been less aggression on the part of the farmers in selling their conilon robusta coffees.   While with the conilon robusta coffee farmers selling approximately 75% of their coffees into the Brazilian domestic market, it is perhaps expected that they would be selling on a slower hand to mouth basis.

The Indonesian Coffee Exporters and Industry Association have reported that due to climatic issues and the evidence of internal market sales, that they have reduced their earlier in the year forecast for coffee production for this year by 14.29%, to now forecast a 10 million bags crop.  This forecast is still larger than many other private trade and industry forecasts, while the association has likewise reduced its forecast for coffee exports and now forecast exports for this year at 7.5 million bags.

It is to be noted however that due to the complexity of coffee production while dominated by the island of Sumatra being spread over a number of islands and with significant degree of tax avoidance informal trade taking place within the internal market, that it is difficult to be truly accurate in terms of Indonesian coffee production.  Thus making the more formal numbers of this country’s coffee production and consumption, potentially conservative in number.

The arbitrage between the markets narrowed yesterday to register this at 99.43 usc/Lb., while this equates to a relatively attractive 52.44% 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 decrease by 2,750 bags yesterday, to register these stocks at 2,405,996 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 11,613 bags.

The Certified Robusta coffee stocks held against the London market increased by 33,333 bags or 2.44% during the two weeks of trade leading up to Monday 18th. August;  to register these stocks at 1,401,667 bags on the day.  

The commodity markets were mixed yesterday, but with the overall macro commodity index tending to show some buoyancy for the day.  The Oil, Natural Gas, Sugar, Coffee, Cotton, Wheat, Corn and Soybean markets were buoyant for the day, while the Cocoa, Copper, Orange Juice, Gold, Silver and Platinum markets had an easier day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.31% higher; to see this Index registered at 509.03.   The day starts with the U.S. Dollar near to steady and trading at 1.658 to Sterling and 1.329 to the Euro, while Brent Crude is steady in early trade and is selling at $ 100.70 per barrel.

The London and New York markets started the day yesterday showing some degree of buoyancy, but with the New York market soon coming under some pressure and entering the afternoon’s trade on a softer track, while the London market retained its buoyancy.  The New York market did however recover as the afternoon progressed but within an environment of thin and lacklustre trade, while the London market continued on its steady track.  There was a further dip experienced in the New York market with producer price fixation selling pressure hanging over this market but it was short lived and the market soon recovered.  The London market continued to end the day on a positive note and with 79.2% of the gains of the day intact, while the New York market ended the day showing modest buoyancy and with 21.3% of the earlier gains of the day intact.    The steady nature of the markets for the end of the day one would think, shall be supportive for a follow through steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1982 + 18                                               SEP     183.75 – 0.35
NOV     1988 + 19                                               DEC     189.60 + 0.65
JAN      1992 + 17                                               MAR    193.35 + 0.70
MAR     1999 + 16                                               MAY    195.45 + 0.70
MAY     2007 + 16                                                JUL     197.00 + 0.60
JUL      2016 + 15                                                SEP     197.70 + 0.60
SEP      2025 + 16                                               DEC     198.30 + 0.65
NOV     2033 + 17                                                MAR    198.80 + 0.55
JAN      2022 + 16                                                MAY    199.25 + 0.35
MAR     2022 + 16                                                 JUL    199.80 + 0.25

21st. August, 2014.
The new Brazil crop harvest is very quickly coming to its close and with tail end harvesting expected to be concluded by the first week of September, which shall no doubt bring forth further dismal yield reports from many sources within the main central arabica coffee districts in the country.    These reports can be expected to be mostly accompanied by forecasts for the earlier in the year stresses caused by the partial drought and incidences of aggressive pruning, which shall be damaging for the potential of next year’s arabica coffee crop.

The big question is however how much support for sentiment one can expect from these reports, in terms of the volatile New York arabica coffee market as one might see a degree of exhaustion coming into play, in terms of reaction to the repeated fear stories emanating from Brazil.   With the evidence of the forthcoming rain season that is now only about a month away that the first half October flowerings for the next crop, due to be the most topical factor to influence the market.

In the meantime the New Mexican and Central American coffee crops are developing nicely and with the lower grown districts within this important producer bloc due to start bringing new crop coffees to the market by the end of October.  But it is only by early in December that one can expect the main higher grown new crop coffees to start impacting upon the market, which can be expected to intensify the negative impact of price fixation hedge selling of these new crop coffees upon the New York market that can really only be countered by the stance that will be taken by the funds and the speculative sectors of the market who dominate volume.  

The big question is where the markets shall go for the last quarter of the year and with little striking directional news expected from Mexico, Central America, Asia and Africa and likewise from Colombia and Peru where overall there are reasonable to good crop prospects, it is Brazilian that shall continue to drive the markets.   In this respect the internal market in Brazil remains a ready seller against the prevailing international market prices and this is a factor that continues to make one question the extent of the damage done to the new crop and the potential for the next crop, as one has to question why is it that if the farmers foresee tightening Brazil arabica coffee supply through to July 2016, they remain such ready sellers of their past and new crop arabica coffee stocks.   Likewise at relatively soft prices against the reference prices of the New York market.  

Surely the Brazilian farmers in the field know best the true story and this continued selling action might make one guess that if the spring rains come in good time in Brazil and the flowering reports are likewise positive, that the market might be foreseen to be potentially softer rather than firmer, for the medium term.   Albeit that for the short terms and until there is more clarity on the prospects for the Brazil rain season and the related new crop flowerings, one would expect the markets to retain some buoyancy and maintain a positive trading range.  But one might comment that with the rising costs of production that are related to both farm inputs and labour for producers in general that the markets are presently not really firm in nature, but are perhaps to be seen to be realistic in value and that any move to the downside would very soon hit a price resistance barrier from within the internal markets of many leading producers.  

The arbitrage between the markets broadened yesterday to register this at 99.64 usc/Lb., while this equates to a relatively attractive 52.73% 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 65 bags yesterday, to register these stocks at 2,408,746 bags.   There was meanwhile a larger in volume 2,035 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 10,973 bags.

The commodity markets were mixed yesterday, but with the overall macro commodity index tending to steady for the day.  The Oil, Sugar, Cocoa, Coffee, Cotton and Copper markets showed buoyancy and the Orange Juice, Silver and Platinum markets were steady, while the Wheat, Corn, Soybean and Gold markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% higher; to see this Index registered at 507.48.   The day starts with the U.S. Dollar steady to buoyant and trading at 1.657 to Sterling and 1.325 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 100.10 per barrel.

The London and New York markets started the day yesterday showing some degree of buoyancy and with the markets maintaining this positive track into early afternoon trade, but with the New York market attracting negative pressure as the afternoon progressed and while the London market maintained its positive stance.   The New York market did however soon encounter support and rather swiftly recovered to re-join the steady London market in positive territory and while the London market continued on its steady positive sideways stance, the New York market started to build upon its gains and to take an upside track for the rest of the day’s trade.   The London market ended the day on a positive note and with 75.9% of the gains of the day intact, while the New York market ended the day on strong note and with 88.9% of the gains of the day intact.   This overall positive close that is accompanied by dry weather forecasts for Brazil through to at least the second week of September might be seen to be supportive for follow through buoyancy for the markets for early trade today, against the firmer prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1964 + 23                                               SEP     184.10 + 1.90
NOV     1969 + 22                                               DEC     188.95 + 2.80
JAN      1975 + 22                                               MAR    192.65 + 2.80
MAR     1983 + 22                                               MAY    194.75 + 2.80
MAY     1991 + 23                                                JUL     196.40 + 2.80
JUL      2001 + 25                                                SEP     197.10 + 2.50
SEP      2009 + 25                                                DEC    197.65 + 2.45
NOV     2016 + 25                                                MAR    198.25 + 2.45
JAN      2006 + 25                                                MAY    198.90 + 2.40
MAR     2006 + 25                                                 JUL    199.55 + 2.35

20th. August, 2014.
The softer nature of the reference prices of the London market has slowed internal market trade within Vietnam, as farmers and internal traders have been showing price resistance to the bids forthcoming from the countries exporters.   However it would seem that there is no panic on the part of the exporters, who are seemingly all holding reasonable stock cover to support their forward sales commitments.   With this lack of aggressive selling within Vietnam resulting in only modest volumes of price fixation hedge selling on the part of the exporters, which is assisting to limit the negative pressure upon the London market.

Meanwhile traders in Vietnam are estimating that ahead of the new crop coffees coming in to the mills during the second half of October, that approximately 3 million bags of past crop coffees shall be exported from Vietnam over the next two months.   These volumes to maintain a steady supply of Vietnamese robusta coffees to the consumer markets, where there really is little excitement for the present and hand to mouth fill in lacklustre demand seen from most roasters.

Coffee farmers in India who had been countering the Coffee Board of India’s forecast for a new arabica coffee crop of 1.75 million bags out of an overall new crop of 5.7 million bags, are stating that due to drought conditions over May and June and the following heavy August monsoon rains that the arabica coffee crop shall potentially be much lower at between 1 million to 1.17 million bags.   But one has to question the motives behind such conservative forecasts that are forthcoming from the arabica coffee farmers, as the reports are coming forth with the softening of international coffee prices and one might see them to be partially market manipulative in nature.

There has meanwhile been no question from farmers over the forecast by the Coffee Board of India for a new robusta coffee crop of close to 3.98 million bags, but one might expect that should the markets soften further that there might be some negative comments on this forecast coming to the market.    But there is meanwhile no doubt that with another good Vietnam robusta coffee crop soon to start coming to the market, good robusta coffee production figures coming out of Uganda, a larger new Brazil conilon robusta crop this year and an improved Indian robusta crop due to start at the end of the year, that these shall all counter this year’s dip in Indonesian robusta coffee production and secure steady robusta coffee supply for the foreseeable future.

Yesterday saw further and separate forecasts from a host of agronomists in the main arabica coffee state of Minas Gerais in Brazil, which point to the stress to the coffee trees during the partial drought in the first two months of the year and to the unseasonal rains experienced in July and August that triggered some early flowerings, which they see to be threatening to the prospects of the next 2015 Brazil arabica coffee crop.    These reports support the traditionally conservative Brazil National Coffee Councils forecast for a new 2015 crop of only around 40 million bags, but did not manage to buoy speculative spirits within the New York market that took a modest tumble yesterday.   These negative crop forecasts somewhat being countered by the respected European based analysts Coffee Network, who maintain their forecast for the 2014 Brazil crop at around 50 million bags, while they foresee that so long as the spring rains start on time during the second half of next month, that they shall be beneficial for the follow on 2015 crop.

In terms of striking consumer market news there was the announcement yesterday that McDonalds has come to an agreement with Kraft Foods in North America, for this leading consumer market player to start distribution in 2015 of the McCafe brand speciality coffees into the retail markets.   This marketing program they indicated is to include distribution of both roast and ground coffee packets and single serve packaged options, for at home machines.

The arbitrage between the markets narrowed yesterday to register this at 97.84 usc/Lb., while this equates to a relatively attractive 52.56% 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 1,682 bags yesterday, to register these stocks at 2,408,681 bags.   There was meanwhile a smaller in volume 40 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 13,008 bags.

The commodity markets were mixed yesterday, but continued on an overall softer track.   The Natural Gas, Cotton, Wheat and Corn markets showed buoyancy and the Brent Oil and Platinum markets were relatively steady, while the U.S. Oil, Sugar, Cocoa, Coffee, Copper, Orange Juice, Soybean, Gold, Silver and Palladium markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.50% lower; to see this Index registered at 507.37.   The day starts with the U.S. Dollar showing some early muscle and trading at 1.660 to Sterling and 1.330 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 99.80 per barrel.

The London and New York markets started the day yesterday on a marginally softer note, which was the track for the thin morning’s trade and followed by the New York market losing some more weight in early afternoons trade, while the London market remained on its sideways marginally negative track.   The New York market posted short term recovery during the afternoon, but once again headed south and both markets moved further into negative territory.  The London market did however post a partial recovery late in the day and ended the day on a soft note but having recovered 67.9% of the earlier losses of the day, while the New York market ended the day near to its lows of the day and with 97.2% of the losses of the day intact.   This soft close for the more volatile New York market is not conducive to support but with tomorrows first notice day to the fore and with the trade and industry needing to close out their September contract positions today, one might see some degree of stability for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1941 – 9                                                 SEP     182.20 – 6.70
NOV     1947 – 9                                                 DEC     186.15 – 6.95
JAN      1953 – 7                                                 MAR    189.85 – 6.95
MAR     1961 – 6                                                 MAY     191.95 – 6.85
MAY     1968 – 6                                                 JUL      193.60 – 6.80
JUL      1976 – 6                                                  SEP     194.60 – 6.40
SEP      1984 – 5                                                 DEC     195.20 – 6.40
NOV     1991 – 4                                                 MAR     195.80 – 6.30
JAN      1981 – 4                                                 MAY     196.50 – 6.10
MAR     1981 – 4                                                 JUL      197.20 – 5.90

19th. August, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market decrease their net long position within this market by 17.16% the week of trade leading up to Tuesday 12th. August;  to register a net long position of 26,197 Lots on the day.  This net long which is the equivalent of 4,366,167 bags has most likely been little changed or perhaps marginally decreased over the period of mixed but range bound trade, which has since followed.

The National Export Centre of Nicaragua has reported that the countries coffee exports for the month of July were 33,800 bags or 20.64% higher than the same month last year, at a total of 197,560 bags.   This improved performance does however follow some slower months earlier in the year and the countries cumulative coffee exports for the first ten months of the present October 2013 to September 2014 coffee year are still 196,982 bags or 11.69% lower than the same period in the previous coffee year, at a total of 1,488,586 bags.

However if one is to take into account that Nicaragua entered the previous 2012 to 2013 coffee year with carryover stocks of approximately 280,000 bags that were exported over October and November 2012, the fact that the countries comparative exports for the present 2013 to 2014 coffee year are presently less than 200,000 bags lower, is remarkable.   This factor would perhaps indicate that with the country having entered the present coffee year with very little in the way of carryover stocks, that the devastating effects of Roya or Leaf Rust have not been as damaging to the Nicaraguan October 2013 to March 2014 crop as it has to some of its neighbours.

The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 386,860 bags or 6.84% during the month of July to register these stocks at the end of the month at 6,042,664 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 490,000 bags per week, equate to approximately 12.33 weeks of roasting activity.

However the stocks do not include the bulk container transit coffees, the onsite roaster inventory stocks and the coffee stocks held within non reporting warehouses in both the U.S.A. and Canada and these would have been at least another 1 million bags.   Therefore in terms of North American coffee supply the end June stocks would have safely exceeded 14.3 weeks of roasting activity, which one would consider to be more than a relatively safe volume of nearby coffee supply.

Meanwhile with such relatively short to medium term supply cover in hand in North America and with lager new crops on the horizon for Mexico and Central America, while there is another large new crop forecasted to start in Vietnam in October, one can expect physical buying activity our of North America to remain relatively cautious for the present.   Thus tending with still many in Europe the world’s largest consumer market on their summer holidays, a lacklustre consumer market for the rest of the month and until post the Labour Day long weekend in the U.S.A., with this holiday due on Monday 1st. September.

The arbitrage between the markets broadened yesterday to register this at 104.38 usc/Lb., while this equates to a relatively attractive 54.05% 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 2,342 bags yesterday, to register these stocks at 2,410,363 bags.   There was meanwhile a smaller in volume 1,329 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 13,048 bags.

The commodity markets were mixed yesterday, but on an overall softer track against softer economic figures coming out of Europe, China and Japan, while with many players still ending off the summer holiday season, the markets lack excitement.   The Natural Gas, Cocoa, Copper, Soybean and Silver markets showed some buoyancy and the New York arabica Coffee and Palladium markets ended on a steady note, while the Oil, Sugar, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn, Gold and Platinum 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% lower; to see this Index registered at 509.90.   The day starts with the U.S. Dollar steady and trading at 1.672 to Sterling and 1.336 to the Euro, while Brent Crude is relatively steady in early trade and is selling at $ 100.10 per barrel.

The London and New York markets started the day yesterday on a marginally softer note, which was the track for the thin morning’s trade, but with the New York market picking up some support to move back into positive territory early in the afternoon.   The London market tended to follow the New York market as the afternoon progressed and this market recovered its losses, but struggled to move higher than par and with the New York market once again coming under pressure, both markets moved back into negative territory.   The London market continued to end the day on a modestly softer note, but having recovered 70% of the earlier losses of the day by the close, while the New York market ended the day on a near to steady note and having recovered 98.1% of the earlier losses of the day by the close.   This overall near to steady close for the day and with both markets seemingly shrugging off negative pressure during the day might be supportive for a follow through hesitantly steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1950 – 1                                                 SEP     188.90 + 0.15
NOV     1956 – 6                                                 DEC     193.10 – 0.05
JAN      1960 – 7                                                 MAR    196.80 unch
MAR     1967 – 9                                                 MAY    198.80 unch
MAY     1974 – 10                                               JUL     200.40 unch
JUL      1982 – 12                                               SEP     201.00 unch
SEP      1989 – 14                                              DEC     201.60 – 0.10
NOV     1995 – 8                                                 MAR    202.10 – 0.15
JAN      1985 – 8                                                 MAY    202.60 – 0.25
MAR     1985 – 8                                                 JUL     203.10 – 0.30

18th. August, 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 6.07% in the week of trade leading up to Tuesday 12th. August;  to register a net long position of 40,509 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 1.33%, to register a net long on the day of 44,950 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 3.54%, to register a net long of 30,010 lots on the day.   This net long position that is the equivalent of 8,507,702 bags has most likely been marginally increased over the period of overall positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The issue of drought damage to the new Brazil crop once again came to the fore on Friday, with the management of the Cocatrel coffee cooperative that represents 5,000 farms in the state of Minas Gerais forecasting that with the new crop harvest approximately 90% completed, that the yields from new crop harvest shall be approximately 40% lower than the previous year.  Furthermore they forecast that due to the stress suffered by many trees during the partial drought over January and February that many farmers shall be obliged to apply aggressive pruning and that this shall potentially result in the next 2015 crop being 15% to 20% lower than the previous 2013 harvest.  

This report seemingly came into play in time to buoy speculative market sentiment later in the day on Friday, with the report supportive of the very conservative forecast that had previously been voiced by the traditionally conservative Brazil National Coffee Council, who has forecasted a new crop that might not exceed 40 million bags.    The question still remains that even though there is no question that Brazilian farmers have entered this year’s new crop with significantly high stocks, why would they if they foresee such a poor new crop and potentially a follow on modest new crop, they would be such willing sellers of existing stocks and new crop arabica coffees at the relatively low prices that prevail within the market.

Surely under such circumstances, the farmers would be showing price resistance and holding out for premiums to release coffee stocks to the countries exporters, which is not the case and still makes one question that while there is no doubt that there has been damage, the extent of the losses incurred.    This really shall only become clear in a couple of month time, by when good percentages of new crop arabica coffees have actually been hulled and graded and the yields from these coffees more accurately evaluated but in the meantime, the speculation over this factor shall most probably continue to maintain the prevailing volatility within the New York market.  

The Trade Ministry in Indonesia, while conceding that this year’s crop is lower one, has also appropriated the negative effects of relatively high 10% value added coffee export taxation as being a factor that discourages coffee exports from the country.    This is a surprising statement emanating from a government which benefits from such taxation, but is perhaps a comment that is emotive on the day, rather than any indication that there are discussions to remove such taxation.  But there is no doubt with export coffees having to counter the negative effects of taxation, that it encourages coffee farmers to pursue the steadily growing domestic coffee market for a better value home for their coffees.        

The arbitrage between the markets broadened on Friday to register this at 104.16 usc/Lb., while this equates to a relatively attractive 53.93% 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 1,100 bags on Friday, to register these stocks at 2,408,021 bags.   There was meanwhile a larger in volume 4,313 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,377 bags.

The commodity markets were mixed on Friday and with the overall picture tending to the negative, while speculative fundamentals were nevertheless supportive for selected markets.  Overall however it would seem that negative economic indicators for the Euro zone and accompanied by some evidence of slowing growth for China, did dampen many spirits within the markets.   The Oil, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat and Corn markets had a day of buoyancy, while the Natural Gas, Cotton, Soybean, Gold, Silver and Platinum markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.17% lower; to see this Index registered at 512.12.   The day starts with the U.S. Dollar tending softer and trading at 1.672 to Sterling and 1.339 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 101.05 per barrel.

The London and New York markets started the day on Friday on a steady to softer note, but with the New York market attracting support in thin and lacklustre trade as it moved into the afternoon, while the London market drifted lower and with the markets moving in opposite directions.   The New York market continued to attract support as the afternoon progressed and with buy stops being triggered to accentuate the gains, the London market was seemingly inspired to recover and move back up into modest positive territory.   The London market continued to shrug off a late in the day negative dip and to end the day with modest buoyancy and with 60% of the gains of the day intact, while the New York markets posted a positive close to the weeks trade and ended the day on a strong note and with 87.8% of the earlier gains of the day intact.   This overall steady to positive close is perhaps encouraging for a cautiously 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.
                                                  
SEP      1951 + 6                                                 SEP     188.75 + 4.65
NOV     1962 + 6                                                 DEC     193.15 + 4.70
JAN      1967 + 6                                                 MAR    196.80 + 4.65
MAR     1976 + 6                                                 MAY    198.80 + 4.60
MAY     1984 + 6                                                  JUL     200.40 + 4.55
JUL      1994 + 7                                                 SEP      201.00 + 4.40
SEP      2003 + 8                                                DEC      201.70 + 4.30
NOV     2003 + 20                                               MAR     202.25 + 4.25
JAN      1993 + 19                                               MAY     202.85 + 4.30
MAR     1993 + 19                                                JUL     203.40 + 4.30

15th. August, 2014.
The National Coffee Council of El Salvador have reported that the country’s coffee exports for the month of July were 104,478 bags or 83.78% lower than the same month last year, at a total of 20,221 bags.   This dismal performance has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 571,855 bags or 54.72% lower than the same period in the previous coffee year, at a total of 473,135 bags.  

The Vietnam Customs authorities have reported that the countries coffee exports for the month of July were below the earlier forecasts and totalled only 1.48 million bags, which was an 18% dip from the previous month’s exports.   They do report that nevertheless, the cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year are still 10% higher than the same period in the previous coffee year, at a total of 23.5 million bags.   

The Ugandan Coffee Development Authority has reported that the countries coffee exports for the month of July were 20% lower than the same month last year, at a total of 314,304 bags.  This does not however detract from the fact that the country’s exports of a ration of approximately 77 to 23 robusta and arabica coffees for the first ten months of the present October 2013 to September 2014 coffee year are still only 11,400 bags or 0.37% lower than the same period in the previous coffee year, at a total of 3,028,534 bags.   

One might suggest and especially in terms of Vietnam, that the dip in July exports of the robusta coffees is not really related to internal market stocks and potential coffee supply, but more so to the combination of internal market price resistance in reaction to the softer markets during the second quarter of this year and to the inverted price structure of the London robusta coffee market.  This latter inverted price structure, has not been allowing traders to use the forward month premiums to finance the carry of stocks, but the market has since returned to a more normal price structure and might well assist to attract increased buying interest from the consumer markets.

Not un-expectantly Brazil made the coffee press again yesterday; with the Minas Gerais Trade Centre reporting that they estimate that Brazil has already used up most of their extensive carryover stocks.  They also predicted that climatic conditions aside for the coming rain season, that due to earlier damage and increased incidences of pruning, that the next 2015 crop shall be another relatively modest crop.  This report was however somewhat loose and unspecific and for the present, one might see it to be somewhat neutral to a market where there are still many who question the extent of the damages that some of the more aggressive reports have indicated.

Meanwhile there is a cold front heading in from the south in Brazil and with scattered showers already being experienced within the southern coffee regions and due this weekend, to move into the important central coffee regions of the country.   These are however light rains and shall not cause too much disturbance to the tail end of the new arabica coffee crop harvest, while they shall assist to bring some relief to the trees that are presently under the stress of the harvest.

There are many countries in Europe and South and Central America who are taking today’s The Feast of the Assumption Day holiday and thus, one can expect a relatively quiet day for the physical coffee markets.   Quieter still than it has been for the past few weeks, with many of the northern hemisphere industry players on their summer holidays.  While some of us in the industry who are somewhat longer in tooth, can remember the times when more often than not the 15th. August triggered something of a celebration for the end of the threatening frost season in Brazil.

The arbitrage between the markets narrowed yesterday to register this at 99.73 usc/Lb., while this equates to a relatively attractive 52.92% 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 1,022 bags yesterday, to register these stocks at 2,406,921 bags.   There was meanwhile a smaller in volume 560 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,690 bags.

The commodity markets were relatively steady yesterday, with the woes of flat growth in Europe countered by improved employment data and steady growth in the U.S.A.   The Cocoa, Cotton, Orange Juice, Silver and Palladium markets showed some buoyancy and the Oil and Corn markets were steady, while the Natural Gas, Sugar, Coffee, Copper, Wheat, Soybeans, Gold and Platinum markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is steady; to see this Index registered at 512.99.   The day starts with the U.S. Dollar steady and trading at 1.669 to Sterling and 1.337 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 101.45 per barrel.

