30th October, 2014.

The arbitrage between the markets narrowed yesterday to register this at 96.98 usc/Lb., while this equates to an attractive 51.14% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted an increase of 3,957 bags yesterday, to register these certified stocks at 2,380,281 bags.  There was meanwhile, a decrease of 3,957 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 25,510 bags.

The commodity markets had a mixed and overall steady day yesterday, the US Dollar rose on the day, following the much awaited by the markets, US Federal Reserve Bank policy statements yesterday, confirming an end to the economic stimulus program which was implemented in reaction to the economic downturn six years ago. News of an improvement in the US Labour market together with better than expected US Corporate earnings were all factors which assisted to fuel positive sentiment in the markets yesterday.  It was a positive day for the Oil markets, resurgence noted in Soybean, Corn, Wheat and Sugar firm, so too Cocoa, Cotton and Palladium.  IT was however, a softer day for Coffee, Orange Juice, Copper, Gold, Silver and Platinum.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.69% higher to see this Index registered at 489.67. The day starts with the U.S. Dollar firmer and trading at 1.598 to Sterling and 1.259 to the Euro, while North Sea Oil is steady and is selling at $ 86.07 per barrel.

The coffee markets opened the day in positive territory, both markets moving higher at the outset in the morning limited volume session.   The London robusta market continued the positive track into the early afternoon but with New York attracting negative pressure as the afternoon progressed; London lost some of the earlier gains but remained within positive territory for the rest of the day. The lower trend in New York by midsession attracted light speculative long liquidation; this was met with light industry and a degree of technical support coming in to support the market at the lows.  The forecasts for well dispersed rains predicted to reach the Brazil Coffee belt for the next fortnight dampened the speculative mood, together with the negative influence of a firming US Dollar in the macro yesterday. The Brazil Real is meanwhile trading at recovered rate of 2.46 to the US Dollar today.  The close in London was in positive territory after a relatively narrow range in trade yesterday, nearer to the days’ highs, and a lower day in New York which saw this market finish the day just off the lows, and set the close yesterday, as follows: 

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

NOV 2042 + 20 DEC 189.60 – 2.75
JAN 2042 + 18 MAR 193.95 – 2.70
MAR 2048 + 17 MAY 196.35 – 2.65
MAY 2060 + 15 JUL 198.40 – 2.60
JUL 2072 + 14 SEP 199.60 – 2.55
SEP 2083 + 14 DEC 200.30 – 2.50
NOV 2083 + 10 MAR 199.90 – 2.45
JAN 2072 + 13 MAY 199.25 – 2.60
MAR 2081 + 15 JUL 198.50 – 2.60 
MAY 2074 + 15 SEP 198.40 – 2.50

29th October, 2014.

Following the arrival of the delayed rains to the main Brazil coffee growing areas, the local weather forecaster Somar has predicted that a new cold front will bring widespread rains across the coffee areas over the weekend.  The wet conditions are expected to continue through most of next week.  This forecast coincides with the US based forecaster Commodities Weather Group, likewise forecasting new rains through the coffee belt in the eleven to fifteen day forecast period, while the further out sixteen to thirty day prediction is for the weather to turn slightly drier over the coffee areas in Bahia and Minas Gerais. These prevailing wet conditions have assisted to provide a degree of recovery in ground water retention levels, a factor which is positive for the development of the flowering but the country needs good rains on a continuous basis in these coming months, to help to establish the new biennially bearing 2015 crop to come. Thus one may anticipate that there shall be a continuation of keen interest in the prospects for the Brazil summer weather and for this to remain conducive to the developing crop in the weeks and months ahead.  

Meanwhile and presuming no longer term climatic issues to negatively affect the new crop prospects for Brazil, the latest forecast from respected commodity bankers Rabobank, has indicated that this next crop ought to be around 47 million bags of which 30 million bags arabica and balance Conilon Robusta.  The starting point for this estimate is a premise that this current crop which was affected by the unforeseen dry weather during development at the beginning of this year has a potential 47 million bags while the expectation for the lower bearing 2015 crop to come should, climatic anomalies aside, see the new crop in at around the same level. There are many months ahead however and the traditional bout of forecasts can be expected to come to the markets of the prospective size of the new Brazil crop to come in 2015, while it might be observed that in general private trade and industry forecasts are lacking at this time year on year. One might presume that the delayed onset of rains this year has inspired a degree of reluctance at this early stage of flowering for participants to as yet put forward official forecasts.  Although these forecasts will start to come through in the next couple of months and the reception of these reports are likely to be accompanied by a degree of speculation surrounding the potential size and impact of this new crop, which is seemingly to remain a topical factor to influence the markets. 