The London market started the day yesterday on a softer note, but with the New York market having a more steady start and showing some buoyancy, before likewise dipping lower.   The New York market did however show some recovery and move back into positive territory while the London market tended sideways, with the New York market once again coming under pressure as the afternoon progressed.   The London market continued to end the day on a soft note and with 87% of the losses of the day intact, while the New York market that had shown some recovery later in the day nevertheless ended on a soft note and with 26.1% of the losses of the day intact.   This late in the day recovery in New York might prove to be supportive for early sentiment and one might expect to see a cautiously steady to buoyant start for the markets today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1945 – 20                                               SEP     184.10 – 1.15
NOV     1956 – 20                                               DEC     188.45 – 1.15
JAN      1961 – 20                                               MAR    192.15 – 1.20
MAR     1970 – 18                                               MAY     194.20 – 1.25
MAY     1978 – 18                                               JUL      195.85 – 1.30
JUL      1987 – 16                                               SEP      196.60 – 1.30
SEP      1995 – 16                                               DEC     197.40 – 1.20
NOV     1983 – 19                                               MAR     198.00 – 1.35
JAN      1974 – 19                                               MAY     198.55 – 1.35
MAR     1974 – 19                                                JUL     199.10 – 1.35

14th. August, 2014.
The month of August is only half way through and already following a smaller crop, the Central American producers are sold out for the better qualities of their new crop coffees, with the remaining stocks of such coffees destined for forward contract commitments rather than new business.   There are however some stocks of lower qualities still available, but these are only really of use for a select few within the more price sensitive sectors of the consumer market industries.

Thus with the new crop starting off in the lower grown districts of Mexico and Central America in October and the higher grown better cupping coffees in late November and December and with nothing in the way of carryover stocks of quality coffees at hand, one can expect very modest export volumes from the region for the last quarter of the year.   The overall regional new crop is however forecasted to be at least 10% larger than the previous year and one might expect to see a degree of catch up selling aggression starting to come into play from this fine washed arabica coffee producer bloc, as early as December.  This should inspire increased volumes of price fixation hedge selling to come into play by December, which one would expect to provide something of a cap for the New York market by the end of the year.

The 25th. International Conference on Coffee Science that is being organised this year by the Colombian Coffee Federation and the Association Scientifique Internationale pour le Café, shall be held in Armenia Colombia, over the 8th to 13th. September.   The conference shall address the usual health benefits of coffee but more important and especially in terms of the Mexicans, Central Americans and Peru, shall be the discussions on agronomy and field technology and with the subject of Roya or Leaf Rust very much to the fore.  

One would comment that there shall be no better place than Colombia to hold this conference, as the country over the past ten years has been very successful in its programs to counter the devastating effect of Rust on coffee, in terms of both controls for rust and the replanting programs with new rust resistant and higher yielding coffee varieties.   Thus one can expect that there shall be a very large contingent of Central and South American agronomists attending, which shall assist to further inspire and provide guidance for the scientists who are already very active in rust control programs in Mexico and Central America.   This will certainly with unforeseen weather problems aside, indicate that Mexico and Central America have probably seen their worst crop and for the foreseeable future can expect to see improved crops coming to the market.    

The arbitrage between the markets broadened yesterday to register this at 99.97 usc/Lb., while this equates to a relatively attractive 52.73% 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 680 bags yesterday, to register these stocks at 2,407,943 bags.   There was meanwhile a larger in volume 3,200 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,130 bags.

These New York certified stocks are dominated by the Mexicans and Central Americans who presently contribute 58.36% of the coffees within the stocks and followed by Peru with 20.97% of the stocks, are with the Mexicans and Central Americans sold out,  unlikely to see any significant growth until at least the second quarter of next year.  Thus with these stocks expected to remain at their presently modest level and to perhaps even lose a little more weight over the coming months, they can be expected to contribute to some degree of support for speculative sentiment towards the market for the medium term.   They are however not the priority in terms of speculative focus upon the market, as the big question and the driver for sentiment and market direction remains in the hands of the prospects for the next 2015 Brazil crop.  

The commodity markets were mixed yesterday and with something of a negative sentiment coming into play, in line with forecasts for declining European growth that follows the worry of the negative growth figures reported by Japan.  This does not however detract from the selected markets, where the fundamentals of supply and demand still can be supportive.   The Oil, New York arabica Coffee, Cotton, Corn, Gold, Platinum and Palladium markets showed buoyancy and the London robusta Coffee and Corn market were steady, while the Natural Gas, Sugar, Cocoa, Copper, Orange Juice, Wheat, Soybean and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.17% lower; to see this Index registered at 513.00.   The day starts with the U.S. Dollar steady and trading at 1.668 to Sterling and 1.336 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.25 per barrel.

The London market started the day yesterday on a softer note, but with the New York market having a steady to marginally buoyant start for the day and with both markets slow and hesitant in their trade.  The positive nature of the New York market did seemingly inspire the London market and within an environment of thin trade the markets entered the more active afternoon’s trade with a degree of cautious confidence, but with the buoyancy in New York tending to bring into play some volumes of producer price fixation selling pressure.  The London market continued to stay close to par and with the New York market having come of its highs ended the day on a hesitantly steady note, while the New York market ended the day showing only modest buoyancy and with only 20% of the earlier in the day’s gains intact.    This was not a confident close 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.
                                                  
SEP      1965 + 1                                                 SEP     185.25 + 0.65
NOV     1976 unch                                              DEC     189.60 + 0.70
JAN      1981 + 1                                                 MAR    193.35 + 0.80
MAR     1988 – 1                                                 MAY     195.45 + 0.85
MAY     1996 – 2                                                  JUL     197.15 + 0.85
JUL      2003 – 3                                                  SEP     197.90 + 0.75
SEP      2011 – 3                                                 DEC     198.60 + 0.55
NOV     2002 + 13                                               MAR     199.35 + 0.55
JAN      1993 + 7                                                 MAY     199.90 + 0.55
MAR     1993 + 7                                                 JUL      200.45 + 0.55

13th. August, 2014.
An agronomist from the Brazilian research group Procafe reported yesterday that losses due to the partial drought over January and February within the main central arabica coffee districts for South Minas Gerais, that he estimates approximately 30% yield loss for the new crop.   Furthermore, the report indicated that due to the damage done to the trees earlier in the year and presumably with the combination of some aggressive pruning, that one should not expect much improvement for the follow on 2014 crop.

It has to be noted however that Procafe being a research group are by nature very conservative in their forecast numbers and had already previously forecasted the new crop at between 40.1 million and 43.3 million bags, which is well down on many other forecasts from respected sources.  Likewise the percentage factors being voiced are not related to the entire crop but to a region and albeit the leading region, is an approximate 4 million bags loss factor, from a crop that is dwarfed by the new crop forecasts of between 55 million and 60 million bags that were being forecasted in December and prior to the early in the year dry conditions.

However countering the market supportive nature of this Procafe report, the spokesman questioned the carryover stock figures of around 12 million bags and indicated that it might have been much higher, with comment that it could be as much as 20 million bags.  Thus the report had little influence upon market sentiment on its issue, with the markets continuing on the days negative track post its publication.

Following on from the Procafe report was a from the second largest coffee cooperative in the same South Minas Gerais region Minasul, who have indicated that with their new crop harvest having already peaked, that they foresee a an approximate 40% dip in the size of this new crop.    With a forecast that following the cooperatives production last year of 1.25 million bags, they expect no more than 750,000 bags from the new crop, but did have 250,000 bags of carryover stocks in hand from the previous crop, which would assist to supplement their coffee supply to the market.  

This report from Minasul which many might see to be partially market manipulative in nature, was not however accompanied by any definite fears over the prospects for the next 2015 crop, due to the damage that might have been done by the early year partial drought.   There was only reference to the need for a good spring and summer rain season, if the trees are to recover and to produce an improved 2015 crop that shall be very necessary, as by then the stocks shall be much depleted and would not be able to supplement much in the way of a deficit production.

The latest weather reports from India foresee that based on the rains so far that the June to September monsoon season shall bring in approximately 87% of average rainfall, but with the monsoons rains often excessive in requirement, that this slightly lower figure shall not be threatening to the countries agricultural sector.   Thus for the present the country remains on track for a larger new crop to start being harvested at the end of the year, with this new crop having previously been forecasted by the Coffee Board of India to be in excess of 5.7 million bags.

The latest El Nino report from meteorologists in Australia now foresee only a 50% chance for this phenomenon to start later this year, which follows the downgrading of a chance for an El Nino from the U.S.A.   Thus there would seem for the present no threat to medium term Pacific Rim countries coffee production, which in terms of weather leaves focus for the present only upon the prospects for the forthcoming Brazilian spring and summer rain season.   Noting that El Nino does in fact have a distant positive influence upon rainfall for central and south Brazil and the lessening chance of an El Nino, might be seen to be reason to be more concerned over the prospects for the last quarter of 2014 and first quarter 2015 rains in Brazil.   

The arbitrage between the markets narrowed yesterday to register this at 99.27 usc/Lb., while this equates to a relatively attractive 52.55% 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 250 bags yesterday, to register these stocks at 2,407,263 bags.   There was meanwhile a larger in volume 1,925 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 21,330 bags.

The commodity markets were tending negative again yesterday, with the combination of poor economic figures coming forth from Japan and with the Russian tension and sanctions threatening Euro zone growth and particularly so, with the European economic star Germany being a major investor in and exporter to Russia.   The Natural Gas, Cocoa, Corn and Gold markets were steady to buoyant, while the Oil, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat, Soybean, 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 0.82% lower; to see this Index registered at 513.87.   The day starts with the U.S. Dollar steady and trading at 1.681 to Sterling and 1.336 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 101.25 per barrel.

The London market started the day yesterday on a steady to buoyant note, while the New York market started on a softer track.   The New York market started to come under further pressure during the afternoon as with the speculative sector having shrugged off the supportive reports out of Brazil, the negative influences of the softer macro commodity index assisted to take the market lower and with the London market following New York south.   The London market carried on to end the day on a soft note and with 58.3% of the losses of the day intact, while the New York market ended the day on a soft note and with 74.2% of the losses of the day intact.   This overall soft close is unlikely to inspire little better than 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.
                                                  
SEP      1964 – 22                                               SEP     184.60 – 4.55
NOV     1976 – 21                                               DEC     188.90 – 4.45
JAN      1980 – 20                                               MAR    192.55 – 4.40
MAR     1989 – 19                                               MAY    194.60 – 4.40
MAY     1998 – 19                                               JUL      196.30 – 4.45
JUL      2006 – 19                                               SEP      197.15 – 4.40
SEP      2014 – 19                                              DEC      198.05 – 4.15
NOV     1989 – 19                                               MAR     198.80 – 4.00
JAN      1986 – 19                                               MAY     199.35 – 3.95
MAR     1986 – 19                                               JUL      199.90 – 3.95

12th. August, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market increase their net long position within this market by 4.29% the week of trade leading up to Tuesday 5th. August;  to register a net long position of 31,622 Lots on the day.  This net long which is the equivalent of 5,270,333 bags has most likely been little changed or perhaps marginally decreased over the period of mixed but range bound trade, which has since followed.

The International Coffee Organisation having reported flat export volumes for the month of June and with exports for the month 0.2% lower than the same month last year, have further reported that exports for the first nine months of the present September 2013 to October 2014 coffee year are 3.5% lower than the same period in the previous coffee year, at a total of 81.8 million bags.   This decline they note is due to impact upon consumer market stocks, but all indications are that the consumer stocks nevertheless remain more than sufficient to support consumer market industries.  Especially so with large new crops due to start coming into play during the last quarter of this year from Central America and Vietnam, which would indicate that there should be no reason for concern on the part of the consumer market industries.

The well respected Brazilian analysts Safras e Mercado have reported that they estimate that by the end of last week, the country had harvested 41.97 million bags of coffee and with their forecast for a 48.9 million bags new crop, that this would indicate the harvest was now 86% completed.    The interesting thing about this figure and most certainly there is more coffee to be harvested, is that their harvested number already exceeds some of the dramatically low figures that some have forecasted for the overall new crop.   

However the big question does still remain over what shall be the yield outturns from the harvested cherries as it really is not the weight of dried cherries that have been harvested, but what shall be the ratio of good bean to harvested cherry that matters.   Thus with the majority of the new crop coffees yet to be hulled and graded, there really is no accurate figure to be assessed and this uncertainty must continue for at least another two to three months.

Meanwhile with the Brazilian Coffee Exporters Association estimating increased export volumes that should increase for the coming year to 33.5 million bags and over and above and approximate 20 million bags of domestic consumption, the indicated demand for Brazil coffee at close to 54 million bags confirms a deficit new crop and only questions how much of a deficit.   While despite the prospects for increased washed arabica coffee supply for the coming year from Mexico, Central America and Colombia, it is unlikely that these higher priced coffees shall effectively compete for market share with the more affordable natural arabica coffees from Brazil.  Thus for the present and with the good carryover stocks in hand, one might expect to see Brazil continue on its path to maintain these forecasted high volumes of exports.

There have been reports of incidences of early flowerings towards the next 2015 crop in some districts in Brazil, which with the supportive rain season still six to eight weeks to the fore, could be a matter of concern.  These flowerings would require earlier than this rain support in order for the flowerings to set and there has been speculation over the prospects for this to reduce the potential for good follow on flowerings and the next 2015 crop.   One does still have to consider that there have over the past couple of months been some unseasonal rains within these districts which have assisted to buoy ground water retention levels and therefore, it might be too early to be truly concerned about severe losses in new crop potential.  It is a factor that nevertheless, has assisted to buoy some speculative spirits within the market.

The arbitrage between the markets broadened yesterday to register this at 102.77 usc/Lb., while this equates to a relatively attractive 53.15% 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 17,226 bags yesterday, to register these stocks at 2,407,513 bags.   There was meanwhile a smaller in volume 1,920 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 19,405 bags.

The commodity markets were mixed yesterday but were overall positive, as were the equity markets on something of an upturn for the day.   The U.S. Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Corn and Silver markets showed buoyancy and the Platinum market was steady, while the Brent Oil, Natural Gas, Wheat, 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 0.54% higher; to see this Index registered at 518.10.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.676 to Sterling and 1.337 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 102.80 per barrel.

The London market started the day yesterday on a follow through softer note, but with the New York market shrugging off the negative track of its Friday close and starting the day with some modest buoyancy.   This remained the track for the morning and into early afternoon’s trade, when the New York market lacking sellers and with good volumes of switch trading in play, started to build upon its early gains.  The positive nature of the New York market finally had its influence and the London market likewise lacking strong selling activity over the market moved back into positive territory, while the New York market continued to take a steady track to higher levels.   The London market flattened off and ended the day on a positive note and with 92.7% of the gains of the day intact, while the New York market ended the day on a strong note and with 94.3% of the earlier gains of the day intact.    This positive close would indicate a steady to buoyant start for the markets for early trade today but might if buying support wanes; start to attract some produce price fixation selling activity against the firmer prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1986 + 38                                               SEP     189.15 + 8.30
NOV     1997 + 38                                               DEC     193.35 + 8.30
JAN      2000 + 37                                               MAR    196.95 + 8.35
MAR     2008 + 37                                               MAY    199.00 + 8.35
MAY     2016 + 38                                               JUL      200.75 + 8.30
JUL      2022 + 38                                               SEP      201.55 + 8.25
SEP      2030 + 37                                              DEC      202.20 + 7.95
NOV     2005 + 24                                               MAR     202.80 + 7.90
JAN      2002 + 24                                               MAY     203.30 + 7.90
MAR     2002 + 24                                               JUL      203.85 + 7.90

11th. August, 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 11.03% in the week of trade leading up to Tuesday 5th. August;  to register a net long position of 43,129 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 1.36%, to register a net long on the day of 44,362 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 14.17%, to register a net long of 31,111 lots on the day.   This net long position that is the equivalent of 8,819,831 bags has most likely been decreased over the period of overall negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

Post the forecasts on Thursday for mild weather for the coming week, there was a further report forthcoming that some of the main arabica coffee districts in Brazil were experiencing their coldest temperatures of the year.  The well respected meteorologist Somar did however report that these temperatures were not frost threatening, but with the New York market opening trade prior to dawn in Brazil, it did seemingly attract some precautionary short covering buying activity and buoy spirits for a somewhat unexpected firmer start for this market on Friday morning.  Buoyancy that was not matched within the London market, with this more fundamental in nature market opening the day on a predictably softer note and soon followed post the frost free dawn in Brazil, by a softening of the New York market.

This week sees some of the market players within the main Northern Hemisphere consumer markets returning to their post-holiday desks, but with many of the industries within the leading European coffee market still on their holidays and thus with the physical coffee market due to remain relatively lacklustre in nature until post the 1st. September long weekend Labour Day holiday in the U.S.A.    There can be expected though, to be some build up in activity prior to the return to more usual autumn trading volumes, as industries look to cover unforeseen gaps in their short term inventory requirements, ahead of the higher volume winter roasting season.

In the meantime and in terms of the speculative sector of the market and with the focus on Brazil now upon the start of the new rain season that is still seven weeks to the fore, one can foresee little in the way of directional news due for the markets, with the exception of reports on the yield outturns from the now near to completion new crop.   These reports can be expected by nature to be rather conservative in nature, to assist to buoy market sentiment against last week’s reversal in fortunes for the markets.     

The arbitrage between the markets narrowed on Friday to register this at 96.19 usc/Lb., while this equates to a relatively attractive 51.98% 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 975 bags on Friday, to register these stocks at 2,424,739 bags.   There was meanwhile a larger in volume 3,850 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,485 bags.

The commodity markets had an overall steady day’s trade on Friday, with most markets remaining within a narrow trading range for the day.  There was however some more aggression within the Wheat, Corn and Coffee markets, which took a more pronounced negative track.   The U.S. Oil, Natural Gas, Sugar, Cotton, Copper, Orange Juice, Soybean, Platinum and Palladium markets showed some buoyancy for the day and the Cocoa market was steady, while the Brent Oil, Coffee, Wheat, Corn, Gold and Silver markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.39% lower; to see this Index registered at 515.34.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.677 to Sterling and 1.340 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.65 per barrel.

The London market started the day on a softer note on Friday, with the New York market posting some early buoyancy in early trade, but this was short lived and both markets entered the afternoon’s trade on a softer track.  The New York market did however attracts some support and took a brief pip back up into positive territory, while the London market continued on an erratic sideways move within negative territory for the day.   The London market continued to end the day on a soft note and with 44.1% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 68.48% of the losses of the day intact.   This overall soft close for the markets does little to inspire confidence and one might expect little better than 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.
                                                  
SEP      1948 – 20                                               SEP     180.85 – 3.15
NOV     1959 – 15                                               DEC     185.05 – 3.10
JAN      1963 – 10                                               MAR    188.60 – 3.15
MAR     1971 – 10                                               MAY    190.65 – 3.15
MAY     1978 – 11                                                JUL    192.45 – 3.10
JUL      1984 – 9                                                  SEP    193.30 – 3.15
SEP      1993 – 6                                                 DEC    194.25 – 3.40
NOV     1981 – 22                                               MAR    194.90 – 3.40
JAN      1978 – 22                                               MAY    195.40 – 3.40
MAR     1978 – 22                                                JUL    195.95 – 3.45

8th. August, 2014.
The updated and more detailed Brazil export figures for the month of July have been announced to report that the country’s exports of green coffees were 730,000 bags or 37.82% higher than the same month last year, at a total of 2,660,000 bags.   Added to this are the exports of value added soluble coffees calculated in terms of their green coffee equivalent which were 23,161 bags or 7.81% higher than the same month last year, at a total of 319,811 bags.   Thus the overall coffee exports for the country were 753,161 bags or 33.82% higher than the same month last year, at a total of 2,979,811 bags.

In terms of value the overall coffee exports for the month of June from Brazil were US$ 206,400,000 or 58.89% higher than the same month last year, at a total of US$ 556,900,000.   This added income is a welcome relief for the country’s arabica coffee farmers, who are investing in the input support for their coffee farms, which were severely affected by the ravages of partial drought during the months of January and February this year.

Meanwhile the weather conditions are dry and mild over the main south and central arabica coffee districts in Brazil and this is conducive to the acceleration of the tail end of the new crop harvest, while with the forecasts for this to continue, the country is due to once again pass through the frost season without any damage.   Thus the focus is now on the start of the new spring and summer rain season, which is due in approximately seven to eight weeks’ time.

The Climate Prediction Centre in the U.S.A. has downgraded its forecast for a new El Nino phenomenon to start in the Pacific ocean during the last quarter of the year to a 65% chance, from the earlier 80% chance prediction and one might suggest that while still a chance, this would indicate that it would only be a mild El Nino.  Thus with a mild El Nino relatively positive for the Pacific rim coffee countries and further afield for fair rainfall for the south and central coffee districts in Brazil for the coming summer, there are no market supportive factors due from this possible phenomenon.  

The Indian monsoon season that had a bit of an erratic start is in full swing and with good rains being experienced over the main coffee districts, while the forecasts are for this to continue.   Thus the new coffee crop that is presently developing on the trees is likely to be a larger crop, as has already been forecasted by the Coffee Board of India.

The arbitrage between the markets narrowed yesterday to register this at 98.61 usc/Lb., while this equates to a relatively attractive 52.41% 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 2,475 bags yesterday, to register these stocks at 2,423,764 bags.   There was meanwhile a smaller in volume 1,680 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 21,335 bags.

The Certified robusta coffee stocks held against the London market were seen to have increased by 103,333 bags or 8.17% over the two weeks of trade leading up to Monday 4th. August;  to register these stocks at 1,368,333 bags on the day.   These stocks still registering relatively slow growth, against price resistance from the origins and the lack of inspiration for the consumer market trade and investors to take on stocks, which are both relatively expensive and have been difficult to finance within the flat price structure of the prevailing London market.

The commodity markets had a mixed but relatively flat day yesterday; with the exception of some excitement for the New York arabica coffee market that took lost its way during the day.  But with the news just out of a record positive trade surplus for China last month, one might think that this might be supportive for the markets today.   The Oil, Cocoa, Copper, Gold and Platinum markets showed buoyancy, while the Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.66% lower; to see this Index registered at 517.34.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.681 to Sterling and 1.336 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 105.45 per barrel.

The London and New York markets started the day quietly yesterday and some hesitant buoyancy, but with both markets starting to falter as the morning progressed and entering the afternoons trade on a modestly softer track, but with the New York market coming under further pressure during the afternoon and with sell stops being triggered, to accentuate the losses.    The London market continued on a more modest downside track to end the day on a soft note and with 77.4% of the losses of the day intact, while the New York market ended the day near to its lows and with 95.8% of the losses of the day intact.   This overall soft close and with a relatively strong U.S. dollar in play that sees the Brazil real softer and trading at 2.296 to the dollar, is likely to indicate selling activity out of Brazil for later in the day and unless there is some speculative support coming to the fore which is unlikely, a softer start for the markets for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1968 – 24                                               SEP     184.00 – 6.85
NOV     1974 – 22                                               DEC     188.15 – 6.70
JAN      1973 – 20                                               MAR    191.75 – 6.60
MAR     1981 – 18                                               MAY    193.80 – 6.55
MAY     1989 – 16                                                JUL     195.55 – 6.50
JUL      1993 – 16                                                SEP     196.45 – 6.40
SEP      1999 – 15                                               DEC     197.65 – 6.10
NOV     2003 – 17                                               MAR     198.30 – 6.25
JAN      2000 – 17                                               MAY     198.80 – 6.15
MAR     2000 – 17                                                JUL     199.40 – 6.00

7th. August, 2014.
The National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of July were 81,742 bags or 21.79% lower than the same month last year, at a total of 293,312 bags.  This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 431,403 bags or 13.89% lower than the same period in the previous coffee year, at a total of 2,673,721 bags.

It has to be noted however in terms of Guatemala, that while offers and sales of past crop top quality Honduras, Costa Rica and El Salvador coffees have since dried up and indicate that these coffees ahead of the new crop harvest that starts in two to three months’ time, that there are still offers of past crop quality coffees from Guatemala in the market.   This indicates that while there is no doubt that Guatemala did have a smaller Roya or Leaf Rust affected past crop, that the lower export volumes are not only related to this factor, but also to the internal market price resistance this year in reaction to lower volumes, which have inflated the prices out of Guatemala and forced many traditional buyers to substitute these coffees with more affordable alternatives.

This substitution has mostly been related to the much larger production figures out of Colombia, who have shipped 1,768,000 bags or 21.31% more coffee over the first ten months of the present October 2013 to September 2014 coffee year, than the same period in the previous coffee year.   While in terms of increasing production out of Colombia, one must look to the evidence of production for the month of July at 1,236,000 bags, which is a sixteen year high for this leading fine washed arabica coffee producer.

Nevertheless, the issue of Roya or Leaf Rust are now being controlled throughout Mexico and Central America and with the prospects for at least a 10% increase for the new crop from this region that combined, still remains the largest producer of fine washed arabica coffees.   Guatemala in particular, is not quite matching this overall regional forecast, with early forecast for the country presently indicating a more modest 7% to 8% larger new crop, at around 4.4 million bags.

There is little new news coming out of Brazil where the larger northern coffee districts conilon robusta coffee crop is complete and the central and southern districts smaller arabica coffee crop is approximately 65% complete, but with this latter arabica coffee crop due to be close to completed by the end of this month.   It is noted however, that despite the many forecasts for a partial drought affected dismal new arabica coffee crop from Brazil that the arabica coffee farmers are still relatively free and aggressive sellers of their substantial carryover stocks of past crop coffees, which makes one question how convinced they who are on the ground and know best are in the prospects for this new arabica crop to be as low as many in the trade have been indicating.

Likewise in terms of the forthcoming next arabica coffee crop in 2015, that the increased incidences of aggressive pruning and the stress to the trees on many farms, shall be as damaging to the new crop potential as is being suggested by many reports.    Surely if the farmers truly believed in a dismal 2015 arabica coffee crop out of Brazil, they would be showing more price resistance and holding back stocks for higher value, rather than being the free sellers of their stocks as they are at present.   But it is early days and once still needs to see a good spring and summer rain season from October 2014 to April 2014, if there is to be a reasonable new arabica coffee crop out of Brazil.

The arbitrage between the markets broadened yesterday to register this at 104.31 usc/Lb., while this equates to a relatively attractive 53.53% 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 7,602 bags yesterday, to register these stocks at 2,426,239 bags.   There was meanwhile a smaller in volume 4,685 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 19,655 bags.

The commodity markets had a mixed but overall day of buoyancy yesterday, despite the steady nature of the U.S. dollar and with the Oil markets tending to steady the overall picture.   The Oil, Natural Gas, Cocoa, Sugar, New York arabica Coffee, Copper, Soybean, Silver and Platinum markets had a day of buoyancy and the Cotton, Gold and Palladium markets were steady for the day, while the London robusta Coffee, Orange Juice, Wheat and Corn markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.78% higher; to see this Index registered at 520.77.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.685 to Sterling and 1.339 to the Euro, while Brent Crude is steady in early trade and is selling at $ 104.10 per barrel.

The London and New York markets started the day quietly yesterday and with both markets tending softer in early trade, but with both markets taking a softer track into the afternoons trade.  The markets came under a bit more pressure as the afternoon progressed and registered increased losses, but with the more volatile New York market soon bouncing back as the day progressed and moving back into positive territory, while the London market made a partial recovery from its lows.   The London market continued to end the day on a modestly softer note and having recovered 60% of its earlier losses of the day, while the New York market ended the day showing some degree of buoyancy but with only 46.7% of the gains of the day intact.   This nevertheless positive close for the New York market might well inspire a degree of buoyancy for the London market and a steady start for the New York market in early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1992 – 17                                               SEP     190.85 + 1.45
NOV     1996 – 11                                               DEC     194.85 + 1.45
JAN      1993 – 13                                               MAR    198.35 + 1.50
MAR     1999 – 11                                               MAY    200.35 + 1.60
MAY     2005 – 11                                                JUL     202.05 + 1.90
JUL      2009 – 6                                                  SEP     202.85 + 2.00
SEP      2014 – 3                                                 DEC     203.75 + 2.15
NOV     2020 + 2                                                 MAR     204.55 + 2.25
JAN      2017 + 2                                                 MAY     204.95 + 2.25
MAR     2017 + 2                                                  JUL     205.40 + 2.25

6th. August, 2014.
The National Coffee Federation of Colombia have reported that the countries coffee production for the month of July was 205,000 bags or 19.88% higher than the same month last year, to total 1,236,000 bags.    While the countries coffee exports for the month were 183,000 bags or 23.25% higher than the same month last year, at a total of 752,000 bags.

This improved performance and following many improved months has contributed to the Colombian cumulative production for the first ten months of the present October 2013 to September 2014 coffee year being 1,768,000 bags or 21.31% higher than the same period in the previous coffee year, at a total of 10,065,400 bags.   Likewise the countries cumulative exports for the first nine months of the present coffee year are 2,042,000 bags or 28.36% higher than the same period in the previous coffee year, at a total of 9,241,000 bags.

Based on the previous year’s performance and with Colombian production steadily rising, one might guess that the last three months of the present coffee year shall produce at least 1.7 million bags and therefore, see Colombia produce approximately 11.7 million bags during the present coffee year.   Therefore to fuel exports of approximately 10.8 million bags, for the present coffee year.   This much improved performance from Colombia assisting to counter much of the negative effects of the dip in Mexican and Central American production and the corresponding exports into the supply chain of fine washed arabica coffees, for the present coffee year.

Meanwhile with the Mexicans and Central Americans forecasted to bring in at least a 10% increase in crop from their next October 2014 to March 2015 harvest and adding in excess of 1.5 million bags to the fine washed arabica coffee supply while Colombia is expected to register a further small increase in crop, the supply of the top end mild coffees to the consumer markets is seemingly secure for the coming coffee year.   This good supply factor is especially so, as there is flat growth within the traditional developed coffee markets for the present, which are the higher value markets that are related to these relatively expensive quality coffees.   Making note that the impressive growth in single serves capsule coffees is very much related to the traditional developed coffee markets, which is resulting in less coffee fuelling more cups.

The full moon period this peaks on the 10th. August at the end of the week is to the fore and is by nature, the time when there is traditionally the most chance of a frost.   But with the frost season over the south and central Brazil coffee districts not forecasted for particularly cold weather, one might not expect that frost shall be a factor for this year.   Thus the focus now starts to be upon the late September to early October new spring and summer rain season, which shall be critical to the prospects for the next 2015 crop.

The positive crop news from Colombia while perhaps dampening some speculative spirits within the New York arabica coffee market does not detract from the problems that have been encountered early in the year for the main central arabica coffee districts in Brazil and with this factor still the headline event within the market, one might expect to see further scare stories emanating from Brazil.  These not only related to the decline in arabica coffee yields for the new crop that is starting to tail off, but more so related to the resulting liquidation of the large carryover stocks and the critical nature of the potential for excessive pruning and stressed trees, in terms of the prospects for the forthcoming 2015 crop that shall not be supported by good carryover stocks.  Thus one might see Brazil continue to underpin market sentiment and to limit the downside potential for the market, but presently and with many players still on holiday, the market can be expected to remain volatile.

The arbitrage between the markets narrowed yesterday to register this at 102.36 usc/Lb., while this equates to a relatively attractive 52.93% 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 on yesterday, to register these stocks at 2,433,841 bags.   There was meanwhile a smaller in volume 250 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,970 bags.

The commodity markets had a mixed but overall softer day yesterday, with some concerns over softer growth in the internal market China tending to take the lustre out of many markets.   The Natural Gas, Wheat and Gold markets showed buoyancy and the Cocoa, London robusta Coffee and Palladium markets were steady, while the Oil, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Corn, Soybean, Silver and Platinum market tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.54% lower; to see this Index registered at 516.76.   The day starts with the U.S. Dollar showing some buoyancy and trading at 1.686 to Sterling and 1.336 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.40 per barrel.

The London and New York markets started the day quietly yesterday and with both markets tending softer in early trade, but attracting support during the afternoon against renewed concerns over the so far difficult to quantify negative effects of the early in the year partial drought to the new Brazil crop and so too, what effect it shall have upon the quality of the trees for the next crop.   This new found buoyancy was however short lived and the markets once again started to come under pressure and with the London market continuing to end the day on a near to steady note, but with the New York moving back into negative territory and ending the day on a soft note and with 34.9% of the losses of the day intact.     This close does not however provide much indication of direction but unless the speculative sector of the market steps in to provide support, might see the markets starting the day on a steady to softer track against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2009 + 2                                                 SEP      189.40 – 1.10
NOV     2007 – 1                                                  DEC     193.40 – 1.00
JAN      2006 – 2                                                 MAR     196.85 – 0.95
MAR     2010 – 2                                                 MAY     198.75 – 0.40
MAY     2016 – 2                                                  JUL      200.15 + 0.40
JUL      2015 – 5                                                  SEP      200.85 unch
SEP      2017 – 5                                                 DEC      201.60 – 0.75
NOV     2018 – 5                                                 MAR      202.30 – 0.50
JAN      2015 – 5                                                 MAY      202.70 – 0.60
MAR     2015 – 5                                                  JUL      203.15 – 0.65

5th. August, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market increase their net long position within this market by 1.22% the week of trade leading up to Tuesday 29th..;  to register a net long position of 30,320 Lots on the day.  This net long which is the equivalent of 5,053,333 bags has most likely been little changed or perhaps marginally increased over the period of mixed but range bound trade, which has since followed.

Government export statistics from Sumatra the main coffee producing island of Indonesia have reported that the islands robusta coffee exports in July were 692,139 bags or 74.54% lower than the same month last year, at a total of 236,350 bags.    This modest total follows relatively modest robusta coffee export totals for the preceding five months and therefore the cumulative robusta coffee exports from Sumatra for the first ten months of the present October 2013 to September 2014 coffee year are 1,325,875 bags or 29.68% lower than the same period in the previous coffee year, at a total of 3,141,415 bags.

This lower performance does despite rising domestic consumption within Indonesia that is impacting upon coffee stocks available for export, assist to provide some confirmation for the many reports that have indicated a lower new coffee crop for Sumatra this year.   With relatively low export volumes expected to continue for the next seven to eight months and until such time as the potentially larger new crop shall start to come into play, so long as there are no unforeseen for the present weather problems for the island.

Thus with this tighter supply scenario out of Indonesia and with the potentially larger new Indian robusta coffee crop only due to start impacting early in the new year, it takes some of the competition away from the Vietnamese.    This we would imagine shall see farmers and internal traders maintain some degree of price resistance in their selling activity of their remaining past crop stocks, which such resistance likely to continue a month or two past the end October start of the deliveries of their large new robusta coffee crop.

Reports from traders in Ho Chi Minh City in have indicated estimates that following exports that are estimated to have been around 1.42 million bags of mostly robusta coffees in July, that the country would more than likely look to export between 1.17 million and 2 million bags of mostly robusta coffees during the month of August.   Much of these exports would of course be more related to deliveries of forward contract commitments rather than new business, but with exporters still looking to cover some of these contract commitments there can be expected to be slow but steady business being done within the internal market, as exporters chase down some of the remaining past crop stocks.

The International Coffee Organisation with their June statistics in hand, have reported that the coffee exports from all producers for the first nine months of the present October 2013 to September 2014 coffee year are 2,946,377 bags or 3.48% lower than the same period in the previous 2012/2013 coffee year, at a total of 81,822,860 bags.   This dip is despite higher volumes of Colombian mild exports that come with the steadily rising production levels in Colombia and a small increase in exports of Brazil natural arabica coffees, which were not sufficient to counter the dip in exports out of the smaller Central American new crop and the downturn in trade stocks of robusta coffees, where the inverted price structure of the London market has not been encouraging for the consumer trade to buy in and carry robusta coffee stocks.

The arbitrage between the markets broadened yesterday to register this at 103.32 usc/Lb., while this equates to a relatively attractive 53.15% 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 8,146 bags on yesterday, to register these stocks at 2,434,841 bags.   There was meanwhile a smaller in volume 2,850 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,720 bags.

The commodity markets had a day of overall buoyancy yesterday, with most markets tending to show some degree of recovery post the past few days of overall softness.   The Oil, Natural Gas, Cotton, Copper, Orange Juice, Wheat and Corn markets had a day of buoyancy and the Sugar and Cocoa markets shed their early gains to end the day near to steady, while the Coffee, Gold, Silver, Platinum and Palladium markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.56% higher; to see this Index registered at 519.59.   The day starts with the U.S. Dollar near to steady and trading at 1.687 to Sterling and 1.342 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 104.10 per barrel.

The London and New York markets started the day yesterday with the London market taking a softer track and the New York market showing so buoyancy in thin trade, with both markets maintaining this stance into the early afternoon’s trade.   The New York market did however come under pressure as the afternoon progressed and moved into negative territory and with sell stops being triggered to accelerate the losses and trigger sharp losses, while the London market continued on a steady downside track.    The New York market did however bounce back from the lows and almost made a full recovery, but without having any influence upon the soft nature of the London market.   The London market continued to end the day on a soft note and with 97.8% of the sharp losses of the day intact, while the New York market ended the day on a modestly soft note but having recovered 79.6% of the earlier losses of the day by the close.   This close does little to inspire strong confidence, but one might think that the late in the day recovery for the New York market might assist to bring some buoyancy to the London market and perhaps a 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.
                                                  
SEP      2007 – 90                                               SEP     190.50 – 1.85
NOV     2008 – 85                                               DEC     194.40 – 1.70
JAN      2008 – 84                                               MAR    197.80 – 1.55
MAR     2012 – 85                                               MAY    199.15 – 1.40
MAY     2018 – 85                                                JUL     199.75 – 1.15
JUL      2020 – 85                                               SEP      200.85 + 0.05
SEP      2022 – 89                                               DEC     202.35 + 1.25
NOV     2023 – 89                                               MAR     202.80 + 1.80
JAN      2020 – 89                                               MAY     203.30 + 1.85
MAR     2020 – 89                                                JUL     203.80 + 1.80

4th. August, 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 12.03% in the week of trade leading up to Tuesday 29th. July;  to register a net long position of 38,845 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 0.4%, to register a net long on the day of 44,975 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 24.44%, to register a net long of 27.250 lots on the day.   This net long position that is the equivalent of 7,725,254 bags has most likely been increased over the period of overall firmer trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of July were 11,469 bags or 9.22% lower than the same month last year, at a total of 112,948 bags.  This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 135,083 bags or 10.46% lower than the same period in the previous coffee year, at a total of 1,156,400 bags.  

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of July were 118,386 bags or 51.24% higher than the same month last year, at a total of 349,450 bags.  This has contributed to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 159,497 bags or 3.85% lower than the same period in the previous coffee year, at a total of 3,986,730 bags.  

The preliminary coffee export figures from Brazil for the month of July indicate the Brail registered coffee exports for the month of July that was 850,000 bags or 44.27% higher than the same month last year, at a total of 2,770,000 bags.   This significantly higher export performance being related to a good percentage of past crop arabica coffee stocks, which by nature of the indication of willing sales on the part of the farmers, still makes one cautious over the reality of some of the more extreme new crop loss reports.

The Brazil Coffee Council who is traditionally conservative in their crop forecasts and post crop figures, stepped in while the markets were already well buoyed on Friday, to state that they were not surprised that the markets had reacted positively last week to a modest new crop.   While stating that they now see both the present and the next 2015 crop, to be only around a modest 40 million bags each.    What was quite remarkable was that rather than further supporting the market, the report was immediately followed by the New York market losing half of its earlier gains of the day.   Perhaps the Coffee Council by nature of usually being 10% to 15% below reality brought some of the preceding low new crop reports into question.

The Coffee Board of India have reported that the country’s cumulative coffee exports for the first ten months of the present October 2013 to September 2014 coffee year were 64,150 bags or 1.48% higher than the same period in the previous coffee year, at a total of 4,389,650 bags.

The Ivory Coast have reported their June exports from their robusta coffee crop to have been 72,017 bags or 28.49% lower than the same month last year, at a total of 180,783 bags.  This lower performance has contributed to the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year registered at 102,983 bags or 10.66% lower than the same period in the previous coffee year, at a total of 863,500 bags.    This is a relatively modest number in terms of the countries estimated crop at around 1.7 million to 1.8 million bags, but there is also local soluble coffee processing within the country and of course, the unquantifiable volumes of coffee that traditionally gets smuggled into the neighbouring countries.  

The arbitrage between the markets broadened on Friday to register this at 101.16 usc/Lb., while this equates to a relatively attractive 51.59% 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 13,721 bags on Friday, to register these stocks at 2,442,987 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had an overall softer days trade on Friday, with little in the way of excitement seen in the majority of the markets with the exception of early trade for the coffee markets.   The London robusta Coffee, Cotton, Wheat and Gold markets ended the week with buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Copper, Orange Juice, Corn, Soybeans, Silver and Platinum markets ended on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.66% lower; to see this Index registered at 516.71.   The day starts with the U.S. Dollar steady and trading at 1.683 to Sterling and 1.342 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.70 per barrel.

The London and New York markets started the day on Friday taking a follow through positive track, with the New York market leading the way to add some more weight in early afternoon trade and adding double digit value to the market and a new three month peak in value, which was followed in a more hesitant and cautious manner, by added value for the London market.  The New York market did however finally bring into play producer price fixation selling and speculative profit taking and started to fall back from the 12.35 usc/Lb. gains for the day, with sell stops coming into play to accelerate the losses and a 15.8 usc/Lb. reversal and with the London market shedding some weight in line with this change of sentiment.  The London market ended the day on a modestly positive note and with only 10% of the gains of the day intact, while the New York market ended the day on a soft note and with 78.3% of the losses of the day intact.  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2097 – 7                                                 SEP     192.35 – 2.70
NOV     2093 + 4                                                 DEC     196.10 – 2.65
JAN      2092 + 9                                                 MAR    199.35 – 2.60
MAR     2097 + 11                                               MAY     200.55 – 2.90
MAY     2103 + 12                                                JUL     200.90 – 3.00
JUL      2105 + 9                                                 SEP      200.80 – 3.10
SEP      2111 + 12                                               DEC     201.10 – 2.85
NOV     2112 + 12                                               MAR     201.00 – 3.35
JAN      2109 + 12                                               MAY     201.45 – 3.15
MAR     2109 + 12                                                JUL     202.00 – 2.65

1st. August, 2014.
Yesterday was another one all about coffee in terms of the relatively flat holiday season commodity markets, as the report by the Brazilian coffee exporter Terra Forte that has pegged the new Brazil crop at just over 45.78 million bags triggered short covering for the New York market and with follow through buoyancy for the London market.    This within an environment of thin trade that assisted to accentuate the early gains, set the base for the rest of the day, where the bulls dominated the more volatile and speculative New York market.

Following on from the Terra Forte report and perhaps throwing some more fuel upon the speculative fire within the New York market, was a report by Sterling Smith a futures market specialist in the Chicago offices of Citigroup, who reported that the new Brazil crop would be an even lower 41.75 million bags.   This forecast very much in line with the traditionally excessively conservative Brazil National Coffee Council, who forecasted the new crop at between 40.1 million to 43.3 million bags on the 4th. April.  While the same report also indicated that due to the damage done to the trees within the arabica coffee districts in Brazil, the follow on 2015 crop would only be a modest 40 million bags.

Thus with new crop forecasts ranging between 41 million bags and 50.5 million bags and with no certainty as of yet and until a good percentage of the new arabica coffee crop has been hulled to truly assess the yields from the harvested cherries, the market remains within a short term period of uncertainty.   Albeit that the majority of the more reliable forecasts are still within the 48 to 49 million bags crop factor, which would mean an approximate 4 million to 6 million bags deficit crop, which is in terms of the approximate 12 million bags of carryover stocks into the new crop, a deficit coffee supply that is presently not threatening to consumer market demand.

The Vietnam Economic Times journal reported yesterday that the Agricultural Ministry in Vietnam is targeting further developments in the countries value added coffee industry and with an intent that by 2020, the country should be exporting approximately 25% of its coffees in the form of soluble instant coffees and roast and ground coffees.   This would be an impressive figure in terms of Vietnam’s present export volumes of approximately 26 million bags of mostly robusta coffees per annum, which would make one question the reality of such a figure, albeit that Vietnam does have the advantage of a developing new coffee consuming market in its neighbouring countries.

With official Coffee Board of India forecasts for a much improved new coffee crop due to start at the end of the year that shall exceed 5.7 million bags, there has been focus upon the slow start to the monsoon rain season.  There have however been reasonable rains over the past few weeks and while erratic, are seemingly quite sufficient for the development of the new crop.   Thus for the present, there is little concern to be seen, in terms of the prospects for this potentially larger new crop.

The arbitrage between the markets broadened yesterday to register this at 99.61 usc/Lb., while this equates to a relatively attractive 51.07% 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 3,232 bags yesterday, to register these stocks at 2,456,708 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had another mixed but overall negative day yesterday, with the exception of the very emotive coffee markets, which surged in value for the day and with the New York market experiencing its most dramatic rally since May this year.   While many market players are awaiting the latest U.S. jobs data that is due out later today, which are expected to be positive but negative in terms of commodities, as this might influence and earlier than expected rise in the dollar interest rate and a stronger dollar to come into play.  The Natural Gas, Cocoa, Orange Juice and Wheat markets had a day of buoyancy and the Coffee markets their dramatic rally, while the Oil, Sugar, Cotton, Copper, Corn, Soybean, Gold, Silver, Platinum and Palladium markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% lower; to see this Index registered at 520.15.   The day starts with the U.S. Dollar maintaining its new found muscle and trading at 1.687 to Sterling and 1.339 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.50 per barrel.

The London and New York markets started the day yesterday taking a strong positive stance and one that set both markets on an upside track into the afternoon’s trade and with trading volumes building, as buy stops started to be triggered to accelerate the gains.   The gains were further assisted by the thin volumes of producer selling over the market, as with most of the northern hemisphere trade on holiday, there remains little physical buying interest in play.   The London market continued to end the day on a positive note and at the highs of the day with 98.5% of the gains of the day intact, as did the New York market end close to the highs of the day and with 89.6% of the gains of the day intact.    This strong close is somewhat constructive for market sentiment and one might expect to see a follow through steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      2104 + 67                                               SEP     195.05 + 12.55
NOV     2089 + 58                                               DEC     198.75 + 12.40
JAN      2083 + 57                                               MAR    201.95 + 12.25
MAR     2086 + 56                                               MAY     203.45 + 11.85
MAY     2091 + 54                                                JUL     203.90 + 11.20
JUL      2096 + 50                                                SEP     203.90 + 10.85
SEP      2099 + 44                                               DEC     203.95 + 10.55
NOV     2100 + 36                                               MAR     204.35 + 10.70
JAN      2097 + 36                                               MAY     204.60 + 10.75
MAR     2097 + 36                                                JUL     204.65 + 10.65

31st. July, 2014.
The fine washed arabica coffee producer bloc of Central America, Dominican Republic, Colombia and Peru, but excluding Mexico, have reported that the bloc’s combined coffee exports for the month of June were 8.63% lower than the same month last year, at a total of 2.39 million bags. This lower export performance has contributed to the bloc’s cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year being 3% lower than the same period in the previous coffee year, at a total of 21.17 million bags.

Added to these figures would be an estimated 250,000 bags plus of exports from Mexico, which would increase the month’s exports to approximately 2.64 million bags of fine washed arabica coffees, from the South and Central America.   Likewise with an estimated 1.9 million bags of exports from Mexico for the first nine months of the present coffee year, cumulative exports from this region of 23.07 million bags.  

The Brazilian coffee exporter Terra Forte have come to the fore yesterday, with a new crop forecast for Brazil of 45,784,000 bags.   This forecast based on the company’s latest estimate the new arabica coffee crop shall dip to a modest 28.3 million bags, which is 22% lower than their pre partial drought forecast.    While by nature of these figures, the company would agree that the new conilon robusta crop was close to 17.5 million bags.   

The same report did not provide any forecasts for the next 2015 crop, but did stress that post the partial drought over January and February in the main central arabica coffee regions, that the farms have suffered and with many showing evidence of dramatic losses of vegetative growth.   This indicating that with the combination of such losses and some incidences of Leaf Rust, that the country shall be due for a relatively modest arabica coffee crop for the coming year.

It is however a report from an exporter and many might see it to be somewhat market manipulative in nature, but it does nevertheless assist to buoy speculative support within the market that is presently lacking any new fundamental news.   This report assisting to a degree in yesterday’s trade, to keep the New York market at the higher end of the prevailing trading range for this more speculative and volatile of the two markets.   While there has to be little doubt that over the coming weeks, that there shall be some more market supportive low crop reports emanating from Brazil.

There are reports from Indonesia of early flowering within the main coffee producing island of Sumatra, which would usually indicate the prospects for a good sized new crop, which would start being harvested early in the coming year.   But this is still very much related to weather conditions for the coming months, which are for the time being looking to be favourable and conducive for a good Indonesian new robusta crop in 2015.   Likewise in terms of the smaller arabica crop that accounts for approximately 13.7% of overall coffee production for Indonesia, a similarly improved 2015 crop.

The arbitrage between the markets narrowed yesterday to register this at 90.10 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 1,912 bags yesterday, to register these stocks at 2,459,940 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The commodity markets had another mixed but overall negative day yesterday, but with many players on holiday, many markets experienced the accentuated moves that come with relatively thin trade.  The Sugar, Cocoa, New York arabica Coffee, Copper, Wheat, Corn, Silver, Platinum and Palladium markets showed buoyancy and the London robusta Coffee market was steady, while the Oil, Natural Gas, Cotton, Orange Juice, 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 0.25% lower; to see this Index registered at 521.87.   The day starts with the U.S. Dollar maintaining its buoyancy and trading at 1.691 to Sterling and 1.339 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 105.00 per barrel.

The London market started the day yesterday taking a softer stance, while the New York market experienced a steady to buoyant start for the day.   Trade was however very thin for the more speculative and volatile New York market but relatively steady within the London market that recovered its losses during the afternoons trade, in line with the New York market that had likewise recovered from a short term afternoons dip back into negative territory.   The London market continued to end the day on a steady note, while the New York market ended the day on a positive note and with 72% of the gains of the day intact.    This somewhat mixed close provides little in the way of guidance for the markets and one might expect that despite the somewhat market supportive report from Brazil yesterday, that the market shall be due to 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.
                                                  
JUL      2047 + 13   
SEP      2037 + 3                                                 SEP     182.50 + 1.80
NOV     2031 unch                                              DEC     186.35 + 1.75
JAN      2026 – 2                                                 MAR     189.70 + 1.75
MAR     2030 – 3                                                 MAY     191.60 + 1.65
MAY     2037 – 3                                                  JUL     192.70 + 1.45
JUL      2046 – 3                                                  SEP     193.05 + 1.20
SEP      2055 – 3                                                  DEC    193.40 + 1.00
NOV     2064 – 3                                                  MAR    193.65 + 0.95
JAN      2061 – 3                                                  MAY    193.85 + 0.95

30th. July, 2014.
The harvesting within the main central and southern coffee districts in Brazil is due to start picking up steam again this week, following the past few days of rain interruption.   These rains have not really caused any problems as the harvest is still well ahead of where it was at the same time last year, with the country’s leading Cooxupe Cooperative reporting that as at the 25th. July that 64.6% of their new crop harvest had been completed, as opposed to only 54.9% on the same date last year.