The arbitrage between the markets held steady yesterday to register this at 100.54 usc/Lb., while this equates to an attractive 52.27% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted an increase of 4,240 bags yesterday, to register these certified stocks at 2,376,324 bags.  There was meanwhile, a decrease of 1,390 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 29,467 bags. 

The commodity markets had a mixed and overall steady day yesterday, with the overall focus on the US Federal Reserve Bank meetings and their resulting announcements later today. The US Dollar weakened toward the latter half of the day to assist to prop up most commodities and a mild recovery registered in the Oil markets on the day. It was a positive day for Oil, Sugar, Cotton, Copper, Wheat, Corn, Soybean, Coffee and the metals markets, Gold, Silver, Platinum and Palladium, although a softer day for Cocoa and Orange Juice. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.60% lower to see this Index registered at 486.34. The day starts with the U.S. Dollar trading at 1.613 to Sterling and 1.273 to the Euro, while North Sea Oil is steady and is selling at $ 86.09 per barrel.  

The coffee markets opened the day yesterday with some buoyancy in London and on a softer note in New York.  The range and volume in both markets was muted and in London a particularly thin day, which with first notice day ahead, this market progressed in light volume on either side of unchanged. It was a little busier in New York yesterday in volume; however, the range was similarly narrow in comparative term and speculative sellers met with underlying light roaster and industry buyer activity to set the floor in the earlier session, where the market drifted along range bound.  The latter day activity perhaps spurred on more by the macro than in coffee alone, along with the much firmer Brazil Real at 2.48 to the US Dollar as the session progressed, encouraged latter day support in New York.  Thus the markets finished the day after a quiet days trade in London and a buoyant day in New York arabica, to set the close near to the days’ high in both markets in a degree of buoyancy, as follows:  

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

NOV 2022 + 10                  DEC 192.35 + 1.45
JAN 2024 + 11          MAR 196.65 + 1.50
MAR 2031 +   6          MAY 199.00 + 1.45
MAY 2031 +   7          JUL 201.00 + 1.50
JUL 2045 +   7          SEP 202.80 + 1.60
SEP 2058 +   8          DEC 202.35 + 1.60
NOV 2069 + 12          MAR 201.85 + 1.55
JAN 2073 +   8          MAY 201.10 + 1.60
MAR 2059 +   8          JUL 200.90 + 1.70 
MAY 2066 +   8          SEP 200.45 + 1.70

28th October, 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 2.40% during the week of trade leading up to Tuesday 21st October; to register a net long position of 28,159 Lots on the day.  This net long which is the equivalent of 4,693,167 bags has most likely been slightly reduced during the period of mixed trade, which has since followed.

Following on from the Vietnam General Statistics office downward review of the country’s September coffee exports, to 1,622,550 bags., the government has since forecast that the country could export approximately 1,750,000 bags of mostly robusta coffees in this first month of the new October 2014 to September 2015 coffee year. These figures yet to be finalised would contribute to the country exporting around 24,882,417 bags of coffee over the first ten months of the calendar year thus far, or at 37.40% higher than cumulative exports over the same period in the previous calendar year.  

The arbitrage between the markets held steady yesterday to register this at 99.41 usc/Lb., while this equates to an attractive 52.07% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted a decrease of 7,400 bags yesterday, to register these certified stocks at 2,372,084 bags.  There was meanwhile, an increase of 6,600 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 30,857 bags. 

The commodity markets had a mixed and mostly lower day yesterday, the markets waiting further guidance as the next interest rate indicators by the US Federal Reserve Bank which two day policy meetings begin later today. It was an overall softer day for the metals markets with Gold, Silver and Palladium posting a softer close on the day.  It was a generally softer day for the Oil markets, while in tandem with the news of the Presidential elections outcome in Brazil and another term narrowly won by Dilma Rousseff, the Brazil Real softened on the day to touch upon fresh lows against the U.S. Dollar. This spilled over as negative pressure into the grains markets although these latter markets posted some recovery toward the end of the day.  It was a positive day for Corn, Soybean and Wheat markets, the other gainers on the day were Copper and Platinum, but a negative day for Orange Juice, Cocoa, Sugar, Cotton and Coffee. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.11% lower to see this Index registered at 483.45. The day starts with the U.S. Dollar trading at 1.61 to Sterling and 1.27 to the Euro, while North Sea Oil is steady and is selling at $ 85.36 per barrel.