Meanwhile with the recent rains having assisted to buoy the ground water retention levels that suffer during the dry winter harvest season, it will assist the trees to counter the stress of the harvest and to carry them through to the end September start for the spring and summer rain season.   These forthcoming rains really do need to be good, if the country is to bring in a reasonable new crop for the coming year, by when the carryover arabica stock levels shall be very much depleted.

These ground water retention levels becoming even more important in terms of the medium term weather forecasts in Brazil indicating a rain free period of three weeks for Brazil, by when the new crop can be expected to be getting closer to completion.    But it shall still take some weeks to follow, prior to the hulling and grading of new crop coffees to truly start to indicate the yield outturns from this new crop and to bring to the market some more clarity as to the size of this new arabica coffee crop, which remains a matter of continued debate for the market players.

Physical coffee trade remains very much stalled for the present, with the majority of the northern hemisphere industries on their summer holidays and with most main stream roasters holding good short to medium term forward cover.   Thus with the traders reluctant to take on to much in the way of speculative stocks and particularly so in terms of robusta coffees to be hedged against the inverted price structure London market, the internal market in Vietnam is at best described as dull.    While with Indonesia celebrating the end of Ramadan Eid el Fitr celebrations, there is no activity so far this week within the second largest of the Asian coffee players.  
 
The arbitrage between the markets narrowed yesterday to register this at 88.44 usc/Lb., while this equates to a relatively attractive 48.94% 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 14,965 bags yesterday, to register these stocks at 2,461,852 bags.   There was meanwhile a larger in volume 17,020 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,570 bags.

The thin and steadily declining nature of the New York certified arabica coffee stocks are presently having little impact upon market sentiment, as all are aware that the Mexicans and Central Americans who dominate these stocks are soon due for a larger new crop.   This new crop forecasted to be approximately 10% larger than the past Roya or Leaf Rust effected past crop and potentially joined by rising coffee production and supply from neighbouring Colombia, which shall ensure steady fine washed arabica coffee supply to the consumer markets.  This supply complemented by prospects for slightly increased fine washed arabica coffee supply from the new Tanzania crop, which is soon to start coming to the market.  

The commodity markets had a mixed but overall negative day yesterday, but with some degree of support coming from improved economic figures from Japan.  However the firmer nature of the U.S. dollar had its influence, to take degree of support out of many of the markets.  The Brent Oil, Natural Gas, Cocoa, London robusta Coffee and Silver markets showed some buoyancy, while the U.S. Oil, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Platinum and Palladium markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.64% lower; to see this Index registered at 523.20.   The day starts with the U.S. Dollar maintaining its buoyancy and trading at 1.694 to Sterling and 1.340 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 107.30 per barrel.

The London and New York markets started the day yesterday on a steady note and with modest gains in thin early trade, but with both markets dipping back in value for the early afternoon’s trade and heading into negative territory.   This reversal in fortunes for the market did however attract underlying support and with the London market finally moving back into positive territory, while the New York market recovered most of its losses.   The London market continued to end the day with modest buoyancy and with 60% of its gains of the day intact, while the New York market ended the day on a soft note, but having recovered 85.2% of the earlier losses of the day by the close.    This ability to recover from the negative effects of earlier afternoon losses for both market is perhaps modestly constructive for sentiment, but one might think that lacking any new fundamental supportive news and with the technical trade somewhat in a holiday mood, that the markets might struggle to do much more than take a steady stance for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2034 – 2   
SEP      2034 + 6                                                 SEP     180.70 – 0.40
NOV     2031 + 7                                                 DEC     184.60 – 0.35
JAN      2028 + 7                                                 MAR    187.95 – 0.25
MAR     2033 + 8                                                 MAY    189.95 – 0.30
MAY     2040 + 10                                                JUL    191.25 – 0.30
JUL      2049 + 30                                                SEP    191.85 – 0.55
SEP      2058 + 15                                               DEC    192.40 – 0.55
NOV     2067 + 17                                               MAR    192.70 – 0.55
JAN      2063 + 24                                               MAY    192.90 – 0.55

29th. July, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market increase their net long position within this market by 2.72% the week do trade leading up to Tuesday 22nd.;  to register a net long position of 29,956 Lots on the day.  This net long which is the equivalent of 4,992,667 bags has most likely been little changed or perhaps marginally increased over the period of lacklustre range bound trade, which has since followed.

The report from Starbucks that the company has already locked in 60% of its coffee prices for the coming year and by nature this confirming that their confidence in the lack of downside risk to international coffee prices, has assisted to support market sentiment for some of the speculative sector of the market.   Thus contributing one would think, within the prevailing environment of thin and lacklustre holiday trade, to some degree of buoyancy within the market that is presently at the higher end of the recent trading range.

This is of course not the main support factor for the New York arabica coffee market that registered a two month high during trade yesterday, as this is mostly related to speculative and fund coverage in relationship to the uncertainty of the prospects for both the present partial drought affected new Brazil.  This harvest has encountered a short term hiccup, with the past few days of unseasonal heavy rains, which seemingly had some influence upon price supportive short covering activity during the day.   But inability of the market to hold on to all of its earlier in the day gains, might well be a sign that the market is getting a bit toppy for the present and might if the upside track falters during this week, bring forth the negative effects of increased producer catch up price fixation hedge selling activity.  

It is traditional at this time of the year and a few weeks prior to the start of the new crop harvest in Vietnam for the Vietnam Coffee and Cocoa Association to come forth with a market manipulative low new crop forecast and once again, they have come forth with a forecast for a new crop of around 23 million bags.   This new crop that they say has suffered from an early in the year drought and followed by excessive rains, they report shall be 1.3% lower than the last crop, which would indicate that they see the last crop to have only been 23.3 million bags.

This past crop figure in terms of Vietnam with a domestic coffee consumption of well in excess of 1 million bags per annum and exports for the first ten months of the present coffee year of 23.33 million bags, does already illustrate the unrealistic nature of the figures being quoted by the Vietnam Coffee and Cocoa Association.  While the so called early in the year drought was in reality the end of the seasonal October to March dry season and meanwhile, the rain season has been mostly normal since April and it is unlikely that with private trade and industry forecasts looking to a new crop that shall match the 27.5 million plus past crop, that this forecast from the Vietnam Coffee and Cocoa Association shall have much impact upon market sentiment.  

In fact contrary to the market supportive report coming from the Vietnam Coffee and Cocoa Association for this the world’s leading robusta coffee supplier, the London robusta coffee market is presently falling behind the recovery in prices that is being experienced by the New York arabica coffee market.   This would indicate that despite the discounted price advantageous that the robusta coffees offer to the consumer market roasters, there is presently not concern on the part of the international industry players in terms of medium to longer term robusta coffee supply.

The arbitrage between the markets broadened yesterday to register this at 89.11 usc/Lb., while this equates to a relatively attractive 49.20% 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 642 bags yesterday, to register these stocks at 2,476,817 bags.   There was meanwhile a larger in volume 5,200 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 550 bags.

The commodity markets had a mixed day yesterday, with most markets remaining within a relatively thin trading range for the day.   The Coffee, Cotton, Copper, Corn, Soybean, Gold, Platinum and Palladium markets showed buoyancy, while he Oil, Natural Gas, Sugar, Cocoa, Orange Juice, Wheat 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 0.08% higher; to see this Index registered at 526.56.   The day starts with the U.S. Dollar tending steady and trading at 1.697 to Sterling and 1.343 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.65 per barrel.

The London and New York markets started the day yesterday on a steady note and with modest gains in thin trade, but with both markets dipping back in value for the early afternoon’s trade.   This dip was however short lived and the markets soon recovered into positive territory and with the New York market building upon its gains to trigger hit a two month high, but once again attracting selling pressure to dip back into negative territory, while the London market continued on a sideways positive track.    The London market continued to end the day on a positive note and with 50% of the earlier gains of the day intact, while the New York market recovered from its afternoon dip and ended the day on a positive note and with 45.9% of the gains of the day intact.   This overall positive close is perhaps supportive for a steady start for early trade today, but with the threat of producer selling coming into play for the New York market against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2036 + 12  
SEP      2028 + 12                                               SEP     181.10 + 1.95
NOV     2024 + 11                                               DEC     184.95 + 2.15
JAN      2021 + 11                                               MAR    188.20 + 2.20
MAR     2025 + 11                                               MAY    190.25 + 2.40
MAY     2030 + 10                                                JUL    191.55 + 2.55
JUL      2036 + 10                                                SEP    192.40 + 2.60
SEP      2043 + 10                                               DEC    192.95 + 2.55
NOV     2050 + 10                                               MAR    193.25 + 2.55
JAN      2039 + 10                                               MAY    193.45 + 2.45

28th. July, 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 4.06% in the week of trade leading up to Tuesday 22nd. July;  to register a net long position of 34,675 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 0.07%, to register a net long on the day of 44,797 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 11.05%, to register a net long of 22,701 lots on the day.   This net long position that is the equivalent of 6,435,633 bags has most likely been increased over the period mixed but overall firmer in value end of the week technical trade which has since followed and likewise, the net long position of the Managed Money Funds.

The security in terms of medium term Brazil coffee supply had been reconfirmed by the Brazil governments crop supply agency, who confirmed on Friday the countries coffee stocks of mostly arabica coffees, were at their highest since 2007, as at March this year.  This report indicating reality to the earlier reports that had pegged the carryover stocks into the new crop at being in excess of 12 million bags and therefore, a guarantee of steady supply through to the next 2015 crop.

In the meantime the National Coffee Council in Brazil have somewhat predictably come forth with a new crop forecast for the country that is a low 40.1 to 43.3 million bags, with comment that the probability is for the crop to be at the lower level.   This is however a forecast that most would view as market manipulative in nature and thus is unlikely to have much impact upon market sentiment, but does nevertheless assist to dampen the spirits of any bears within the market.

New crop figures in Brazil aside the main focus is now on the prospects for the next 2015 Brazil crop, which shall need to be a good crop to assist in the recovery of the by then depleted stocks and to maintain steady Brazil coffee supply through to 2016.   Thus with above average winter rains for many of the main coffee districts and the resulting assistance to maintain ground water retention levels ahead of the main spring and summer rain season that is due to start at the end of September, the prospects are for a good start to the forthcoming flowerings for the new crop.   

With the export registrations for the month in hand and the month nearly over, the government in Vietnam have come forth with their preliminary export volume for the month of mostly robusta coffees, which they peg at being 6.3% lower than the same month last year, at 1.42 million bags.     This they note would contribute to the countries cumulative exports for the first ten months of the present October 2013 to September 2014 coffee year being 0.7% lower than the same period in the previous coffee year, at a total of 23,33 million bags.

The arbitrage between the markets broadened on Friday to register this at 87.71 usc/Lb., while this equates to a relatively attractive 48.96% 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 increase by 1 bag on Friday, to register these stocks at 2,476,175 bags.   There was meanwhile a modest in volume 550 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,750 bags.

The commodity markets ended the week with some degree of overall buoyancy, but within continued lacklustre holiday trade for the majority of the markets.  The Brent Oil, Sugar, New York arabica Coffee, Wheat, Corn, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the U.S. Oil, Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice and Soybean markets had s softer days trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.22% higher; to see this Index registered at 526.15.   The day starts with the U.S. Dollar tending steady and trading at 1.698 to Sterling and 1.343 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.30 per barrel.

The London and New York markets started the day on Friday on a softer note but with the New York market soon attracting sufficient support in thin trade, to bounce back into positive territory, while the London market maintained its negative track.   The New York market encountered some short term negative pressure in early afternoon trade but again bounced back to maintain its positive track for the rest of the day.  The London market did not however fare so well and the market closed on a negative note and with 51.6% of the losses of the day intact, while the New York market ended the day on a positive note and with 44.7% of the gains of the day intact.   This mixed close provides little indication for the markets and one might think that with physical trade mostly absent from the holiday market for the present and the speculative sector of the markets cautious, that the markets are due for at best a 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.
                                                  
JUL      2024 – 17  
SEP      2016 – 16                                               SEP     179.15 + 0.85
NOV     2013 – 15                                               DEC     182.80 + 0.85
JAN      2010 – 15                                               MAR    186.00 + 0.85
MAR     2014 – 16                                               MAY    187.85 + 0.80
MAY     2020 – 17                                                JUL     189.00 + 0.55
JUL      2026 – 19                                                SEP     189.80 + 0.45
SEP      2023 – 21                                               DEC     190.40 + 0.40
NOV     2040 – 23                                               MAR     190.70 + 0.30
JAN      2029 – 23                                               MAY     191.00 + 0.25

25th. July, 2014.

The Certified robusta coffee stocks held against the London robusta coffee exchange were seen to rise by 117,667 bags or 10.26% in the two weeks of trade leading up to Monday 21st. July; to register these certified stocks at 1,265,000 bags.   

The arbitrage between the markets remained steady yesterday to register this at 86.13 usc/Lb., while this equates to a relatively attractive 48.31% 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 3,390 bags yesterday, to register these stocks at 2,476,714 bags. There were 3,940 bags drawn from the number of bags pending grading for the exchange; to register these pending grading stocks, at a reduced 5,200 bags. 

The commodity markets were mixed yesterday, with the latest release of employment data from leading economy U.S.A. report of reduced jobless claims thus far in July, providing some buoyancy to sentiment in this largest consumer market. There remains however a general undercurrent of uncertainty within the context of prevailing geopolitical turbulence and the appearance of some restraint as a result.  It was a softer day in the Oil markets, Cotton, Orange Juice, Wheat, Corn, and a positive day for Copper, Coffee, Sugar, Cocoa, Soybean, within the metals markets a negative day for Gold, Silver and Platinum and some buoyancy for Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up of 17 markets is 0.40% lower; to see this Index registered at 525.00.   The day starts with the U.S. Dollar trading at 1.699 to Sterling and 1.347 to the Euro, while Brent Crude is steady in early trade and is selling at $ 105.56 per barrel.   

It was a positive start to the day in the coffee markets yesterday, with London robusta buoyant and in positive territory at the outset.  The New York arabica market, following on from the positive close started the day mildly buoyant with both markets gaining ground during the morning session.  While New York maintained a mild and muted positive range during the session with light volume, this was in contrast to the London market which having resisted to follow the gains in New York of late, experienced a degree of catch up on the day.  The afternoon session progressed in a similar vein with both markets steady in positive territory and a narrow range set for the duration although underlying buyer support left the floor toward the end of the session in New York, to see this market close off of the days’ high, the London market continued to build on the gains until the closing bell, the markets set the close yesterday in positive territory, as follows:  

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

JUL   2041 + 42 
SEP 2032 + 38                      SEP 178.30 + 1.70
NOV 2028 + 35                      DEC 181.95 + 1.60
JAN 2025 + 33                      MAR 185.15 + 1.60
MAR     2030 + 32                                        MAY 187.05 + 1.40 
MAY     2037 + 34                                          JUL 188.45 + 1.20
JUL      2045 + 34                                              SEP 189.35 + 0.80
SEP      2054 + 36                                              DEC 190.00 + 0.75 
NOV     2063 + 38                                              MAR   190.40 + 0.75
JAN      2052 + 38                                              MAY   190.75 + 0.75

24th. July, 2014.
A Reuters Poll over a selected number of respected coffee industry players has come forth with crop and price predictions for the medium term, with the Poll has suggesting that the new Brazil crop shall be 49 million bags and the new Vietnam crop shall be 27.5 million bags.    While with such crops coming into play and based on the Poll’s consumption figures, the Poll suggests a 4 million bags deficit in supply for the coming October 2014 to September 2015 coffee year.    The results of this Poll might be seen to be neutral and conducive to maintenance of the present trading range, rather than being directional in nature.

In terms of year end prices, the Poll has suggested that the London market shall end the year at a price level of US$ 2,075.00 per Metric ton and the New York market at a price level of 180.00 usc/Lb., which suggests a relatively flat London robusta market, but some buoyancy for the New York washed arabica coffee market.  While such price levels would equate to an arbitrage of 92.32 usc/Lb., which would be a 51.29% price discount for the London robusta coffee market.

This is however very much a poll and with many factors still to come into play as the year progresses, but in terms of the crop figures at least, they would seem to agree with many within the industry.    While in terms of the price predictions, one has to always keep in mind that the funds do not necessarily always follow the logic of market fundamentals, when they invest in coffee.  

Fortunately if these Poll figures are close to correct in terms of longer term supply, the world stocks are still significant and unless there is a disaster with the next 2015 Brazil crop and is a factor that can only be calculated and forecasted late in the year, it would seem that the industry has no reason for concern for the foreseeable future.  Thus it remains business as usual for the coffee markets and with many players on the beach for the holiday season, a lacklustre few weeks to the fore.   

The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of June were 96,535 bags or 26.73% lower than the same month last year, at a total of 264,611 bags.  This more modest performance does however follow on from some good volume months and the countries cumulative coffee exports for the first nine months of the present October 2013 to September 2014 coffee year are still 69,337 bags or 2.62% higher than the same period in the previous coffee year, at a total of 2,713,510 bags.

The Tanzania Coffee Board have forecasted that with this being a biennially bearing up year for the country, that they forecast this year’s new coffee crop which is starting to be harvested to be due 26.7% larger than last year’s crop, at a total of 1,030,000 bags.  This crop expected to be a ration of approximately 64 to 35 arabica and robusta coffees, with the more important arabica coffees starting to come to the international markets from September onwards.

Following on from the many forecasts from private trade and industry players and some leading commodity futures brokers forecasts for the new Brazil crop that have been indicating a new crop of around 49 million to 50 million bags, the brokerage firm International F C Stone’s representative has reported post a four day tour of the main central arabica coffee districts in Minas Gerais and north Sao Paulo, that the damage seen was irreversible and could be as much as 25% of the pre partial drought crop potential.   This rather dramatic figure is of course related to just these main arabica coffee districts and not all the coffee districts in Brazil and would at a guess indicate losses of approximately 8 million bags, but against what overall crop figure.   Making note that prior to the partial drought and in late December last year, the more reliable new crop forecasts ranged from between 55 million bags to 60 million bags.

Thus the question is would such damage to the potential from the main arabica coffee districts in Brazil actually indicate an overall crop of well below 49 million, or is it just another dramatic figure that in reality has done little to change the acceptable in terms of carryover stocks of close to 12 million bags into the new crop, modest deficit of 4 million to 5 million bags.   The same report did however make reference to high and wide spread incidences of Leaf Rust within these arabica coffee districts that presumably would be related to the weakened trees and the wet conditions over April and May, which does hint at problems for the prospects for the next 2015 crop.  Should this prove to be a longer term reality, it would indicate another follow on deficit crop year for Brazil and with reduced stocks, a bullish factor for the market.  Only time can tell, but this somewhat unexpected supportive report has in the meantime, added some short term excitement to the prevailing lacklustre holiday market yesterday.

The arbitrage between the markets broadened yesterday to register this at 86.15 usc/Lb., while this equates to a relatively attractive 48.78% 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 525 bags yesterday, to register these stocks at 2,473,324 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,140 bags.

The commodity markets were again mixed yesterday, but might be due to gain some support from the news of increasing internal market factory demand in China.   The Cocoa, New York Arabica Coffee, Cotton, Copper, Soybean and Gold markets had a day of buoyancy and the Natural Gas and London robusta Coffee markets were steady, while the Oil, Sugar, Orange Juice, Wheat, Corn, Silver and Platinum markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.30% higher; to see this Index registered at 527.10.   The day starts with the U.S. Dollar tending steady and trading at 1.703 to Sterling and 1.346 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 106.85 per barrel.

The London and New York markets started the day yesterday with some hesitant buoyancy, but with both markets tending softer in thin early trade.   The New York market did however recover into the afternoon’s trade, while the London market continued on its softer track.   The New York market started to show added muscle as the afternoon progressed and with speculative support further inspired by the International F C Stone report, to trigger buy stops and with thin volumes of producer price fixation selling over the market, to accelerate the gains.   The London market continue on its soft track but with the positive influences of the New York market in play, to recover its losses late in the day and end on a steady note, while the New York market ended the day on a strong note and with 80.6% of the earlier gains of the day intact.   This strong close in New York might well inspire some buoyancy for the London market but perhaps some profit taking selling for the New York market in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1999 + 1
SEP      1994 + 1                                                  SEP     176.60 + 8.30
NOV     1993 + 5                                                  DEC     180.35 + 8.25
JAN      1992 + 7                                                  MAR    183.55 + 8.05
MAR     1998 + 8                                                  MAY    185.65 + 8.00
MAY     2003 + 6                                                   JUL    187.25 + 7.75
JUL      2011 + 6                                                   SEP    188.55 + 7.60
SEP      2018 + 6                                                  DEC    189.25 + 7.35
NOV     2025 + 8                                                  MAR    189.65 + 7.05
JAN      2014 + 6                                                  MAY    190.00 + 7.00

23rd. July, 2014.
The well respected Brazil analyst Safras e Mercado have reported that with very favourable dry harvest weather over the past few weeks the countries new crop is now 74% completed, as against a factor of only a more modest 56% at the same time last year.  One might however comment that with the northern conilon robusta coffees that come in earlier during the harvest season accounting for approximately 35% of the new crop, that this would indicate that the central and south districts arabica coffee crop that is in its peak, is still only 60% completed.    

Thus in terms of the assessment of the yield outturns from the partial drought affected central districts arabica coffee crop and with time required to properly dry the harvested cherries prior to hulling, it is really too early to assess the yields that can be expected from this arabica coffee crop.    There are of course early reports and with indications of green bean yields that are between 10% to 30% lower than last year, but it is early days and one shall really have to wait for a month or perhaps even two more, prior to gaining more accurate data and meanwhile, the speculation on the size of this new crop will continue.

The same report from Safras e Mercado has indicated that by the end of last month, approximately 30% of the new Brazil crop had been sold forward, as opposed to a 23% sold factor by the same time last year.   This does make one question the confidence of the Brazilian coffee farmers who should know best the potential damage to their new crop, as if they truly believed in a disaster and a dramatically lower crop, why would they have been such ready sellers of the new crop.   Albeit that a good percentage of these forward sales might well be related to the third and fourth months of this year, when the reference prices of the international markets provided more value than the prevailing trading range.    

There is a cold front heading in from the south in Brazil that shall bring with it relatively heavy rains, which shall potentially stall the new crop harvest for four to five days, but with this wet weather due to start impacting on Thursday and with the weekend to the fore, it shall in reality only interrupt the harvest for a couple of days.   Thus the harvest continues in full swing and in the meantime the rains shall be conducive to the support of ground water retention levels for the main central and south arabica coffee districts in Brazil, ahead of the spring and summer rain season that starts in only about eight to nine weeks’ time.

In the meantime and with the reference prices of the London market tending softer and the consumer markets quiet for the present, there is only lacklustre trade within Vietnam for the present.  The country has however already exported 22 million bags of mostly robusta coffees over the first nine months of the present October 2013 to September 2014 coffee year and with the countries trade predicting that with forward contracts in hand the country shall export between 1.5 million and 2 million bags this month, the Vietnamese coffee supply continues to easily fulfil consumer market demand for robusta coffees.    

The arbitrage between the markets narrowed yesterday to register this at 77.90 usc/Lb., while this equates to a relatively attractive 46.29% 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 525 bags yesterday, to register these stocks at 2,474,074 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,140 bags.

Despite the relatively tight supply of Mexican and Central American washed arabica coffees post the Roya or Leaf Rust affected past crop, this producer bloc continues to dominate the certified stocks held against the New York market.  Presently the bloc that is made up by Mexico, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua accounts for 1,436,187 bags or 58.05% of the stocks and followed by Peru who contribute 516,806 bags or 20.89% and the East and Central African bloc of Burundi, Rwanda, Tanzania and Uganda who account for 337,922 bags or 13.66% of the stocks.   Meanwhile Colombia with their recovering crop levels, are steadily increasing their contribution that is presently 114,992 bags and with India bringing up the rear, with a contribution of 68,167 bags.

The commodity markets had another lacklustre summer holiday day of trade yesterday, with the macro commodity index tending softer for the day.  The Cotton, Copper and Orange Juice markets showed some buoyancy and the Cocoa, Silver, Platinum and Palladium markets were steady, while the Oil, Natural Gas, Sugar, Coffee, Wheat, Corn, Soybean and Gold markets were easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% lower; to see this Index registered at 525.51.   The day starts with the U.S. Dollar tending steady and trading at 1.706 to Sterling and 1.346 to the Euro, while Brent Crude is close to steady in early trade and is selling at $ 106.00 per barrel.

The London and New York markets started the day yesterday with the London market close to steady and the New York market posting some modest losses and with the New York market soon recovering in thin trade and to see both markets taking a steady track into the afternoon’s trade.  This positive stance was however short lived and with the volumes picking up both markets came under negative pressure and fell back into negative territory for the rest of the day’s trade.  The London market continued to end the day on a soft note and with 71% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 73% of the earlier losses of the day intact.  This close does little to inspire confidence and one might expect little better than 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.
                                                  
JUL      1998 – 27
SEP      1993 – 22                                                SEP     168.30 – 4.60
NOV     1988 – 21                                                DEC     172.10 – 4.55
JAN      1985 – 20                                                MAR    175.50 – 4.60
MAR     1990 – 20                                                MAY     177.65 – 4.60
MAY     1997 – 19                                                 JUL     179.50 – 4.50
JUL      2005 – 17                                                 SEP     180.95 – 4.35
SEP      2012 – 15                                                DEC      181.90 – 3.85
NOV     2017 – 15                                                 MAR     182.60 – 3.55
JAN      2008 – 15                                                 MAY     183.00 – 3.40

22nd. July, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial speculative sector of this market reduce their net long position within this market by 7% in the week do trade leading up to Tuesday 15th. July;  to register a net long position of 29,164 Lots on the day.  This net long which is the equivalent of 4,860,667 bags has most likely been little changed over the period of lacklustre range bound trade, which has since followed.

The robusta coffee markets remain range bound for the present with Vietnam still holding sufficient stocks of past crop stocks to see supply steady through to the start of the new crop in approximately fourteen weeks’ time, while with the inverted nature of the reference prices of the London market not conducive to the carry and finance of stocks, there is little inspiration for the trade to aggressively chase the purchase of robusta coffee stocks.   This latter factor does likewise dampen spirits in terms of international market demand for new crop Indonesian robusta coffees, where the internal market trade is also slow in line with the distractions of Ramadan and with this religious period only due to terminate with the Eid-el-Fitr celebrations early next week, one would think that Indonesia shall tend to stay off the field of play until at least the end of the month.   

Colombian production continues to maintain its buoyancy and with steady sales into a lacklustre consumer market assisting the country to regain its market share, which it lost with the dip in production that came with the devastating effects of an El Nino and a follow on La Nina.   With the country dominating the fine washed arabica coffee supply to the consumer markets, where they account for approximately 30% of world supply and offer in terms of quality, a consistent reliability.  

Thus with Colombia firmly back on the field of play and joining the giants of the industry Brazil and Vietnam with their individual dominance within the natural arabica and robusta coffee supply, these three countries that account for approximately 60% of world coffee supply, likewise dominate main stream consumer market buying support.   The big three not only offering reliability in supply, but also a reliability in their commitment to on time delivery that is a very important factor, in these days of corporate tight inventory controls.

So far and with the new crop cherries in development there are no concerns over the prospects for the new fine washed arabica coffee crop from Mexico and Central America, which are looking to come forth with a combined new October 2014 to March 2015 crop that shall be at least 1.5 million bags higher than the past crop.  Thus with the region due for a new crop that shall be in the region of 17.5 million bags and added to the potential for 11.5 to perhaps even as high as 12 million bags supply from Colombia, there would appear to be little concern over washed arabica coffee supply for the coming October 2014 to September 2015 coffee year.

This scenario and with little in terms of fear over potential supply from Africa and Asia for the foreseeable future, leaves the markets very much in the hands of Brazil for the present.  With focus remaining upon the prospects of the partial drought affected new Brazil arabica coffee crop that is in peak harvest, but only really quantifiable post the hulling and grading outturns of a reasonable percentage of these coffee in five to six weeks’ time.   Likewise focus upon Brazil in terms of the forthcoming spring and summer rain season that kicks in late in September, which shall indicate the prospects for the follow on 2015 crop that remains in terms of market direction, the most important factor to consider.   These both being wait and see factors and for the short term, there is little to distract market players from the short term summer holiday season and resulting in the prevailing lacklustre market conditions.

The arbitrage between the markets narrowed yesterday to register this at 81.50 usc/Lb., while this equates to a relatively attractive 47.14% 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 280 bags yesterday, to register these stocks at 2,474,599 bags.   There was meanwhile a larger in volume 3,000 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,140 bags.

The commodity markets remain mostly within a narrow trading range, which can be expected within the present holiday season and with little in the way of fundamental news to provide direction.  The Oil, Cocoa, Sugar, Coffee, Cotton, Soybean, Gold and Silver markets ended the day with some buoyancy and the Orange Juice and Palladium markets were steady, while the Natural Gas, Copper, Wheat, Corn and Platinum markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.08% higher; to see this Index registered at 527.27.   The day starts with the U.S. Dollar tending steady and trading at 1.707 to Sterling and 1.352 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.45 per barrel.

The London and New York markets started the day yesterday with predictable catch up buoyancy, following the mixed close on Friday and with the New York market having surged ahead, while the New York market likewise started the day with a predictable profit taking softer stance.   This remained the stance for the markets in thin and lacklustre trade into the afternoon, but with the London market tending to soften during the afternoon, until later in the day when the New York market recovered and moved back into positive territory.  The London market continued to end the day on a positive note and with 45% of the earlier in the day gains of the day intact, while the New York market ended the day on a steady note and with 34.5% of the gains in the day intact.  This close provides little in the way of direction and one might expect to see little better than a cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2025 + 20
SEP      2015 + 14                                               SEP     172.90 + 0.50
NOV     2009 + 12                                               DEC     176.65 + 0.40
JAN      2005 + 9                                                 MAR    180.10 + 0.45
MAR     2010 + 8                                                 MAY     182.25 + 0.40
MAY     2016 + 6                                                 JUL      184.00 + 0.40
JUL      2022 + 6                                                 SEP      185.30 + 0.55
SEP      2027 + 6                                                 DEC     185.75 + 0.35
NOV     2032 + 6                                                 MAR     186.15 + 0.20
JAN      2023 + 6                                                 MAY     186.40 unch

21st. July, 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 12.88% in the week of trade leading up to Tuesday 15th. July;  to register a net long position of 33,323 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 0.15%, to register a net long on the day of 44,830 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 23.44%, to register a net long of 19,541 lots on the day.   This net long position that is the equivalent of 5,539,787 bags has most likely been increased over the period mixed but overall firmer in value end of the week technical trade which has since followed and likewise, the net long position of the Managed Money Funds.

The physical coffee market remains within the doldrums of northern hemisphere summer holiday trade and is having little influence upon the markets, which are in terms of the more volatile and speculative New York arabica coffee market, dominated by technical fund and speculative trade.   There is however with the new Brazil crop now at its peak and with the unforeseen late in the day on Friday strong market rally in New York, some encouragement for some internal market new crop selling activity due for later in the day to the countries exporters, which might bring with it some increased volume of price fixation hedge selling to come into play.  Such activity unless the funds are prepared to take on some more weight, might stall the market and bring some profit taking correction into play.

In terms of weather over the main coffee producer blocs there is nothing in the way of negative indicators within the market, with Brazil remaining frost free, Vietnam in receipt of good summer rains, Indonesia, Colombia, Central America and Africa reporting normal weather, while India is experiencing a pick-up in the slightly delayed monsoon rain season.   Thus for the present the weather conditions bring nothing to the coffee markets, which is illustrated by the lack of any market supportive forecasts from any of the main coffee producers.

The Cameroun with their robusta coffee year running from December to November, have reported that the countries robusta coffee exports for the month of June were 1,883 bags or 4.97% higher than the same month last year, at a total of 39,700 bags.  This has contributed following a slow start to the coffee year, to cumulative exports for the first seven months of the present December 2013 to November 2014 coffee year to now only being 3,767 bags or 2.11% lower than the same period in the previous coffee year, at a total of 174,483 bags.   

Meanwhile the struggling Cameroun arabica coffee sector which works on a conventional October to September coffee year have reported that their arabica coffee exports for the month of June were 1,516 bags or 19.35% lower than the same month last year, at a total of 6,317 bags.  This modest performance has contributed the countries cumulative arabica coffee exports for the first nine months of the present October 2013 to September 2014 coffee year being 8,934 bags or 29.81% lower than the same period in the previous coffee year, at a total of only a modest 21,033 bags.   

The arbitrage between the markets broadened on Friday to register this at 81.64 usc/Lb., while this equates to a relatively attractive 47.35% 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 1,510 bags on Friday, to register these stocks at 2,474,879 bags.   There was meanwhile no change to the modest number of bags pending grading for the exchange; to register these pending grading stocks at 6,140 bags.

The commodity markets had another lacklustre day on Friday, with little in the way of significant directional news coming into play, but with the New York arabica Coffee market tending to be the late in the day star of the day.  The Sugar, Cocoa, New York arabica Coffee, Cotton, and Orange Juice markets had a day of buoyancy and the U.S. Oil, London robusta Coffee and Palladium markets were steady, while the Brent Oil, Natural Gas, Copper, 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 0.23% lower; to see this Index registered at 526.86.   The day starts with the U.S. Dollar tending steady and trading at 1.709 to Sterling and 1.353 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 105.20 per barrel.

The London and New York markets started the day on Friday in thin trade, at modestly softer levels but soon tending to steady and to show some degree of buoyancy into the afternoon’s trade.   The London market took a sideways track, but with the New York market that is still attracting speculative support from the concerns of a modest new Brazil arabica coffee crop and lacking the negative effects of producer selling pressure, showing some degree of buoyancy.  The London market continued on its sideways track to end the day on a steady note and with 28.6% of its very modest gains of the day intact, while the New York market attracted late in the day speculative short covering and with buy stops being triggered, finished off with a strong close and on its highs with 97.2% of the gains of the day intact.   The rather dramatic firm close in New York might be expected to encourage a buoyant start for the London market and perhaps some light profit taking and producer price fixation hedge selling for the New York market in early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2005 + 3                                                  JUL     170.70 + 9.00                                                
SEP      2001 + 2                                                 SEP     172.40 + 8.55
NOV     1997 + 2                                                 DEC     176.25 + 8.55
JAN      1996 + 2                                                 MAR    179.65 + 8.50
MAR     2002 + 6                                                 MAY    181.85 + 8.55
MAY     2010 + 6                                                  JUL    183.60 + 8.70
JUL      2016 + 6                                                  SEP    184.75 + 8.75
SEP      2021 + 6                                                 DEC    185.40 + 8.10
NOV     2026 + 6                                                 MAR    185.95 + 8.40
JAN      2017 + 4                                                 MAY    186.40 + 8.35

18th. July, 2014.
It is with apologies that I report a typo in yesterday’s report in terms of the weekly North American coffee usage, as the report should have read:  The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 259,262 bags or 4.8% during the month of June to register these stocks at the end of the month at 5,656,004 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per week, equates to approximately 11.78 weeks of roasting activity.

The National Export Centre of Nicaragua have reported that the countries coffee exports for the month of June were 90,654 bags or 42.56% higher than the same month last year, at a total of 303,642 bags.   This positive total does not however detract from the slower start to the present October 2013 to September 2014 coffee year with records cumulative coffee exports for the first nine months of the coffee year being 230,582 bags or 15.15% lower than the same period in the previous coffee year, at a total of 1,291,026 bags.

One does however need to note that while this export performance for the coffee year is significantly lower than the first nine months of the previous coffee year, that the exports for the first two months of the previous 2012/2013 coffee year were inflated by approximately 285,000 bags of carryover stocks from the previous 2011/2012 harvest.   Thus with these taken into account and by the evidence of export volumes recorded from the 2013/2014 harvest, it would seem that this latest harvest from Nicaragua has matched the previous crops harvest and that the country suffered from no further damage from Roya of Leaf Rust.  With the prospects now foreseen; for an improved crop from their next October 2014 to March 2015 harvest.

Following the surprisingly official Indonesian Agricultural Ministry’s positive 2014 coffee crop forecast that indicated a 2.89% larger crop of 11.85 million bags, there has been the predictable reactions from the internal market trade and the exporters.  With statements coming forth that indicate production due to be below 9 million bags, while noting the rising domestic consumption shall further reduce export potential for the coming months.   This export consumption which is officially reported to be 4.2 million bags per annum is somewhat difficult to accurately calculate, as there is a good volume of unofficial tax free farm to market consumption that cannot be recorded and one might suspect it is a more impressive figure, but so too there would be unofficial production related to such sales.    

In terms of rising Colombian production, the Colombian Coffee Growers Federation have reported that from January 2009 the state subsidised coffee farm rejuvenation program has supported the replacement of 3.05 billion coffee trees, with the planting out of new disease resistant and higher yielding coffee varieties.   This program and combined with some earlier new plantings they say, has reduced the average age for coffee trees in Colombia now being a relatively modest 7.3 year and therefore, having a high yielding potential.

This impressive base and with the program continuing and so long as there are no unforeseen negative climatic factors coming into play, is likely to fuel a steady increase in production for the coming years and one might speculate that with the potential for a crop of in excess of 11 million bags due for the present coffee year, that Colombia’s coffee production might well exceed 14 million bags by the 2016/2017 coffee year.   Noting that preceding the state assisted coffee farm rejuvenation program, the Federation was actually targeting production figures that exceeded 15 million bags per annum.

The arbitrage between the markets broadened yesterday to register this at 73.18 usc/Lb., while this still equates to a relatively attractive 44.66% 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 7,601 bags yesterday, to register these stocks at 2,476,389 bags.   There was meanwhile a smaller in volume 926 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 6,140 bags.

The commodity markets had a better overall day yesterday, despite lacklustre holiday trade within many markets.  The Oil, New York arabica Coffee, Copper, Wheat, Gold, Silver, Platinum and Palladium markets showed buoyancy and the Cocoa and Cotton markets were was steady, while the Natural Gas, Sugar, London robusta Coffee, Orange Juice, Corn and Soybean markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.22% higher; to see this Index registered at 528.07.   The day starts with the U.S. Dollar tending steady and trading at 1.710 to Sterling and 1.352 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.85 per barrel.

The London and New York markets started the day yesterday on a steady note, but with the London market soon losing its way and moving down into negative territory, while the New York market shrugged off some negative pressure during thin trade, to maintain a hesitant steady track.   The London market recovered during the afternoon to join New York on a positive track but once again faltered near to the end of the day’s trade, while the New York market took a sideways stance.  The London market ended the day on a soft note and with 71.4% of the losses of the day intact, while the New York market ended the day on a positive note and with 45% of the earlier gains of the day intact.  This mixed close and with trade thin is unlikely to inspire confidence and one might expect to see much 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.
                                                  
JUL      2002 – 10                                                JUL      161.70 + 1.35
SEP      1999 – 10                                                SEP     163.85 + 1.35
NOV     1995 – 8                                                  DEC     167.70 + 1.40
JAN      1994 – 7                                                  MAR    171.15 + 1.45
MAR     2000 – 6                                                  MAY    173.30 + 1.45
MAY     2006 – 6                                                  JUL      174.90 + 1.35
JUL      2012 – 6                                                  SEP      176.00 + 1.35
SEP      2017 – 6                                                  DEC     176.90 + 1.30
NOV     2022 – 6                                                  MAR     177.55 + 1.25
JAN      2013 – 6                                                  MAY     178.05 + 1.30

17th. July, 2014.
The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 259,262 bags or 4.8% during the month of June to register these stocks at the end of the month at 5,656,004 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per month, equate to approximately 11.78 weeks of roasting activity.

However the stocks do not include the bulk container transit coffees, the onsite roaster inventory stocks and the coffee stocks held within non reporting warehouses in both the U.S.A. and Canada and these would have been at least another 1 million bags.   Therefore in terms of North American coffee supply the end June stocks would have safely exceeded 13.5 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

This relatively good cover of close to fourteen weeks within the North American market is also ahead of the slower summer roasting season and one can see is a cover that is dampening physical coffee market trade aggression within this second only to Europe coffee market, which is likewise a market that is somewhat lacklustre in terms of physical trade at present.   Albeit that with good forward cover for natural arabica coffees from Brazil and robusta coffees from Vietnam in hand, both markets continue to take a steady hand to mouth interest in trade for fine washed arabica coffee supply.

The respected Brazilian coffee trade house Comexim have reported that the Brazilian carry over coffee stocks as at the end of June this year were 12.3 million bags, with these stocks that they note include 1.65 million bags of government coffee retention stocks are 12.1% lower than the end of June last year.   They have further forecasted that the new arabica crop that is peaking at present shall be 32.75 million bags and added to the close to completed new conilon robusta coffee crop of 16.1 million bags, which sees Comexim peg the overall new Brazil 2014 coffee crop at a total of 48.85 million bags.

This latest forecast is marginally lower than many other forecasts that range between 49 million and in excess of 50 million bags, but does seemingly indicate that a figure of 49 million bags plus is on the cards.   While if one is to go with their carryover stock figure and even putting aside the not so accessible government stocks, it indicates a relatively safe 59.47 million bags of coffee supply for the coming twelve months and into the still to determined follow on 2015 crop.    Thus a surplus supply would be guaranteed for the short to medium term.   

The Brazilian Coffee Export Council have forecasted that the country shall export 32.5 million bags of coffee over the coming twelve months, to which one would add the approximate 20.5 million bags of domestic consumption.  This indicates an overall Brazil coffee demand for the coming twelve months of 53 million bags, but the export figure does not clarify if it includes the exports of value added soluble coffees, calculated in terms of their green coffee equivalent.   Nevertheless even if they have to be added, the forecast would indicate demand that shall not exceed 55.5 million bags and therefore, a figure that is below the majority of coffee supply forecasts for the period.  This factor is tending for the present, to take some of the wind out of the sails of the speculative bulls within the market.   

There remains some degree of confusion over the Indonesian coffee crop that is dominated by an 86% plus share of robusta coffees, with many private trade and industry players indicating a sharp dip in production.  This lower crop perspective is presently being supported by the slow export volumes that prevail, but with the price resistant nature of the internal market tending to cloud statistics.   But it is something of a surprise that despite this the Indonesian Agricultural Ministry has forecasted the countries 2014 coffee production to be 2.89% larger than last year’s crop, to total this year 11.85 million bags.   However with crop figures emanating from the generally difficult to quantify Indonesian market, one would think that this latest more positive report shall have little impact upon market sentiment.  

The arbitrage between the markets broadened yesterday to register this at 71.37 usc/Lb., while this still equates to a relatively attractive 43.92% 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 1,708 bags yesterday, to register these stocks at 2,483,990 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,214 bags.

The commodity markets remained generally lacklustre and mixed in trade yesterday, with still little in the way of direction coming from the first half of latest report and forecasts from the U.S. Federal Reserve, which have still to be completed.   The Oil, Natural Gas, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Gold, Platinum and Palladium markets showed some buoyancy, while the Sugar, Cocoa, London robusta Coffee, Cotton, Copper 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 0.23% lower; to see this Index registered at 526.91.   The day starts with the U.S. Dollar tending steady and trading at 1.714 to Sterling and 1.352 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.40 per barrel.

The London and New York markets started the day yesterday with some hesitant buoyancy and with both markets taking a positive track into the afternoon, but with trade thin and lacklustre in nature.  The New York market did however falter within the afternoon and fall below par, but while the London market continued from thereon at the negative levels, the New York market recovered within continued thin trade and set a positive track for the rest of the day.   The London market continued to end the day on a modestly soft note and with 56.5% of the losses of the day intact, while the New York market ended the day on a modestly positive note and with 37.9% of the earlier gains of the day intact.   This was while overall steady an uninspiring close and one that is likely to set the markets for a hesitantly close to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2012 – 13                                                JUL      160.35 + 0.95
SEP      2009 – 13                                                SEP     162.50 + 0.55
NOV     2003 – 10                                                DEC     166.30 + 0.60
JAN      2001 – 7                                                  MAR    169.70 + 0.60
MAR     2006 – 8                                                  MAY    171.85 + 0.65
MAY     2012 – 9                                                  JUL      173.55 + 0.75
JUL      2018 – 10                                                SEP      174.65 + 0.95
SEP      2023 – 12                                                DEC     175.60 + 0.85
NOV     2028 – 12                                                MAR     176.30 + 0.75
JAN      2019 – 12                                                MAY     176.75 + 0.65

16th. July, 2014.
The Vietnam Customs Authorities have reported that the countries coffee exports of mostly robusta coffee for the month of June were 21.3% lower than the previous month, at a total of 1,801,667 bags.    This export performance was marginally lower than the official forecast of in excess of 1.83 million bags and most certainly well below the private trade forecasts for exports for the month, which ranged between 2 million bags and 2.83 million bags.

Nevertheless with the June exports albeit that they are more modest than expectations, the cumulative coffee exports for the first nine months of the present October 2013 to September 2014 coffee year are still 11.9% than the same period in the previous coffee year, at a total of over 22 million bags.   While with stocks in hand within both farm and exporters hands that are estimated to be approximately 5 million bags, the prospects are for the coffee year to end off with exports well in excess of 26 million bags.

Trade within and out of Vietnam is presently slow and due not so much to the negative effects of price resistance, but more so to the dull holiday season nature of the consumer markets.   This scenario is most likely to continue for the coming four to five weeks, until the post-holiday buying activity starts to pick up in volume.  While the resulting reduced volumes of exporter price fixation hedge selling activity, is likely to assist for some degree of stability for the London market.

The largest coffee cooperative in Brazil Cooxupe and likewise the largest arabica coffee producer in the country, has reported that their new crop harvest is in full swing and approximately 50% complete.   This harvest percentage is well ahead of the same time last year, when only 36% of the harvest had been completed.   In the meantime and based on the evidence of the early outturns from the harvested coffees, the cooperative estimate that their production shall be 23% lower than last year, to total 6.5 million bags.

This lower outturn forecast factor from Cooxupe is quite dramatic and if it is realistic and were to be mirrored by the Brazilian arabica coffee farmers in general, would with even the larger 17.3 million bags new conilon robusta crop, indicate an overall new crop of 46.56 million bags.  However not all the arabica coffee districts suffered from the partial drought that was experienced over January and February, as did a smaller percentage of farmers have the benefit of supplementary irrigation and thus one might presume that there is still reality to the higher crop forecasts of between 49 million to 50 million bags for this year.

There was talk earlier in the week of the temperatures dropping in South and Central Brazil and with some coffee districts getting close to freezing, but this has not yet become reality or proved to be of any speculative concern.   Thus the country continues through the frost season with no impact upon the market from the issues of frost, but the threat is still there and shall continue for the next four to five weeks.

With the new crop harvest at a peak, the Ministry of Agriculture in Peru have forecasted that this new crop that has suffered from Roya or Leaf Rust within some of the lower grown districts, shall be 4% lower than the past crop at a total of 4,166,667 bags.   This forecast is significantly higher than the figure of 3,296,667 bags that has been voiced by the countries coffee association and therefore, there remains some uncertainty over the size of this new fine washed arabica coffee crop.    There is meanwhile a degree of internal market price resistance for new crop coffees, which has slowed the export activity out of the country but with many within the main stream consumer markets on holiday, this has not proved to be a matter of any concern.

The arbitrage between the markets narrowed yesterday to register this at 70.23 usc/Lb., while this still equates to a relatively attractive 43.37% 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 1,245 bags yesterday, to register these stocks at 2,485,698 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,574 bags.

The commodity markets were generally lacklustre and mixed in trade yesterday, with little in the way of direction coming from the first half of latest report and forecasts from the U.S. Federal Reserve, but some degree of confidence can be expected from confirmation of steady growth in China.   The Cocoa, Copper and Orange Juice markets showed buoyancy and the Sugar, London robusta Coffee, Wheat and Soybean markets were steady, while the Oil, Natural Gas, New York arabica Coffee, Cotton, Corn, Gold, Silver, Platinum and Palladium markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.38% lower; to see this Index registered at 528.10.   The day starts with the U.S. Dollar tending steady and trading at 1.713 to Sterling and 1.355 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 106.17 per barrel.

The London and New York markets started the day yesterday on a near to steady note, but with both markets very quickly moving into negative territory, which set the track for the afternoons trade.  The New York market that was also influenced by the negative nature of the macro commodity index increased its losses in mid-afternoon trade, but did manage to bounce off its lows, while the London market made a full recovery.  The London market ended the day on a steady note, while the New York market ended the day on a soft note, but having recovered 52.9% of the earlier losses of the day by the close.    This close provides little in the way of direction, but with perhaps the partial recovery in New York due to inspire some degree of confidence and along with a lack of producer selling activity likely to set the markets 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.
                                                  
JUL      2025 – 1                                                  JUL      159.40 – 2.90
SEP      2022 – 1                                                 SEP      161.95 – 2.40
NOV     2013 – 1                                                 DEC      165.70 – 2.40
JAN      2008 – 3                                                 MAR     169.10 – 2.40
MAR     2014 – 3                                                 MAY     171.20 – 2.45
MAY     2021 – 3                                                  JUL      172.80 – 2.35
JUL      2028 – 3                                                  SEP      173.70 – 2.25
SEP      2035 – 3                                                  DEC     174.75 – 2.10
NOV     2040 – 3                                                  MAR     175.55 – 2.00
JAN      2031 – 3                                                  MAY     176.10 – 2.15

15th. July, 2014.
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 13.43% in the week of trade leading up to Tuesday 8th. July;  to register a net long position of 30,225 Lots on the day.  This net long which is the equivalent of 5,037,500 bags might well have been marginally reduced over the following days of mixed but overall softer trade, which has since followed.

The Coffee Board of India have reported that the countries recently completed coffee crop had been 708,333 bags or 12.25% lower than they had forecasted, to total only 5,075,000 bags, which was a crop that was 3.49% lower than the previous 2012/2013 crop.  This recently completed crop they report, was made up by the combination of 3,371,667 bags of robusta coffees and 1,703,333 bags of arabica coffees, with the export sales for the present October 2013 to September 2014 coffee year so far, being marginally lower than the same period in the previous coffee year.

Meanwhile the monsoon rains that have been slow to start this year are now building up in volume and therefore, the Coffee Board of India are forecasting that the next crop shall bring in 3,987,500 bags of robusta coffee and 1,758,333 bags of arabica coffees, to result in a much improved overall crop of 5,745,833 bags.   This forecast is however seen to be somewhat ambitious by the countries coffee farmers who fear the negative impact upon prices that might come with such positive forecasts and the figure is being publically questioned, but it really is early days and there shall no doubt be a more accurate review on the prospects for this next crop during the last quarter of this year.

There has been much talk over the past few months of the prospects for a new El Nino phenomenon to start to come into play within the Pacific Ocean later in the year and with well-respected weather stations in the U.S.A., Japan and Australia all in agreement of the strong chance for the phenomenon to occur.    The Australian weather bureau has however now reported that while they still foresee and El Nino soon to start, that they would not expect it to be a strong event and therefore, one would think that there is little chance so far, for any extreme damaging weather conditions for the Pacific Rim coffee producing countries.