The coffee markets opened the day on Monday in the wake of the news of the results from Brazil in anticipation that the weaker Brazil Real would apply further pressure to both markets, which gapped lower on opening. The opening lower market found support to set the floor for the day and once the initial volume of selling was removed, both markets regained ground during the morning session ticking over in light volume through and into positive territory.  There was little else in the markets yesterday to provide guidance while the macro focus moved to the US Fed meetings to start today and a softer US Dollar on the day.  The afternoon session slid back into negative territory in both markets, which in the modest volume of the day was met with limited industry support once more and another attempt to the upside in both markets toward the latter part of the session which finally assisted the markets to the finish line with some buoyancy and most of the recovery intact albeit in negative territory, to set the close in both markets yesterday, as follows:

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

NOV 2012 - 15 DEC 190.90 – 0.60
JAN 2017 - 11 MAR 195.15 – 0.60
MAR 2025 -   9 MAY 197.55 – 0.55
MAY 2038 -   9 JUL 199.50 – 0.55
JUL 2051 -   9 SEP 200.55 – 0.60
SEP 2061 -   9 DEC 201.20 – 0.80
NOV 2061 -   9 MAR 200.80 – 0.90
JAN 2051 -   9 MAY 200.25 – 0.75
MAR 2058 -   9 JUL 199.40 – 0.40 
MAY 2051 -   9 SEP 199.20 – 0.15

27th October, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 5.42% in the week of trade leading up to Tuesday 21st October;  to register a net long position of 45,131 Lots on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 2.01%, to register a net long on the day of 43,668 Lots. 

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 2.86% to register a net long of 37,109 lots on the day.  This net long position is the equivalent of 10,520,401 bags has most likely decreased slightly over the period of overall more negative trade that has since followed and likewise, the net long position of the Managed Money Funds. 

The Brazilian weather issues have taken a bit of respite for the moment, the news from local and international weather forecasters predicting nearly all of Brazil’s main agricultural areas should receive good rainfall for the next fortnight having been absorbed to some degree by the latest round of speculative liquidation. Further attention has since turned to the developments surrounding the local Presidential elections held over the weekend and likewise a recovery in the Brazil Real which is currently trading at 2.473 to the US Dollar prior opening for business, later today.  

The physical coffee market for the meantime has picked up some pace ahead of the winter northern hemisphere roasting and with the advent of the rains in Brazil, improved consumer activity registered in the past week.  This has been supported by the advantageous in US Dollar terms, softer Brazil Real and improved sales within the internal market in Brazil last week.   

The forward prospects are meanwhile all positive thus far for the development of the harvests and new crop coffees which will soon start to come from the fine washed arabica producer bloc of Mexico, Central America and Colombia, as well as the new robusta crop to come from Vietnam in the next months.  This would indicate that a majority of the consumer industry roasters are tending to maintain a cautious view towards the markets and a continuation of a steady buying policy for the more attractive in value terms coffees which are coming to the fore.

The arbitrage between the markets narrowed on Friday to register this at 99.51 usc/Lb., while this equates to an attractive 51.96% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted an increase of 1,650 bags on Friday, to register these certified stocks at 2,379,484 bags.  There was meanwhile, a decrease of 2,475 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,257 bags.

The commodity markets had a mixed but overall negative day on Friday, improved U.S. housing sales data assisted to boost confidence in this leading consumer sector and with improved sentiment in the equity markets, a softer day for safe haven Gold. The Oil markets were weighed down by ample supply indicators which similarly leant a softer mood to the day in these markets.  It was a softer day for the Grains; Soybean, Wheat, Corn finished in negative territory; as did Orange Juice, arabica Coffee, Platinum and Palladium. The Copper markets posted a flat day while Cocoa, robusta Coffee, Cotton and Silver registered a positive finish on the day. The US Dollar held steady on the day against other major currencies. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.47% lower to see this Index registered at 484.00. The day starts with the U.S. Dollar trading at 1.609 to Sterling and 1.269 to the Euro, while North Sea Oil is steady and is selling at $ 86.01 per barrel.

The London market started the day on Friday with some hesitant buoyancy, but with both markets turning softer in early trade.  The London market did however recover into the afternoon’s trade, while the New York market continued on its softer track.  There was a renewal of interest and buyer fixation support posted toward the latter half of the session in both markets and with speculative support to boost the volume in both markets toward the end of the session.  The London robusta market finished the day on Friday in some buoyancy but off of the days highs ahead of the end month roll over, while New York found late in the day positive support to provide a improvement and to see this market recover some of its losses late in the day, but near to the end of the day to end the session in negative territory and on a softer note, the markets set the close on Friday as follows: 

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

NOV 2027 + 19 DEC 191.50 – 1.80
JAN 2028 +  6 MAR 195.75 – 1.75
MAR 2034 +  3 MAY 198.10 – 1.70
MAY 2047 +  2 JUL 200.05 – 1.40
JUL 2060 +  2 SEP 201.15 – 1.00
SEP 2070 Unch DEC 202.00 – 0.65
NOV 2070 + 4 MAR 201.70 – 0.35
JAN 2060 + 2 MAY 201.00 – 0.45
MAR 2067 + 2 JUL 199.80 – 0.70 
MAY 2060  - 5 SEP 199.05 – 1.15

24th October, 2014.