In fact a modest El Nino might actually be seen to be a positive factor for countries such as Colombia and Peru, as modestly drier weather conditions would be beneficial to combating the development of Roya or Leaf Rust.   While there would still be sufficient rains coming forth, to support the development of the new crop.  While on a longer range, the influence of a modest El Nino might be expected to bring with it an increase in rains for the main central and south Brazil arabica coffee districts, which should be beneficial for the development of the next 2015 crop.

The latest report from the International Coffee Organisation has noted that their composite indicator price for coffees or the month of June were 7.3% lower than the previous month of May, with the indicator price being its lowest since February this year.   This dip in the composite indicator prices being related more so to the arabica coffees rather than the more modest dip experienced for the robusta coffees, which continue to attract good buying support from the price sensitive new markets and to some degree of increase in usage on the part of price sensitive brands within the traditional developed markets.

The arbitrage between the markets broadened yesterday to register this at 72.59 usc/Lb., while this still equates to a relatively attractive 44.17% 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 decrease by 375 bags yesterday, to register these stocks at 2,486,943 bags.   There was meanwhile a very modest in volume 280 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,574 bags.

The commodity markets were mixed in trade yesterday, but with some degree of speculative buoyancy coming into play for selected markets that had experienced a negative track last week.  The Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a day of buoyancy and the Oil and Natural Gas markets were close to steady, while the Cocoa, Copper, Gold, Silver and Platinum markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.03% higher; to see this Index registered at 530.14.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.707 to Sterling and 1.361 to the Euro, while Brent Crude is close to steady in early trade and is selling at $ 105.10 per barrel.

The London and New York markets started the day yesterday with predictable corrective buoyancy for both of the markets, with the markets maintaining a positive stance into the afternoon’s trade.   The New York market did however come under some pressure early on in the afternoon and took a short dip back to par while the London market continued on its positive sideways track, with the New York market quickly recovering and once more taking a positive stance.  The London market continued to end the day on a positive note and with 55.3% of the gains of the day intact, while the New York market ended the day on a relatively strong note and with 86.7% of the earlier in the day’s gains intact.   This overall positive close shall most likely assist to set the markets for a steady start in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2026 + 26                                                JUL      162.30 + 3.35
SEP      2023 + 26                                               SEP      164.35 + 2.95
NOV     2014 + 25                                               DEC      168.10 + 2.95
JAN      2011 + 24                                               MAR     171.50 + 2.95
MAR     2017 + 22                                               MAY     173.65 + 2.85
MAY     2024 + 20                                                JUL      175.15 + 2.85
JUL      2031 + 21                                                SEP      175.95 + 2.90
SEP      2038 + 22                                               DEC      176.85 + 3.15
NOV     2043 + 18                                                MAR     177.55 + 3.30
JAN      2034 + 5                                                  MAY     178.25 + 3.50

14th. July, 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 1.8% in the week of trade leading up to Tuesday 8th. July;  to register a net long position of 37,061 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 0.59%, to register a net long on the day of 44,896 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 1.99%, to register a net long of 25,524 lots on the day.   This net long position that is the equivalent of 7,235,941 bags has most likely been further reduced over the period mixed but overall softer trade which has since followed and likewise, the net long position of the Managed Money Funds.

The National Coffee Council of El Salvador have reported that the countries coffee exports for the month of June were 50.87% or 51,875 bags lower than the same month last year, at a total of 50,093 bags.  This lower performance that is related to a severely lower past crop has resulted in the cumulative coffee exports for the first nine months of the present October 2013 to September 2014 coffee year being  50.79% or 467,377 bags lower than the same period in the previous coffee year, at a total of 452,914 bags.  

These dismal figures from were to have been expected, as due to the ravages of Roya or Leaf Rust in the previous year the countries coffee farmers who are somewhat uniquely for the regional producer bloc dominated by commercial farmer, have pruned back damaged fields and therefore, accentuated the losses in crop from the negative effects of Roya.   This approximate 48% dip in production for the last October 2013 to March 2014 harvest is however seen to be on a path to recovery and the expectations are for a significantly larger new crop to start in the last quarter of this year, which some forecasts talking in terms of in excess of a 30% larger crop.   Albeit that the overall increase in regional production for the Mexican and Central American countries is so far forecasted to be a more modest 10% increase, for the next crop.   

The physical coffee market remains weak and with only limited industry buying interest, as the majority of consumer market main stream roasters are relatively well covered for their short term requirements and through to the post summer holiday period.   This is with the softening of the reference prices of the international markets dulling nature of physical trade the for the present the markets remain in something of the doldrums, as the producers are not reacting to this dip in value and are mostly happy to sit out the season and show some degree of price restraint to do new business.

Meanwhile the New York and London markets take their direction from the technical indicators that are pointing somewhat negative, but could well react to the upside on receipt of any supportive news.   Thus focus once more returns to Brazil weather rather than soccer, with clarification on the size of the small new arabica coffee crop being the short term factor and to be followed by the spring and summer rain season that shall dictate the potential for the next 2015 crop.   

The arbitrage between the markets narrowed on Friday to register this at 70.82 usc/Lb., while this still equates to a relatively attractive 43.88% 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 1,004 bags on Friday, to register these stocks at 2,487,318 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,854 bags.

The commodity markets were again mixed in trade on Friday, but with many markets experiencing thin trade and within and overall softer direction for the macro commodity index.   The Natural Gas, Cocoa, Copper and Palladium markets were steady for the day, while the Oil, Sugar, Coffee, Cotton, 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 0.74% lower; to see this Index registered at 530.00.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.712 to Sterling and 1.363 to the Euro, while Brent Crude is close to steady in early trade and is selling at $ 105.25 per barrel.

The London and New York markets started the day on Friday with predictable corrective buoyancy for both of the markets, but within and environment of thin and hesitant trade.   The afternoon’s trade however brought with it a lack of consumer buying interest and despite the lack of producer selling aggression, the negative influences of a softening macro commodity index and a reversal in fortunes for the more speculative and volatile New York market, which was mirrored within the London market.   The London market continued to end the day on a softer note and with 52% of the earlier losses of the day intact, while the New York market ended the day on a softer note and with 46.4% of the losses of the day intact.   The partial recovery for both markets on Friday is however somewhat positive in terms of sentiment and with a marginally weaker U.S. dollar in play, one might expect to see some degree of buoyancy for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2000 – 12                                                JUL      158.95 – 1.30
SEP      1997 – 12                                                SEP     161.40 – 1.60
NOV     1989 – 10                                                DEC     165.15 – 1.50
JAN      1987 – 7                                                 MAR     168.55 – 1.45
MAR     1995 unch                                              MAY     170.80 – 1.35
MAY     2004 + 2                                                  JUL      172.30 – 1.25
JUL      2010 + 2                                                  SEP      173.05 – 0.95
SEP      2016 unch                                              DEC      173.70 – 0.75
NOV     2025 – 2                                                  MAR     174.25 – 0.40
JAN     2029 – 2                                                   MAY     174.75 + 0.10

11th. July, 2014.
The news from Brazil continues to be dominated by soccer rather than coffee, but with the new crop harvest progressing well and with the northern conilon robusta crop near to complete, while the central and southern districts arabica coffee crop is moving into its peak.   Thus with close to 60% of the new crop now complete, it is getting closer to the time that one can truly assess the overall results of this new crop, which remains under much debate.

One would suggest however that as the damage has been related to the central arabica coffee districts and that there really cannot be reality to the outturn reports from these coffees until such time as a good percentage of new crop has actually been hulled and graded, it can really only be in two to three months’ time that reasonably accurate figures can come to the market.   Thus for the present the uncertainty shall continue, but one might think that with the softer nature of the international coffee markets at present, that reports shall tend to be dominated by more conservative forecasts.

Meanwhile with the mainstream consumer markets heading into their summer holidays and buying interest on the wane, there cannot be much trading aggression expected for the coming weeks for the new crop in Brazil.  It is a factor that shall probably thin the volumes of price fixation hedge selling into the New York market, which likewise lacks volume from the well sold past crops in Mexico and Central America.   But it shall still with the consumer industry players quiet require some volumes of speculative and fund support to come into play, if the market is to show any significant recovery.

The U.S. Weather authorities have raised to 70% the chances of an El Nino phenomenon developing within the Pacific ocean, which are supported by the Australian Bureau of Meteorology, who foresee a weak El Nino developing for the last quarter of the year.   This in terms of the indication of mild El Nino is not really a concern in terms of coffee production, as it has historically only been the strong El Nino’s that have impacted severely on production for the Pacifica Rim coffee producing countries and in particular, Colombia, Peru, Indonesia and Vietnam.

The El Nino not only has an effect upon its directly related Pacific Rim countries, but also has a more modest influence upon world weather conditions.   This in terms of the Brazil coffee districts has resulted in warmer weather and increased rains, which might be seen to be conducive to the prospects of a reasonable sized crop for the forthcoming 2015 crop.   Thus for the present the issue of El Nino has little in the way of positive impact upon market sentiment, with most players cautious and taking a wait and see stance towards the phenomenon.

In terms of weather there are still concerns being voiced in India over the slow start to the monsoon rain season last month, which have been followed by erratic rains so far in July.   There are some reports that liberally have applied the word drought, but weather forecasts are indicating a wet second half of the month of July and so far there is no reason to fear dramatic damage to the potential for the next Indian coffee crop, which the Coffee Board of India has forecasted to larger than last.

The arbitrage between the markets narrowed yesterday to register this at 71.87 usc/Lb., while this still equates to a relatively attractive 44.09% 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 275 bags yesterday, to register these stocks at 2,488,322 bags.   There was meanwhile a larger in volume 1,980 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,854 bags.

The Certified robusta coffee stocks held against the London robusta coffee exchange were seen to rise by 40,500 bags or 3.66% in the two weeks of trade leading up to Monday 7th. July; to register these certified stocks at 1,147,333 bags.   There has been a steady rise in these stocks since the price structure of the London market returned to a more normal structure and with premiums for the forward months, to assist in the finance of the carry of stocks.   However with the London market having since returned to an unfriendly inverted price structure, one might expect to see the rise in these stocks somewhat stalled.    

The commodity markets were again mixed in trade yesterday, but with the stronger U.S. dollar tending to dent support within selected markets, while the Coffee markets were the biggest mover of the day, in a negative way.  The Oil, Copper, Gold, Silver, Platinum and Palladium markets showed buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.59% lower; to see this Index registered at 533.94.   The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.713 to Sterling and 1.360 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.80 per barrel.

The London and New York markets started the day yesterday on a hesitantly steady note and in thin and lacklustre trade, but with the London market turning south in early afternoon trade and triggering sell stops, to accentuate the losses.  The New York market likewise tended softer and with sell stops coming into play, took a rather dramatic move lower, with volumes picking up and a lack of buying support under the market, to see the market flounder for the rest of the day.   The London market had however partially recovered during the afternoon and continued on a sideways track and to end the on a soft note and with 54.7% of the earlier losses of the day intact, while the New York market ended the day on a soft note and near the low of the day, with 98% of the losses of the day intact.   This soft close  for the markets might not be expected to attract immediate negative pressure but might rather with producer selling stalled and with perhaps some advantageous industry buying coming into play, result in a modest corrective buoyancy for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2012 – 46                                                JUL      160.25 – 9.95
SEP      2009 – 47                                                SEP     163.00 – 9.90
NOV     1999 – 43                                                DEC     166.65 – 9.80
JAN      1994 – 42                                               MAR     170.00 – 9.75
MAR     1995 – 39                                               MAY     172.15 – 9.70
MAY     2002 – 37                                                JUL      173.55 – 9.60
JUL      2008 – 38                                                SEP      174.00 – 9.55
SEP      2016 – 39                                                DEC     174.45 – 9.30
NOV     2027 – 39                                                MAR     174.65 – 9.20
JAN      2031 – 39                                                MAY     174.65 – 9.05

10th. July, 2014.
With the southern province of Yunnan in China dominating the country’s coffee production and reporting over 120,000 hectares under coffee, the Pu’er City local government has arranged to open up a coffee exchange, but how this shall operate is still not clear.  In the meantime it is business as usual with a number of exporters operating and actively selling Chinese arabica coffees to the European, North American, Japanese and South Korean markets.

It is not always clear what the Chinese coffee production really is and with a variety of figures being mentioned, but the authorities in Pu’er talk in terms of approximately 1.5 million bags per annum, from an October to January harvest period.   The majority of these arabica coffees still being exported as with China having domestic consumption of still only around 60 gms per capita per annum and this mostly related to imported robusta coffees for the soluble coffees that dominate consumption, there remains little local market demand for Chinese arabica coffees.   

There is however a growing coffee shop culture within the Chinese urban centres and while most support these shops for fashionable reasons and still drink tea, the prospects are for the coffee shops to steadily encourage coffee consumption.   But the hopes of world producers for the massive Chinese population to come to the fore as a high volume consumer and to buoy prices, has to remain a long term dream.   While one would speculate that even when Chinese consumption starts to pick up a little bit of steam, the neighbouring countries to its south shall step in with increased production, to chase this market.

Already Vietnam has proved its abilities to produce high yielding coffee and is a dominant supplier to the Chinese market, with evidence of Vietnamese expertise starting to impact in Laos and moving into Myanmar and Cambodia.   Thus indicating that in time, there shall be a steady growth in regional coffee production, which shall assist to increase the Asian share of world production, which is presently approximately 30% of overall production.

With Brazil having exported 30.48 million bags of green coffee over the past twelve months and continuing to report high monthly volumes of exports, one can safely assume that this shall continue and that with the combination of green coffee and value added soluble coffee exports, that there shall be an export demand of approximately 33 million bags over the next twelve months.   This combined with a domestic demand of approximately 20.5 million bags shall come to an overall coffee demand of close to 54 million bags and therefore even with the more reliable trade and industry new crop forecasts for a drought damaged 2014 crop of just under 50 million bags, a 4 to 5 million bags deficit crop year.

This Brazil crop deficit has however already been countered by the approximately 10 to 12 million bags of carryover stocks from the past crop, which has dampened some speculative spirits over the past couple of months.   The evidence of these stocks having been clearly illustrated, by the relatively aggressive selling activity on the part of farmers within the internal market and the exporters, over the first half of this year.   Thus for the present and with prospects for rising South and Central American washed arabica coffee supply due for the next October 2014 to September 2015 coffee year, the coffee markets have lost some of their earlier in the year lustre.    

The arbitrage between the markets broadened yesterday to register this at 79.64 usc/Lb., while this still equates to a very attractive 46.06% 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 3,186 bags yesterday, to register these stocks at 2,488,597 bags.   There was meanwhile a smaller in volume 2,204 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 2,874 bags.

The commodity markets were mixed in trade yesterday, with the softer growth figures emanating from China tending to impact upon sentiment for many markets.   Albeit that there is still good growth seen in the Chinese economy and at around 7%, which would be a figure that almost every other country would dream of.    The Gold, Silver, Platinum and Palladium markets had a day of buoyancy and the New York arabica Coffee and Orange Juice markets had a steady day, while the Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Corn and Soybean markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.45% lower; to see this Index registered at 537.13.   The day starts with the U.S. Dollar near to steady and trading at 1.714 to Sterling and 1.365 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.15 per barrel.

The London and New York markets started the day yesterday on a hesitantly steady note and in thin and lacklustre trade, but with the markets lacking producer selling activity showing some buoyancy into the afternoon’s trade.  The markets did however come under some speculative pressure as the afternoon progressed and moved back into negative territory that was accentuated in the New York market by a lack of volume.  The London market continued to end the day on a softer note and with 87.5% of the losses of the day intact, while the New York market recovered 96.7% of the earlier losses of the day and to end the day close to par.   This close provides little in the way of direction for early trade today which one might think shall be a steady to marginally softer start against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2058 – 7                                                  JUL      170.20 unch
SEP      2056 – 7                                                  SEP     172.90 – 0.05
NOV     2042 – 7                                                  DEC     176.45 – 0.05
JAN      2036 – 4                                                 MAR     179.75 – 0.05
MAR     2034 – 4                                                 MAY     181.85 unch
MAY     2039 – 5                                                  JUL      183.15 unch
JUL      2046 – 7                                                  SEP      183.55 + 0.10
SEP      2055 – 7                                                 DEC      183.75 + 0.10
NOV     2066 – 5                                                  MAR     183.85 + 0.10
JAN      2070 – 5                                                  MAY     183.70 + 0.10

9th. July, 2014.
The updated and more detailed Brazil export figures for the month of June have been announced to report that the country’s exports of green coffees were 512,943 bags or 24.56% higher than the same month last year, at a total of 2,601,162 bags.   Added to this are the exports of value added soluble coffees calculated in terms of their green coffee equivalent which were 15,869 bags or 5.78% lower than the same month last year, at a total of 258,745 bags.   Thus the overall coffee exports for the country were 497,074 bags or 21.04% higher than the same month last year, at a total of 2,859,907 bags.

In terms of value the overall coffee exports for the month of June from Brazil were US$ 500,000 or 21.19% higher than the same month last year, at a total of 2.86 million US dollars.   This added income is a welcome relief for the country’s arabica coffee farmers, who are investing in the input support for their coffee farms that were severely affected by the ravages of partial drought during the months of January and February this year.

The evidence of these exports which include a fair percentage of past crop arabica coffee stocks amongst the 86.16% share of the green coffees exported that were related to arabica coffees for the month of June, shall have assisted along with the good volumes of coffee exported from Brazil over the preceding months, to buoy stocks within the consumer markets.  Thus seeing the majority of the consumer market industry players starting to enter their summer holiday season with a degree of complacent confidence, as they now look to the future and the prospects for increased coffee supply from Central America and Mexico for the end of the year.   

Adding to the confidence in reasonable volumes of coffee supply for the coming year and despite the very obvious dip in new crop that is due from Brazil post the early in the year drought, is the forecast from the Coffee Board in India.   This report that was tabled yesterday has forecasted that on the basis of the flowerings that have come with the early monsoon rains over the main coffee districts in India, that the new crop due to start at the end of the year can be foreseen to be 13% higher than the last crop, to total 5,745,833 bags.

This forecast contradicts many of the market manipulative forecasts coming from the Indian farmers, as is illustrated by the Karnataka Planters Association talking in terms of an arabica production from the forthcoming new crop due to be 30% lower than the past crop.   This comment on the dismal prospects for India’s arabica coffee production has however to be valued in the context of the country’s overall coffee production being dominated by robusta coffees, which the Coffee Board predict shall account for approximately 69.5% of the overall production.

Meanwhile physical coffee trade and with the consumer markets relatively well stocked following the high volumes of forward sales concluded over the first four months of the year has become slow and lacklustre in nature, which is perhaps adding to the dampened spirits of the speculative sector of the more volatile New York arabica coffee market.  Thus the coffee market in general is taking something of a sideways stance for the present and with the players now awaiting some further guidance on the reality of the size of the new Brazil crop and more so the evidence of the rains in Brazil for the last quarter of this year, to provide a perspective for 2015 overall coffee production and guidance of a related trading range for the terminal markets.   Unless there are some unforeseen climatic problems forthcoming in the interim, to generate shorter term speculative interest in the coffee markets.  

The arbitrage between the markets broadened yesterday to register this at 79.37 usc/Lb., while this still equates to a very attractive 45.89% 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 decline by 800 bags yesterday, to register these stocks at 2,485,411 bags.   There was meanwhile a similar in volume 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,078 bags.

The commodity markets were mixed in trade yesterday, but lacked any excitement.   The Sugar, Cocoa, Coffee, Orange Juice, Gold, Silver, Platinum and Palladium markets experienced some buoyancy, while the Oil, Natural Gas, Cotton, Copper, Wheat, Corn and Soybean markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.13% lower; to see this Index registered at 539.58.   The day starts with the U.S. Dollar near to steady and trading at 1.714 to Sterling and 1.363 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.45 per barrel.

The London and New York markets started the day yesterday with predictable buoyancy in quiet trade, with sentiment buoyed post the significant partial recovery the previous day, within the New York market.   The New York market did however briefly falter during early afternoon trade, while the London market retained its gains and followed by a recovery for the New York market.  The London market continued to end the day on a positive note and with 67.6% of the gains of the day intact, while the New York market likewise ended the day on a positive note and with 56% of the gains of the day intact.    This relatively steady close is likely to fuel a hesitantly steady and cautious start to early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2065 + 27                                               JUL      170.20 + 1.20
SEP      2063 + 25                                              SEP      172.95 + 1.85
NOV     2049 + 26                                              DEC      176.50 + 1.75
JAN      2040 + 26                                              MAR     179.80 + 1.75
MAR     2038 + 27                                              MAY     181.85 + 1.85
MAY     2044 + 29                                               JUL     183.15 + 1.80
JUL      2053 + 32                                               SEP     183.45 + 1.70
SEP      2062 + 35                                              DEC     183.65 + 1.65
NOV     2071 + 36                                               MAR    183.75 + 1.70
JAN      2075 + 36                                               MAY    183.60 + 1.75

8th. July, 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 2.37% in the week of trade leading up to Tuesday 1st. July; to register a net long position of 38,760 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 44,632 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 5.75%, to register a net long of 26,042 lots on the day.   This net long position that is the equivalent of 7,382,792 bags has most likely been marginally reduced over the period mixed but overall slightly softer trade which 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 this market increase its net long position within the market by 11.82% in the week of trade leading up to Tuesday 1st. July; to register a net long of 26,647 Lots.   This net long which is the equivalent of 4,441,167 bags has most likely been marginally increased over the period of modestly positive trade, which has since followed.

Meanwhile in terms of robusta coffee supply a survey over traders in Vietnam has indicated that as at the end of June the countries coffee farmers were still holding stocks of unsold coffee beans from the last crop of approximately 15% of the harvest, which would equate to 4.2 million bags.    These stocks are aside from the stocks that are being held by the countries exporters that are difficult to determine, but one might think that these would be relatively good and sufficient to cover at least six weeks of forward shipment commitments and therefore with a new robusta coffee crop due to start coming into play by November, steady supply for the foreseeable future.   

There has so far this year been a relatively slow delivery so far from the new Indonesian robusta coffee crop which is largely seen to be a smaller crop and one that with steadily rising domestic market demand has further reduced the potential supply of Indonesian robusta coffees for this year, which takes out some of the competition from Indonesia within global robusta coffee supply.  This tighter coffee supply from Indonesia and with the Vietnam unsold robusta coffee stocks adequate rather than being in surplus is therefore allowing Vietnams farmers to show a degree of price resistance and play the market, which is likely to assist to buoy export differentials for robusta coffees supply relative to the reference prices of the London market in general, over the next three to four months.   

The weather conditions over the main coffee districts in Brazil despite some rain showers remain mostly dry and conducive for good progress with the new crop harvest, which is at its peak.   While with the medium term forecasts not indicating any chance for a cold snap to accompany this weekend’s more vulnerable full moon, the threat of frost damage to the potential for the next 2015 arabica coffee crop is side-lined.   Thus focus in terms of Brazil remains for the present on soccer rather than coffee, with little in the way of trading aggression expected for most of this week, as the business community concentrate on the next two days of semi-finals and the finals this weekend.   One might however expect to see a frosty reception for the German team from the larger part of the spectators at today’s semi-final, against an excited Brazil team.

The arbitrage between the markets broadened yesterday to register this at 78.66 usc/Lb., while this still equates to a very attractive 45.97% 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 decline by 7,096 bags yesterday, to register these stocks at 2,486,211 bags.   There was meanwhile a smaller in volume 3,813 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,438 bags.

The commodity markets came back into play yesterday following the Independence Day long weekend in the U.S.A. with speculation of an earlier than previously expected chance for higher interest rates for the U.S. dollar, which buoyed the dollar and dampened speculative spirits within many markets.   The Cocoa, New York arabica Coffee, Orange Juice, Gold and Palladium markets did however end the day near to steady, while the Oil, Natural Gas, Sugar, London robusta Coffee, Cotton, Copper, Wheat, Corn, Soybean and Platinum markets had s softer days trade.    The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.04% lower; to see this Index registered at 540.29.   The day starts with the U.S. Dollar steady and trading at 1.713 to Sterling and 1.360 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.50 per barrel.

The London and New York markets started the day showing hesitant buoyancy in thin trade, but soon tending softer yesterday.    The London market did however recover from its modest losses, while the New York market maintained a track which was accentuated with the news on the dollar and the negative influences of the macro commodity index and followed by a reversal in fortunes for the London market, which drifted back into negative territory.   The London market continued to end the day on a soft note and with 75% of the losses of the day intact, but the New York market once again showed some muscle and while ending the day on a softer note, had recovered an impressive 87.7% of the earlier losses of the day by the close.   This rather late in the day partial recovery for the New York market might settle some nerves and with producer price fixation selling volumes low, one might expect to see a relatively 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.
                                                  
JUL      2038 – 15                                                JUL      169.00 – 0.40
SEP      2038 – 18                                                SEP     171.10 – 0.70
NOV     2023 – 17                                                DEC     174.75 – 0.70
JAN      2014 – 20                                                MAR    178.05 – 0.65
MAR     2011 – 20                                                MAY     180.00 – 0.50
MAY     2015 – 22                                                 JUL     181.35 – 0.35
JUL      2021 – 23                                                 SEP     181.75 – 0.25
SEP      2027 – 26                                                 DEC    182.00 – 0.15
NOV     2035 – 27                                                 MAR    182.05 – 0.15
JAN      2039 – 27                                                 MAY    181.85 – 0.15

7th. July, 2014.
With the long weekend holiday in the U.S.A., there was no detailed Commitment of Traders report from the washed arabica coffee New York market on Friday, however it has been reported that the Non Commercial Speculative sector of the market has reduced its net long position within the market in the week of trade leading up to Tuesday 1st. July by 5.75%, to register a net long of 26,042 lots on the day.   This net long position that is the equivalent of 7,382,792 bags has most likely been little changed over the period of pre-holiday quiet trade, which has since followed.

The European Coffee Federation have reported that the European port warehouse coffee stocks increased by 1.09 million bags or 11.63% during the month of May, to register these stocks at 10.46 million bags as at the end of the month.   These stock with the combination of East and West Europe having a consumption of approximately 1 million bags per week, would therefore account for the equivalent of a relatively healthy 10.4 weeks of roasting activity, but with the unreported bulk container transit coffees, roaster on site inventory stocks and stocks held in unofficial warehouses, one might safely add the equivalent of two to three weeks to these stocks.   Therefore indicating that Europe ahead of the slower summer roasting season was well covered for their medium terms coffee requirements.

One might note however that with the Brazil partial drought inspired coffee market rally in February that it did spark off a precautionary surge in industry coffee buying activity over February to April, which would have likewise contributed to this rather significant increase in port warehouse coffee stocks by the end of May.   This relatively aggressive buying activity on the part of the European industry and trade has since slowed and one would therefore speculate that by now, the port warehouse coffee stocks in Europe would have settled back by in excess of 1 million bags.

Nevertheless the news of the rise in the European port warehouse coffee stocks will tend to dampen some speculative spirits within the coffee markets, as it comes into the press at a time that there is already some degree of speculative exhaustion in terms of the more modest crop prospects for Brazil.   This latter story having been so often repeated and often questioned in terms of its severity and potential impact is tending to lose its influence upon the market that is seemingly now more interested in the outcome of the Brazil world cup soccer tournament than the coffee crop.

Meanwhile it is the summer holiday season in the main northern hemisphere markets that dominate coffee demand and coffee trade is lacklustre for the present, with little in the way of news presently coming to the markets, to inspire any concern or speculative cover.   Thus with the business end of the soccer tournament due to dominate many market players interest for the week, one might think that the important U.S.A. players are due to return from their long weekend, to a quiet and uninspired trading week for the coffee markets.      

The arbitrage between the markets broadened on Friday to register this at 78.54 usc/Lb., while this still equates to a very attractive 45.72 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 unchanged on Friday with the closure of the market due to the Independence Day holiday and long weekend, to register these stocks at 2,493,307 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

The commodity markets with many closed on Friday for the Independence Day holiday saw the remaining markets operate within an environment of thin and lacklustre trade, with little in the way of direction being set within the markets.   Thus the Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets remained as at Thursday’s 0.10% lower; to see this Index registered at 545.97.   The day starts with the U.S. Dollar showing modest buoyancy and trading at 1.715 to Sterling and 1.358 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.20 per barrel.

The London coffee market with the New York market closed and most players side-lined for the day opened on a hesitantly softer note on Friday and with trade very thin, to see the market head into the afternoon on its inactive softer track.   There was a brief period of recovery as the afternoon continued but this was short lived and the market fell back to end the day on a softer note and with 70.6% of the earlier losses of the day intact.   This soft but solo close for the day provides little in the way of direction but one would think that with uncertainty as to the stance that shall be taken once the U.S.A. returns to the field of play later in the day, shall prove to bring short term uncertainty to the markets for early trade today which is likely to set a slow and steady to softer start for the markets against the prices set in New York of Thursday and London on Friday last weeks, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2053 – 12                                                JUL      169.40 – 1.65
SEP      2056 – 12                                                SEP     171.80 – 1.50
NOV     2040 – 11                                                DEC     175.45 – 1.50
JAN      2034 – 10                                               MAR     178.70 – 1.50
MAR     2031 – 9                                                 MAY     180.50 – 1.55
MAY     2037 – 8                                                  JUL      181.70 – 1.60
JUL      2044 – 10                                                SEP      182.00 – 1.65
SEP      2053 – 10                                               DEC      182.15 – 1.55
NOV     2062 – 10                                                MAR     182.20 – 1.45
JAN      2066 – 10                                                MAY     182.00 – 1.45

4th. July, 2014.
The weather conditions in Brazil have remained conducive for the progress of the arabica coffee harvest in the South and Central coffee districts of the country, with this arabica coffee harvest now estimated to be 50% completed.   It is however early days still to assess the yields from this harvest as it is only once the coffees have been hulled and graded, that the reality of the yields can be calculated and therefore the speculation over the size of this new arabica crop continues.    

Meanwhile the northern conilon robusta coffee crop is just about completed with many private industry players speculating that this new crop is over 9% larger than last year’s crop, at close to 17.3 million bags.   This increase in the size of the conilon crop tending to reduce the fears of a lower arabica coffee crop in terms of the large Brazil domestic coffee market, as these price competitive coffees are likely to increase their market share within this market and thus, release more of the smaller arabica coffee crop for export.

The internal market in Brazil for new crop coffees is lacklustre at present, with most exporters already well covered for their nearby forward sale commitments with a combination of past crop stocks and new crop coffees.   While with the World Cup now starting to get to the business end of the tournament and Brazil still in the game, there is a definite distraction within the country from normal business activities.   Thus it is convenient that with Brazil due for a critical quarter final match against Colombia today, that there shall be no reference prices from the New York market that is on its Independence Day long weekend to allow coffee offices to close early for the day.

The new Peru fine washed arabica crop is coming in presently, but with many conflicting forecasts on the size of this crop, while with uncertainty as to the potential it is tending to mute exporter trading activity from the country which alike the Central Americans, has been suffering from Roya or Leaf Rust.   These problems are however regional and tend to be related mostly to the lower grown coffee farms and therefore, there remains uncertainty as to the size of this crop which has been forecasted at around 4.2 million bags.   Contrary to a government forecast in May that was indicating a new crop that would be larger than the previous year’s crop, which they had estimated to have been in excess of 4.3 million bags.

It has been a steady year in terms of coffee exports from India so far, but with the past couple of months of lower international prices tending to fuel some degree of price resistance that has slowed export selling activity.   Nevertheless the coffee exports from India for the first six months of this year are reported to be still only 2.6% lower than the same period in the previous year, at a total of 3,042,550 bags.   However the value of these exports has been reported to be 6.18% lower than the same period last year, at a value of 486.4 million U.S. dollars.

The coffee trading activity in Vietnam and Indonesia has been slow this week, with the inverted nature of the price structure in the London market tending to dampen trade house buying activity, while some degree of price resistance on the part of the internal market players is likewise impacting upon selling aggression.   This slow selling activity is further influenced within Indonesia, where many internal market players are distracted by the onset of the Ramadan month of fasting which started last weekend and shall carry on through to near to the end of July.

The arbitrage between the markets narrowed yesterday to register this at 78.00 usc/Lb., while this still equates to a very attractive 45.4% 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 4,345 bags yesterday, to register these stocks at 2,493,307 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

The commodity markets remained mixed in trade yesterday, but with some degree of confidence continuing in line with the news of improved employment data from the U.S.A.   While there was a tailing off in interest, ahead of today’s Independence Day close for the markets.   The Natural Gas, London robusta Coffee, Copper, Orange Juice, Wheat, Platinum and Palladium markets showed buoyancy, while the Oil, Sugar, Cocoa, New York arabica Coffee, Cotton, Corn, Soybean, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.10% lower; to see this Index registered at 545.97.   The day starts with the U.S. Dollar steady and trading at 1.717 to Sterling and 1.360 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.30 per barrel.

The coffee markets opened the day yesterday with both the London and New York markets showing buoyancy in thin and lacklustre trade, which remained the track into the afternoon’s trade.    The New York market did however start to falter as the afternoon progressed, while the London market maintained its positive stance.  The London market continued to end the day on a positive note and with 55.3% of the earlier gains of the day intact, while the New York market didn’t manage to recover from the late in the day reversal of fortunes and ended the day on a soft note and with 90.9% of the losses of the day intact.   The New York market is closed today to leave the London market to trade solo for the day, which is likely to result in thin and lacklustre steady to soft trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2065 + 18                                                JUL      169.40 – 1.65
SEP      2068 + 21                                                SEP     171.80 – 1.50
NOV     2051 + 16                                                DEC     175.45 – 1.50
JAN      2044 + 15                                               MAR     178.70 – 1.50
MAR     2040 + 12                                               MAY     180.50 – 1.55
MAY     2045 + 10                                                JUL      181.70 – 1.60
JUL      2054 + 10                                                SEP      182.00 – 1.65
SEP      2063 + 11                                                DEC     182.15 – 1.55
NOV     2072 + 12                                                MAR     182.20 – 1.45
JAN      2076 + 12                                                MAY     182.00 – 1.45

3rd. July, 2014.
The National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of June were 95,918 bags or 22.65% lower than the same month last year, at a total of 327,537 bags.  This higher volume has contributed to the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year having been 349,661 bags or 12.81% lower than the same period in the previous coffee year, at a total of 2,380,409 bags.

The National Coffee Federation of Colombia have reported that the countries coffee production for the month of June was 31,000 bags or 3.4% higher than the same month last year, to total 944,000 bags.    While the countries coffee exports for the month were 79,000 bags or 11.74% higher than the same month last year, at a total of 752,000 bags.

This improved performance and following many improved months has contributed to the Colombian cumulative production for the first nine months of the present October 2013 to September 2014 coffee year being 1,563,400 bags or 21.52% higher than the same period in the previous coffee year, at a total of 8,829,400 bags.   Likewise the countries cumulative exports for the first nine months of the present coffee year are 1,859,000 bags or 28.99% higher than the same period in the previous coffee year, at a total of 8,271,000 bags.

Based on the previous year’s performance and with Colombian production steadily rising, one might guess that the last three months of the present coffee year shall produce at least 2.7 million bags and therefore, see Colombia produce approximately 11.5 million bags during the present coffee year.   Therefore to fuel exports of approximately 10.5 million bags, for the present coffee year.   This much improved performance from Colombia assisting to counter much of the negative effects of the dip in Mexican and Central American production and the corresponding exports into the supply chain of fine washed arabica coffees, for the present coffee year.

Meanwhile with the Mexicans and Central Americans forecasted to bring in at least a 10% increase in crop from their next October 2014 to March 2015 harvest and adding in excess of 1.5 million bags to the fine washed arabica coffee supply while Colombia is expected to register a further small increase in crop, the supply of the top end mild coffees to the consumer markets is seemingly secure for the coming coffee year.   This good supply factor is especially so, as there is flat growth within the traditional developed coffee markets for the present, which are the higher value markets that are related to these relatively expensive quality coffees.   Making note that the impressive growth in single serves capsule coffees is very much related to the traditional developed coffee markets, which is resulting in less coffee fuelling more cups.

The Indian monsoon season for the country’s main coffee districts remains below par, with rainfall for many farms being reported at 20% below the monthly average for the month of June.  It is however noted that the months of July and August are traditionally the heaviest rainfall months and so far even  though it has been a drier than normal June there have been rains and therefore, it is too early to foresee the relatively mild monsoon season as being threatening to the forthcoming year end new coffee crop.  Albeit that there are already many market manipulative scare stories emanating from the coffee farmers in India, as they look to resist the softer prices that are presently being dictated by the reference prices of the international coffee markets.

The arbitrage between the markets broadened yesterday to register this at 80.45 usc/Lb., while this still equates to a very attractive 46.42% 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 320 bags yesterday, to register these stocks at 2,497,652 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

The commodity markets remained mixed in trade yesterday, but with some degree of confidence in play with the support of reasonable economic figures that are related to slow but steady growth from the U.S.A.   The Coffee, Sugar, Copper, Orange Juice, Wheat, Gold, Silver, Platinum and Palladium markets showed buoyancy, while the Oil, Natural Gas, Cocoa, Cotton, Corn and Soybean markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.01% lower; to see this Index registered at 546.50.   The day starts with the U.S. Dollar steady and trading at 1.715 to Sterling and 1.365 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.50 per barrel.

The coffee markets opened the day yesterday with the London market near to steady and the New York market experiencing some modest corrective buoyancy, following the previous day’s soft close.   The London market did however soon recover and return to positive territory, while the New York market shrugged off a short dip back to par, to recover its earlier gains of the day.   The London market continued on a positive sideways track for the rest of the day and to end the day with 63.3% of the gains of the day intact, while the New York market likewise ended the day on a positive note and with 70.1% of the earlier gains of the day intact.   The markets shall be conscious of the fact that the more volatile New York market is on holiday tomorrow for Independence Day in the U.S.A. and one would think that they shall be due for a follow through steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2047 + 40                                                JUL      171.05 + 2.75
SEP      2047 + 31                                               SEP      173.30 + 2.35
NOV     2035 + 23                                               DEC      176.95 + 2.40
JAN      2029 + 20                                               MAR     180.20 + 2.40
MAR     2028 + 20                                               MAY     182.05 + 2.35
MAY     2035 + 19                                                JUL      183.30 + 2.55
JUL      2044 + 20                                                SEP      183.65 + 2.70
SEP      2052 + 20                                                DEC     183.70 + 2.50
NOV     2060 + 20                                                MAR     183.65 + 2.50
JAN      2064 + 20                                                MAY     183.45 + 2.70

2nd. July, 2014.
The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of June were 72,516 bags or 16% higher than the same month last year, at a total of 525,631 bags.  This higher volume has contributed to the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year having been 277,883 bags or 7.1% lower than the same period in the previous coffee year, at a total of 3,637,280 bags.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of June were 16,684 bags or 11.31% higher than the same month last year, at a total of 164,257 bags.  This higher volume follows a slow start but nevertheless now contributes to the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year having been 123,614 bags or 10.59% lower than the same period in the previous coffee year, at a total of 1,043,452 bags.

The preliminary coffee export figures from Brazil for the month of June have indicated that the countries green coffee exports for the month were 540,000 bags or 25.96% higher than the same month last year, at a total of 2.69 million bags.    This rise in volume having been very much expected, as the positive nature of the reference prices of the New York market and the resulting firm prices of the washed arabica coffees, has influenced rising demand for the more affordable natural arabica coffees from Brazil, where farmers have remained active sellers of their significant 2013 crop stocks.

The preliminary June exports of mostly robusta coffees from Vietnam have been announced to have been 1,816,667 bags and at a value of US$ 229,000,000, while this contributes to the countries coffee exports for the first six months of the present calendar year being 31.7% higher in volume and 24.7% in value than the same period last year.   The income from coffee exports from Vietnam for the first six months of this year being calculated at an impressive 2.12 billion U.S. dollars.

The International Coffee Organisation have reported that global coffee exports for the month of May were 5.6% lower than the same month last year, at a total of 9.62 million bags.    This lower figure contributes to the official ICO exports for the first eight months of the present October 2013 to September 2014 coffee year being 3.9% lower than the same period in the previous coffee year, at a total of 72.83 million bags.  This dip in exports is however of no real concern, as it is more related to the restrained export selling over the period by many price resistant producers who had been speculating upon a Brazil partial drought inspired firmer international market.   

In the meantime and with a full moon due at the end of next week that is a period that is usually accompanied by clear nights and therefore, making any accompanying cold weather harsher, there remains the modest threat of frost in the coffee districts in Brazil.  This factor might assist to dampen any speculative bearish spirits for the coming days, which shall also be interrupted by the Independence Day holiday for the USA and the New York market on Friday.    Thus we would think that the markets shall be able to attract some degree of support and a degree of buoyancy, following the past few days of reversal of fortunes for the more volatile New York market.    This aside from the marginally stronger Brazil Real that is likely to restrain selling activity and the resulting price fixation hedge selling into the markets, from this leading player.     

The arbitrage between the markets narrowed yesterday to register this at 79.51 usc/Lb., while this still equates to a very attractive 46.15% 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 170 bags yesterday, to register these stocks at 2,497,972 bags.   There was meanwhile a larger in volume 3,923 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

The commodity markets were mixed in trade yesterday, but with most markets somewhat lacklustre in their trading activity in line with the holiday season that is now coming into play.   The Orange Juice, Gold, Silver, Platinum and Palladium markets were firmer in line with a soft U.S. dollar and the London robusta Coffee market was steady, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Soybean 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% higher; to see this Index registered at 546.58.   The day starts with the U.S. Dollar steady and trading at 1.715 to Sterling and 1.367 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 110.85 per barrel.

The coffee markets opened the day yesterday with the London market showing some early buoyancy, while the New York market started to come under some early negative pressure.   The London market continued to show its muscle into the afternoon’s trade, but with the New York market continuing to struggle the London market shed its earlier gains.   The London market continued to end the day on a steady note, while the New York market ended the day on a soft note and with 80.6% of the losses of the day intact.   This was not an very inspired close but one might think that there might nevertheless be some degree of stability for the markets to steady trade within the London market and bring forth some modest corrective recovery for the New York market against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2007 + 9                                                 JUL      168.30 – 4.70
SEP      2016 unch                                             SEP      170.95 – 4.15
NOV     2012 unch                                             DEC      174.55 – 4.15
JAN      2009 – 3                                                MAR     177.80 – 4.10
MAR     2008 – 7                                                MAY     179.90 – 4.05
MAY     2016 – 7                                                 JUL      180.75 – 4.00
JUL      2024 – 9                                                 SEP      180.95 – 3.95
SEP      2032 – 10                                               DEC     181.20 – 4.00
NOV     2040 – 10                                               MAR     181.15 – 3.90
JAN      2044 – 10                                               MAY     180.75 – 3.95

1st July, 2014. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 6.08% in the week of trade leading up to Tuesday 24th June, to register a net long position of 23,831 Lots on the day.  This speculative net long position within the London market is the equivalent of 3,971,833 bags and will most likely have been marginally reduced following the latter days of softer trade.

With the month of June passed the Government Trade data from Sumatra as the main coffee growing island of Indonesia has reported that the islands Robusta coffee exports for the month of May were 79,172 bags or 40.78% lower than the same month last year, at a total of 114,960 bags.  This lower performance contributes to the islands cumulative robusta coffee exports from Sumatra for the first nine months of the present October 2013 to September 2014 coffee year at a total of 2,791,681 bags. 

The arbitrage between the markets widened yesterday to register at 83.66 USc/Lb., this equates to an attractive 47.78% 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 arabica coffee prices. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 10,059 bags yesterday to register these stocks at 2,498,142 bags. The pending grading stocks posted an increase of 4,158 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 12,174 bags on the day. 

It was a mixed and generally softer day on the commodity markets yesterday, the Oil markets continued to register a slide as summer time inventories in the leading northern hemisphere consumer markets remain positive and concerns regarding potential supply disruptions from Iraq continued to wane. It was a similarly softer day for Sugar, Cocoa, Cotton, Orange Juice and the grains, Wheat, Corn, Soybean were all lower on the day.  It was a more positive day for Copper, Gold, Platinum and Palladium with Silver fairly flat on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.88% lower; to see this Index registered at 544.74. The day starts with the U.S. Dollar steady and trading at 1.709 to Sterling and 1.367 to the Euro, while Brent Crude is softer in early trade and is selling at US$ 110.90 per barrel.

It was a choppy day in the coffee markets yesterday which started with a negative follow through in London and a positive start to the day in New York to set the tone for the morning session and in limited volume.  The New York market could not however maintain the gains posted at the outset and slowly this market flattened out and back to opening levels.  Light trade on either side of unchanged was maintained while London remained fairly buoyant albeit in negative territory, until the America’s opened for business whereupon speculative pressure came to the fore in New York to push this market lower and trigger stops along the way.  There was a similar move in London robusta where the downside volume slipped through technical levels in a rapid succession and at one point 2.13% below opening levels. The afternoon session and the lower levels tested attracted improved interest and both markets found buyer support to lift the floor, with London still in negative territory having clawed back the earlier losses and a close near to the middle of the days’ trading range, and a recovery in New York to register a 3% recovery from the lows of the day and finish in a positive range and at the days’ highs, to set the close yesterday in both markets, as follows: 

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

JUL 1998 – 28                 JUL 173.00 + 2.55 
SEP 2016 – 18                 SEP 175.10 + 2.55
NOV 2012 – 18               DEC 178.70 + 2.55
JAN 2012 – 16             MAR 181.90 + 2.65
MAR 2015 – 14                                   MAY 183.75 + 2.65 
MAY 2023 – 14                 JUL 184.75 + 2.80
JUL 2033 – 14                 SEP 184.90 + 2.85
SEP 2042 – 14                 DEC 185.20 + 3.15
NOV 2050 – 14                 MAR   185.05 + 3.15
JAN 2054 – 14                 MAY   184.70 + 3.15

30th June, 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 0.97% in the week of trade leading up to Tuesday 24th June; to register a net long position of 39,702 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 1.05%, to register a net long on the day of 45,058 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 3.62% to register a net long position of 27,631 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,833,389 bags has most likely been modestly decreased following the latter end week softer trade, which followed.

The arbitrage between the markets narrowed on Friday to register at 80.29 USc/Lb., this equates to an attractive 46.53% 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 arabica coffee prices.   
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 14,125 bags on Friday to register these stocks at 2,508,201 bags. The pending grading stocks posted an increase of 604 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,016 bags on the day.

It was a mixed and generally softer day on the commodity markets on Friday, lead by the overall softer sentiment in the Oil markets and volatility in the grains sector ahead of crop report forecasts anticipated to be released later today. It was a softer day for Sugar, Coffee, Soybean, Corn and a steady day for Gold and Platinum, while Wheat and Cocoa were higher on the day, as was it a better day for Silver and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.22% lower; to see this Index registered at 549.59. The day starts with the U.S. Dollar steady and trading at 1.702 to Sterling and 1.364 to the Euro, while Brent Crude is softer in early trade and is selling at US$ 112.16 per barrel. 

The London and New York markets both started the day with a degree of buoyancy on Friday, within a modest volume environment.  Both markets set a positive track in the morning and London registering progressive upward momentum and in the absence of producer seller participation in any volume. New York held steady and in a somewhat narrow range above the market opening for much of the day.  A general softer mood within the macro however and with the coffee markets seemingly devoid of directional inspiration saw the speculative sector of the market return to the floor later in the day as sellers, with sell stops entering the fray to trigger the market lower along the way and New York finished the day on a softer note just off of the days’ lows.  The London market which had shown signs of resistance to the general negativity however the gains of the session were rapidly eroded as the trading day drew to a close to see this market finish in still positive territory in the front months but nearer to the day lows, to set the close on Friday on a softer note as follows: 

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

JUL 2026 + 18                          JUL  170.45 – 8.35 
SEP 2034 +  7                                   SEP  172.55 – 8.30
NOV 2030 +  1                                 DEC  176.05 – 8.30
JAN 2028 – 2                       MAR 179.25 – 8.15
MAR 2029 – 5                           MAY  181.10 – 8.10 
MAY 2037 – 7                           JUL   181.95 – 8.00
JUL 2047 – 7   SEP   182.05 – 7.80
SEP 2056 – 7   DEC  182.05 – 7.80
NOV 2064 – 7   MAR  181.90 – 7.70
JAN 2068 – 7   MAY  181.50 – 7.70

27th June, 2014.

The Vietnam General Statistics Office have revised the countries coffee exports of mostly robusta coffees for the month of May to 2,290,000 bags and not 2,833,333 bags as reported last month.  The Office has also subsequently reported that the countries estimated coffee exports for the month of June to have been 1,833,333 bags or 22.40% more than the same month a year ago.  This figure would indicate that the countries cumulative exports for the first nine months of the present October 2013 to September 2014 coffee year are 11.60% higher than the same period in the previous coffee year, at a total of 22 million bags.

The new northern Conilon robusta crop in Brazil is approximately 80% completed, while the central and southern arabica coffee crop is building up in volume and can be expected to start to peak in the coming month of July. This latter Brazil arabica harvest has experienced seasonally suitable dry weather and with the next full moon due on 12th July, which is historically viewed as the most likely month for frost events, there is little in the weather forecasts to indicate any likelihood of this occurring and this has in recent years as coffee farming has moved away from traditional frost affected areas, become a non-event.

Following the host of Brazil new crop forecasts and with many looking to a figure close to 50 million bags and some even in excess of 50 million bags, the National Coffee Council in Brazil is maintaining their forecast at this stage for a coffee crop to be between 40.1 million bags and 43.3 million bags.  This with the announcement after the market close yesterday, that cumulative reports would indicate that the new Brazil crop to include Conilon robusta which begins harvest earlier in the year and the arabica harvest currently underway, to be between 35% to 40% complete at this time.

The arbitrage between the markets narrowed yesterday to register at 88.90 USc/Lb., this equates to a very attractive 49.16% 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 arabica coffee prices.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 792 bags yesterday to register these stocks at 2,522,326 bags. There was a 2,275 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 7,412 bags on the day.

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 111,333 bags or 10.05% over the two weeks of trade leading up to Monday 23rd June, to register these stocks at 1,106,833 bags. 

It was a mixed and generally softer day on the commodity markets yesterday, the U.S. Dollar slipped back against a basket of major currencies, inspired by general discussion of a possible interest rate hike in first quarter 2015 within the leading USA consumer market. In the commodity sector it was a softer day for Oil as concerns over possible disruptions to exports from Iraq faded. It was a positive day for Sugar, Copper, Wheat, Corn, Soybean and a softer day for Cocoa, Cotton, Coffee, Orange Juice, Gold, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% lower; to see this Index registered at 550.81. The day starts with the U.S. Dollar steady and trading at 1.703 to Sterling and 1.36 to the Euro, while Brent Crude is softer in early trade and is selling at $ 112.42 per barrel.
 
Both the London and New York markets started the day on a hesitantly stead note yesterday, but with both markets soon coming under some negative pressure in thin trade. There was however a positive correction that came into play for both markets as the morning progressed.  The London market maintained its firmer track while the correction in New York was short lived and with some speculative profit taking within the limited volume environment.  The London market continued to end the day in positive territory and close to the days highs on the close, whereas New York remained range bound in negative territory for the latter half of the day, with speculative support lifting this market toward the end of the session. The London market has two sessions left to first notice day, which might indicate a continuation of the steady trend with limited producer selling overhead. The New York market is currently lacking directional news and therefore inspiration for the speculative sector, although there remains the underlying longer term speculative confidence that comes with the prospects of a smaller Brazil crop. The Brazil Real is firmer today and currently trading at 2.196 to the U.S. Dollar and could serve to discourage active producer participation from this sector of the market for the short term.  Thus, with some volatility still in play, the markets set the close yesterday on a mildly buoyant note, as follows:

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

JUL 2008 + 14                             JUL 178.80 – 1.15
SEP 2027 + 11                            SEP 180.85 – 1.20
NOV 2029 +  5                            DEC 184.35 – 1.25
JAN 2030 + Unch                         MAR  187.40 – 1.30
MAR 2034 – 1                              MAY 189.20 – 1.35
MAY 2044 – 1                              JUL 189.95 – 1.40
JUL 2054 – 1                               SEP 189.85 – 1.60
SEP 2063 – 1                              DEC 189.85 – 1.45
NOV 2071 – 1                             MAR     189.60 – 1.45
JAN 2075 – 1                              MAY     189.20 – 1.50

26th June, 2014.

All eyes remain focused on Brazil and not only for the World Cup which is drawing the attention of the fans all around the globe. With the new crop harvest underway, attention within the coffee community remains drawn to the question of potential size of the crop that is starting to coming in and the extent of damage that may have been incurred to the forming beans within the ripening cherries, during the extraordinary climatic anomaly of excessive dry weather experienced from January through to March in the growing areas this year.  

In this respect, reports from the interior can be expected to continue to draw the focus of the speculative sector within the coffee markets and so too the industry at large.  Brazil’s largest coffee cooperative Cooxupe came forth yesterday with their latest report that their members have thus far harvested 1.78 million bags of coffee by 20 June, or 27.50% of their estimated crop thus far, which was for this crop underway was put at an estimated 10 million bags from its areas at the beginning of this year and ahead of the drought.

The harvest is by comparative terms, advanced on that of the previous year which yielded a higher biennial bearing crop and reported at 13.60% coffee that had been collected by the same time in that year.  There was no reason provided for the higher intake at this point in the year, however the cherries related to early flowering would most likely be the most vulnerable to the hot and dry weather in January and February and likewise, earlier ripening, providing for an earlier harvest of ripe cherries in these areas.  While there is perhaps the additional incentive in that prevailing market levels are more conducive to facilitate willing producers to release new crop coffees earlier on in the season than would otherwise traditionally be a factor at this stage of the harvest.  It is however early days for this current crop and with a few months ahead for this harvest, it remains very difficult to gauge conclusions at this early stage. 

The arbitrage between the markets widened yesterday to register at 90.60 usc/Lb., this equates to a very attractive 49.77% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 275 bags yesterday to register these stocks at 2,523,118 bags. There was a 1,925 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 9,687 bags on the day.

It was a mixed day in the commodity markets yesterday, the influential Oil markets losing ground during the session on weaker than expected consumption data filtered into the markets in the U.S., while Brent Crude slipped back as concerns regarding the sectarian violence in Iraq, and the potential to affect exports from this country faded. Thus a mixed day and Light Crude positive while Brent lower, it was similarly a lower finish on the day for Sugar, Cotton, Orange Juice, Corn and the metals markets, Gold, Silver, Platinum and Palladium.  Copper continued its positive run, Coffee finished positively and a recovery for Wheat, and Soybeans. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.05% higher;  to see this Index registered at 552.624. The day starts with the U.S. Dollar steady and trading at 1.699 to Sterling and 1.363 to the Euro, while Brent Crude is steady in early trade and is selling at $ 113.46 per barrel.   

It was a quiet start to the day in the coffee markets yesterday, with London in positive territory and New York starting the day on a softer note.  The morning progressed within limited volume and a narrow range and in London with three trading sessions ahead of first notice day for the prompt month.  The New York market registered a recovery which continued in thin afternoon trade into the afternoon session with stops triggered along the way to feed the upward momentum. A lack of producer participation was evident and with the Brazil Real registering at a firmer 2.20 to the US Dollar during the course of the day, a limited volume of selling at the top at the top of the market toward the latter half of the day. The speculative buying support in New York market met with light resistance as the day progressed toward the close. It was a similarly firm day in London which continued to hold on to its buoyancy throughout the session and a close in both markets near to the days’ high to set the close yesterday, as follows;

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

JUL 1994 + 40                   JUL 179.95 + 5.80 
SEP 2016 + 44                         SEP 182.05 + 5.80
NOV 2024 + 44                                 DEC 185.60 + 5.80
JAN 2030 + 45                                 MAR 188.70 + 5.80
MAR 2035 + 44                                         MAY 190.55 + 5.85 
MAY 2045 + 45                         JUL 191.35 + 5.85
JUL 2055 + 45                         SEP 191.45 + 5.90
SEP 2064 + 45                         DEC 191.30 + 5.90
NOV 2072 + 45                         MAR     191.05 + 5.90
JAN 2076 + 45                         MAY     190.70 + 5.90

25th June, 2014.

The weather in Brazil remains conducive as the peak harvest is underway for the new coffee crop for which the size of the crop and extent of the earlier drought damage remains largely under debate with many forecasts in play and some ranging as far apart as a difference of 10 million bags from lowest to highest estimate.  

The weather has likewise remained conducive to the developing new crops in Central America and on the shorter term Weather Services International has maintained their forecast for a relatively tame hurricane season for the Gulf of Mexico for the second half of this year.  This while weather forecasters continue to monitor the likelihood of an El Niño weather phenomenon that could occur later this year, which has shown signs of warming in the Pacific albeit weak and the question of whether this may yet develop is not yet known.  For the moment however weather forecasts are positive and this removes short to medium term weather fears for Central and South America and for Indonesia and Vietnam off the table for the present.      

The arbitrage between the markets narrowed marginally yesterday to register at 86.80 usc/Lb., this equates to a very attractive 49.25% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,710 bags yesterday to register these stocks at 2,523,393 bags. There was a 5,100 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 7,762 bags on the day. 

It was an overall easier day on the commodity markets yesterday and renewed confidence in the U.S. manufacturing sector reported yesterday assisted a firmer U.S. Dollar on the day.  It was a positive day for the Oil markets and Copper continued a positive run, as was it a positive day for metals, Gold, Silver, Platinum and Palladium all in positive territory.  It was however a softer day for the agriculture sector in general terms with Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean all posted lower results on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.54% lower; to see this Index registered at 552.343. The day starts with the U.S. Dollar firmer trading at 1.695 to Sterling and 1.36 to the Euro, while Brent Crude is buoyant in early trade and is selling at $ 114.16 per barrel. 

The coffee markets started the day in a positive range in London and slightly softer in New York.  Volumes were very light however and particularly in New York the quiet morning progressed within a narrow range below opening levels with London in marginally positive territory.  The muted trend seemed to settle in for the day with both markets hardly changed toward the midmorning and very limited activity in New York up to the point when the America’s opened for their business day. The earlier listless trade in New York met with a bout of strong speculative selling pressure and with little underlying support the market broke lower, triggering stops along the way.  The lows tested met with some resistance and buyer fixation support returned to prop up and level off the market, to steady once more.  

It was a somewhat less dramatic performance in London yesterday however, which maintained a positive stance for much of the day’s trade. Finally in the wake of the rapidly weaker New York market, London met with only tapered selling pressure to see this market shed some of the earlier gains. London did not follow New York however and instead maintained a modestly negative but steady range for the most part of the afternoon, to settle above the day lows.  Once the volatile speculative losses had been absorbed in New York, the latter day attracted speculative and buyer fixation support back to the floor, to see New York recover much of the ground lost during the day, to see the markets close in negative territory on a buoyant note, as follows:  

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

JUL 1954 – 13   JUL 174.15 – 0.95 
SEP 1972 – 10         SEP 176.25 – 1.15
NOV 1980 –  7         DEC 179.80 – 1.20
JAN 1985 –  7         MAR 182.90 – 1.20
MAR 1991 –  6                               MAY 184.70 – 1.10 
MAY 2000 –  7 JUL 185.50 – 1.10
JUL 2010 –  7 SEP 185.55 – 1.10
SEP 2019 –  7 DEC 185.40 – 1.05
NOV 2027 –  7 MAR 185.00 – 1.10

24th June, 2014.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 1.36% in the week of trade leading up to Tuesday 17th June, to register a net long position of 22,382 Lots on the day.  This speculative net long position within the London market which is the equivalent of 3,730,333 bags has most likely been increased following the latter days of positive trade.

The Mexico national coffee association Amecafe have reported that the countries coffee exports for the month of May were 63,938 bags or 20.19% lower than the same month last year, at a total of 252,703 bags.  This lower volume has contributed to the countries cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year having been 683,842 bags or 29.36% lower than the same period in the previous coffee year, at a total of 1,644,812 bags. 

Thus, with the export figures now in from Mexico, the assessment of the export performance for the month of May for the greater bloc of fine washed Arabica producers, to include the main five Central American producers; Guatemala, Honduras, Costa Rica, Nicaragua and El Salvador, as well as Mexico, Colombia and Peru, this brings the cumulative export total for the month of May to 2,858,250 bags and 15,300 bags increase on that of the same month last year. The largest contributors toward this increased export figure with a surge in exports up 196,098 bags on that of last year from Honduras, as well as a smaller 38,963 bags but nevertheless an increase year on year for exports in May, from Nicaragua.  

The cumulative figures for the first eight months of exports from the earlier in development Roya affected regions in Central America and Mexico are however, all negative when compared against that of the same eight month period in the previous coffee year.  A continuation of the coffee crop recovery in Colombia and a consistent export performance from Peru to date, has assisted to fill in the gaps within the washed Arabica basket and the overall exports for the first eight months of this coffee year have thus far to the end of May come in at 1.42% below that of the previous year, at a total 18,829,993 bags.  

The arbitrage between the markets widened yesterday to register at 87.50 usc/Lb., while this equates to a very attractive 49.32% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,705 bags yesterday to register these stocks at 2,518,683 bags. There was a 4,400 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 12,862 bags on the day.

It was a mixed day on the commodity markets yesterday, the earlier supportive sentiment within the Oil markets seemed to run out of steam and a softer day on the Oil markets, lending an influence on overall sentiment.  It was a softer day overall for Oil, Sugar, Cocoa, robusta Coffee, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum, It was a better day on the Gold markets which finished in positive territory and a steady day for Palladium and a positive day for Cotton, Copper and arabica Coffee.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.27% lower; to see this Index registered at 555.327. The day starts with the U.S. Dollar tending steady and trading at 1.702 to Sterling and 1.36 to the Euro, while Brent Crude is steady in early trade and is selling at $ 113.40 per barrel. 

The London robusta coffee market started the day yesterday taking a softer track and with producer selling pressure weighing in at the outset.  The New York market started the day on a steady note and in thin morning trade with underlying buyers supportive, this market regained upward momentum.  This was however short lived as the presence of overhead sellers became apparent as the day progressed, to cap the gains as the opportunities were presented. The failure for this market to build upon the gains tested during the morning session lead to a mostly sideways day and in a somewhat muted session with modest volumes. The London robusta market seemed to follow suit with limited upward support and producer activity prevalent, to see this market finish the day near to the lows on the day. The New York arabica market did however, after a lacklustre afternoon saw a return to the upside once more and this market post a recovery late in the day to recover all the ground lost and close in positive territory and a buoyant finish to the day in New York but a softer close in London, to set the close yesterday, as follows;  

LONDON ROBUSTA US$/M T     NEW YORK ARABICA USc/Lb. 

JUL 1967 – 23 JUL 175.10 + 1.85 
SEP 1982 – 19         SEP 177.40 + 1.90
NOV 1987 – 19         DEC 181.00 + 2.00
JAN 1992 – 19         MAR 184.10 + 1.90
MAR 1997 - 18                          MAY 185.80 + 1.85 
MAY 2007 – 20 JUL 186.60 + 1.75
JUL 2017 – 19 SEP 186.65 + 1.80
SEP 2026 – 18 DEC 186.45 + 1.70
NOV 2034 – 18 MAR 186.10 + 1.60
JAN 2038 – 18 MAY 185.75 + 1.45

23rd June, 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 2.06% in the week of trade leading up to Tuesday 17th June;  to register a net long position of 39,320 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 1.64%, to register a net long on the day of 44,587 Lots.

 

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 1.59% to register a net long position of 26,664 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,559,244 bags has most likely been modestly increased over the following days of overall positive trade, which has since followed. 

Following on from the announcement by J. M. Smucker and Kraft Foods that they were raising their wholesale prices for their prominent brands in North America, Starbucks confirmed on Friday that it will raise prices on some drinks offered by its U.S. shops and similarly increase list prices on its own brand of packaged coffee sold in supermarkets and other retail outlets. This news may continue to provide the New York market with a degree of support in speculative sentiment following the buoyant day registered on Friday. This move following on from increases announce by other leading roasters in this market, will likely be interpreted by the speculative sector as an affirmation of the prevailing levels on the coffee markets, as the main stream brands in this leading coffee consumer market can continue to pay up for coffee stocks, with the assistance of these price increases filtering into the market over the next months.  Likewise this will raise the price barometer against which smaller players in the market can continue to operate within this highly competitive market.  

The arbitrage between the markets widened yesterday to register this at 84.74 usc/Lb., while this equates to a very attractive 48.28% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 921 bags on Friday, to register these stocks at 2,515,978 bags. There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,262 bags.

It was a positive day on the commodity markets on Friday, as concerns of possible disruptions to Oil supply from Iraq lead to a buoyant day on the oil markets. The latest round of economic data released by China assisted the trend with positive indicators well received by the markets.  It was a positive day for Oil, Sugar, Coffee, Copper, Wheat, Corn, Soybean and Palladium markets, while a steady to softer day for Gold, Silver, Platinum, Cotton and Orange Juice on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.18% higher; to see this Index registered at 556.809. The day starts with the U.S. Dollar tending steady and trading at 1.703 to Sterling and 1.36 to the Euro, while Brent Crude is steady in early trade and is selling at $ 115.27 per barrel.

The London and New York markets both started the day on a positive note yesterday, with both markets retaining their buoyancy into the afternoon session.  Along with speculative and commercial industry buyers present in what was relatively thin volume, there was a notable lack of producer participation and with Brazil mostly removed from the market over a long weekend holiday, the New York market surged ahead lacking significant sellers on the floor. The added assistance of an overall positive influence in the macro commodity index came into play to assist to boost the day.  It was a similarly positive day in London, although this market was gradually restrained by sellers waiting above the market, which returned to finally cap the gains on the day in London. The volume of trade picked up pace toward the latter half of the session in New York with underlying buyer fixation support maintained most of the ground gained during the day to finish close to the day’s highs.  The London market lost some ground toward the latter half of the day but managed to post a recovery ahead of the close, and a buoyant finish to the day in both markets to set the close on Friday, as follows: 

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

JUL 1990 + 31 JUL 173.25 + 6.25 
SEP 2001 + 35         SEP 175.50 + 6.40
NOV 2006 + 34         DEC 179.00 + 6.40
JAN 2011 + 34         MAR 182.20 + 6.40
MAR 2018 + 32                       MAY 183.95 + 6.30 
MAY 2027 + 32 JUL 184.85 + 6.25
JUL 2036 + 30 SEP 184.75 + 6.25
SEP 2044 + 27 DEC 184.85 + 6.20
NOV 2052 + 24 MAR 184.75 + 6.20
JAN 2056 + 24 MAY 184.50 + 6.20

20th. June, 2014.

The producer bloc of Central America, Dominican Republic, Colombia and Peru but excluding the unreported Mexico exports for the Month of May were seen to have been 3.1% higher than the same month last year, at a total of 2.6 million bags.    This positive performance has contributed to the producer blocs cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year to have been 2.1% higher than the same period in the previous coffee year, at a total of 17.2 million bags.  

Albeit that the Mexican authorities have not reported the countries coffee exports for the month of May and likewise since February this year, one might guess that their exports from a 10% smaller new crop harvested over October 2013 to March 2014, would likewise have been similarly lower.   Therefore one might have expected that their May exports might have been approximately 285,000 bags and therefore to inflate this producer bloc May exports to approximately 2.88 million bags.

Likewise to guess Mexico’s coffee exports to have been 10% lower for the first eight months of the present coffee year, to total approximately 2.1 million bags and therefore inflate the producer bloc cumulative exports for the first eight months of the present coffee year to approximately 19.3 million bags.  But perhaps one should be cautiously more conservative and therefore, estimate that with Mexico included this producer bloc has exported at least 19 million bags, for the first eight months of this present coffee year.  

It has been a very quiet week in Brazil with yesterday’s Corpus Christi public holiday being bridged by many into a long weekend, while Tuesday was a half day for all Brazilians who were distracted by their World Cup soccer match.  Therefore with a two and half day week, there internal market trade and likewise export selling activity has been somewhat muted and is likely to inspire some catch up selling for the coming week.   This is potentially in terms of the related price fixation hedge selling activity, something of a cap to the prospects of the New York market for the coming week.

Albeit that in terms of exporters having good volumes of forward sales in hand, that the coffee exports from Brazil are steaming along and with volumes that are seemingly indicating that the country shall export approximately 33 million to 34 million bags of coffee during the present October 2013 to September 2014 coffee year.   Thus with an approximate 20.5 million bags domestic market demand and overall demand of approximately 54 million bags one could perhaps extrapolate this to indicate a similar demand for the coming coffee year, and thus if one is to work with 10 million bags of carryover 2013 arabica coffee stocks and a new crop that is conservatively 49 million bags a coffee supply of 59 million bags and a surplus of 5 million bags, to fuel carryover stocks into the next 2015 crop.

The Cameroun has reported their May robusta coffee exports to have been 1300 bags or 2.97% higher than the same month last year, at a total of 45,000 bags.  This improved performance does however follow a slow start earlier in the year and for the Cameroun, which works with a robusta coffee year from December to November.  In this respect they report their cumulative robusta coffee exports for the first six months of the December 2013 to November 2014 coffee year to be 5,317 bags or 3.79% lower than the same period in the previous coffee year, at a total of 134,783 bags.

The Cameroun has also reported their arabica coffee exports for the month of May which was 3,633 bags or 86.15% higher than the same month last year, at a total of 7,833 bags.  This with the country working on a conventional coffee year for their arabica coffees and following a very slow start, has contributed to the country’s cumulative arabica coffee exports for the first eight months of the October 2013 to September 2014 coffee year to have been 5,267 bags or 26.35% lower than the same period in the previous coffee year, at total of 14,717 bags.  

The arbitrage between the markets narrowed yesterday to register this at 79.92 usc/Lb., while this still equates to a very attractive 47.26% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,283 bags yesterday, to register these stocks at 2,516,899 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 17,262 bags.

The steady day by day decrease in these New York washed arabica coffee certified stocks that reflects mostly the tighter supply and positive export differentials of Roya affected Mexican and Central American coffee from the last harvest, should by nature be supportive for speculative sentiment within the market.   But it would seem that the players are already looking forward to the prospects of an over 10% increase for the regions new crop that is due to start being harvested in the lower grown districts in four months’ time, rather than the negative growth of these stocks for the present.  

The commodity markets were mixed in trade yesterday, but with the softer nature of the U.S. dollar proving supportive in selected markets, while the Iraq problem continued to underpin the Oil markets.    The Oil, Sugar, Copper, Wheat, Corn, Soybean, Gold and Platinum markets had a day of buoyancy and the Natural Gas and Palladium markets were steady, while the Cocoa, Coffee, Cotton and Orange Juice markets were softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.93% higher; to see this Index registered at 555.83.   The day starts with the U.S. Dollar tending softer and trading at 1.705 to Sterling and 1.363 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 115.30 per barrel.

The coffee markets opened the day yesterday with the London market tending softer and the New York market showing modest buoyancy, but with the London market soon recovering into positive territory, while the New York market turned south and moved into a negative track.  As the afternoon progressed the London market one again came under pressure and moved back into negative territory, while the New York market bounced off its lows and recovered some of its losses.  The London market continued to end the day on a soft note and with 72.7% of the losses of the day intact, while the New York market ended the day marginally softer but with only 22.7% of the earlier losses of the day intact.   It was however nevertheless and overall softer close and one that is unlikely 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.
                                                  
JUL      1959 – 15                                                JUL      167.00 + 0.25
SEP      1966 – 16                                               SEP      169.10 – 0.75
NOV     1972 – 19                                               DEC      172.60 – 0.80
JAN      1977 – 20                                               MAR     175.80 – 0.85
MAR     1986 – 20                                               MAY     177.65 – 0.95
MAY     1995 – 20                                                JUL      178.60 – 0.95
JUL      2006 – 19                                                SEP      178.65 – 0.85
SEP      2017 – 19                                               DEC      178.55 – 0.85
NOV     2028 – 19                                               MAR      178.30 – 0.90
JAN      2032 – 19                                               MAY      177.95 – 0.85

19th. June, 2014.
The National Export Centre of Nicaragua has reported that the country’s coffee exports for the month of May were 38,963 bags or 17.58% higher than the same month last year, at 260,579 bags.   This improved performance has not however done much to dent the dip in exports for the present October 2013 to September 2014 coffee year, which has so far registered exports for the first eight months of the coffee year at 321,236 or 24.55% lower than the same period in the previous coffee year, at a total of 987,384 bags.

It must be noted however that the Nicaraguan exports during the previous 2012 to 2013 coffee year were inflated by carryover stocks from the previous 2011/2012 crop of approximately 300,000 bags, which were exported over the first two months of last coffee year.  Therefore in reality the lower exports during the present coffee year are indicating only a modest dip in production for the present crop, rather than a severe dip.

The Customs authorities in Vietnam have reported that the country’s exports of mostly robusta coffees were below some of the earlier estimates and including the official estimate of 2.83 million bags, with the exports for the month now registered at 2.29 million bags.   Despite this dip however, the country’s coffee exports for the first eight months of the present October 2013 to September 2014 coffee year are 10% higher than the same period in the previous coffee year, at a total of 20,166,667 bags.    While with an export potential for this year of in excess of 27 million bags, one might think to see some good volumes of coffee being exported from Vietnam over the last four months of the present coffee year.

Today is the Corpus Christi holiday for Brazil and some other Latin American countries, as it is for some of the countries in Western Europe, which is likely to slow physical trade and with many taking Friday off to bridge the holiday into a long weekend, for the last couple of days of this week.   Thus while the countries that host the international markets are still working, one might expect to see relatively lacklustre trade for today and tomorrow.

It is anyhow the start of the summer holiday season for the main northern hemisphere markets and a period within which physical coffee trade tends to slow and unforeseen weather issues aside to spike up speculative and industry cover interest, one can expect to now see two months of relatively slow trade.   There nevertheless can be expected that with consumer industry forward cover in Brazil natural arabica coffees and the robusta coffees relatively good, that there shall be continued hand to mouth trading activity for the higher priced washed arabica coffees that are generally not as well bought forward.

The arbitrage between the markets narrowed yesterday to register this at 79.95 usc/Lb., while this still equates to a very attractive 47.07% 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 arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,925 bags yesterday, to register these stocks at 2,522,182 bags.   There was meanwhile a smaller in volume 2,268 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 17,262 bags.

These certified stocks remain dominated by the Mexican and Central American coffees which account for 1,479,051 bags or 58.64% of the stocks and followed by Peru, who contribute 522,898 bags or 20.73% of the stocks.   While with much improved production over the last year, the Colombia now contributes 107,267 or 4.25% of the stocks.   Latin American fine washed arabica coffees aside, the balance is made up by the African producers Burundi, Rwanda, Tanzania and Uganda, who contribute 336,849 bags or 13.36% of the stocks and India with 76,117 bags, or 3.02% of the stocks.

The commodity markets were relatively flat again yesterday and with the majority of the markets trading within a narrow range, but with the macro commodity index tending to the firmer side.   The Brent Oil, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the U.S. Oil, Natural Gas, New York arabica Coffee, Orange Juice, Corn and Palladium markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.21% higher; to see this Index registered at 550.71.   The day starts with the U.S. Dollar tending softer and trading at 1.701 to Sterling and 1.361 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 115.20 per barrel.

The coffee markets opened the day yesterday with both markets hesitantly steady and indicating some degree of buoyancy, but with both markets soon starting to lose their way into early afternoon trade and taking a negative track.    The options expiry did however have a marked effect upon the fortunes for the London market that experienced a sharp recovery and moved back into positive territory, while the New York market continued to flounder and remain in negative territory.   The London market continued to maintain its positive stance and end the day on a positive note and with 60% of the gains of the day intact, while the New York market ended the day on a soft note and with 68.9% of the earlier losses of the day intact.    This rather mixed close provides little indication for trade today but perhaps with a weaker U.S. dollar it might assist to inspire a steady start for the London market and perhaps some modest positive correction 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.
                                                  
JUL      1974 + 18                                               JUL      166.75 – 2.30
SEP      1982 + 12                                               SEP     169.85 – 2.10
NOV     1991 + 10                                                DEC    173.40 – 2.10
JAN      1997 + 9                                                 MAR    176.65 – 2.05
MAR     2006 + 8                                                 MAY    178.80 – 1.95
MAY     2015 + 7                                                  JUL    179.55 – 1.95
JUL      2025 + 7                                                  SEP    179.50 – 1.95
SEP      2036 + 7                                                 DEC    179.40 – 1.90
NOV     2047 + 7                                                  MAR   179.20 – 1.80
JAN      2051 + 7                                                  MAY   178.80 – 1.90