The arbitrage between the markets widened yesterday to register at 102.21 usc/Lb., while this equates to an attractive 52.88% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted an increase of 4,915 bags yesterday, to register these certified stocks at 2,377,834 bags.  There was meanwhile, a decrease of 8,260 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 26,732 bags.

The commodity markets were mostly steady yesterday with the Oil markets regaining some lost ground with news of broadly stronger than expected economic data from the Eurozone, assisting to fuel positive sentiment.  It was a similarly a firmer day for Soybean, Cotton, Corn, arabica Coffee, Wheat, Orange Juice, Copper and Palladium although a softer day for robusta Coffee, Sugar, Cocoa, Gold, Silver and Platinum. The US Dollar held steady on the day against other major currencies. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.33% higher to see this Index registered at 486.30. The day starts with the U.S. Dollar trading at 1.602 to Sterling and 1.265 to the Euro, while North Sea Oil is steady and is selling at $ 86.07 per barrel.

Following on from the bearish results posted in New York the day before, the London market opened lower, to set a new floor for the day which in a relatively slow and low volume day, held the range within a narrow band and steady albeit in negative territory. It was a more robust session in New York with improved volumes which started the day positively and drifted back toward midsession, but with industry buyer fixation support returning to the floor to see this market retrace and build upon the gains, to take an upside positive track for the rest of the day.  This trend was sustained right up to the final bell yesterday, to see New York register a positive close within improved volume and an overall tighter range through the day, with the appearance of some consolidation.  The Brazil Real meanwhile is trading softer at 2.497 to the US Dollar ahead of the presidential elections this weekend, while the forecast rains are now predicted to be around the Brazil coffee areas for the next fortnight, to add little in the way of directional influence with the markets seemingly have absorbed the weather factor, for the time being at least.  The close yesterday in both markets, after a moderately buoyant day was set as follows;  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/LbNOV    2008 – 17                                           DEC    193.30 + 2.20

JAN     2022 – 17                                          MAR    197.50 + 2.20
MAR    2031 – 17                                          MAY    199.80 + 2.15
MAY    2045 – 16                                          JUL      201.45 + 2.15
JUL     2058 – 15                                    SEP      202.15 + 1.90
SEP     2070 – 13                                          DEC     202.65 + 1.90 
NOV    2066 – 13                                           MAR    202.05 + 1.80
JAN     2058 – 13                                          MAY     201.45 + 210
MAR    2065 – 13                                          JUL     200.50 + 2.35 
MAY    2065 – 13                                          SEP     200.20 + 2.55

23rd October, 2014.

The focus in Brazil meanwhile remains the now anticipated arrival of the summer rains to set the flowering for the next new Brazil 2015 / 2016 crop to come.  Weather forecasts are now looking to widespread rains to reach the coffee areas in Brazil, with the arrival of a new cold front to bring forth good showers through the weekend and the coming week. The arrival of these delayed rains will assist to set the flowering for the next new Brazil 2015 crop to come and while there are still many months ahead, one might anticipate that the discussion will soon turn to the question of the continuation of rains to set the flowering for this new crop to develop. 

The short to medium term forecasts are optimistic meanwhile, for an increased potential for showers over the region in the latest sixteen to thirty day outlook as forecast by the U.S. based Commodities Weather Group.  While this next Brazil 2015 crop will follow on from this year’s arabica coffee crop harvest which was negatively affected by the partial drought during the first two months of this year.  In the meantime the Brazil Real is trading at an easier 2.49 to the U.S. Dollar, to provide inspiration to the internal market for current crop coffee sales.    

The arbitrage between the markets narrowed yesterday to register this at 98.61 usc/Lb., while this equates to a relatively attractive 51.60% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assists 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 posted a decrease of 2,559 bags yesterday, to register these certified stocks at 2,372,919 bags.  There was an increase of 6,822 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 34,992 bags.

It was a mixed day on the commodity markets yesterday, the leading in influence Oil markets tending softer on the news of ample inventories being held in the top U.S.A. consumer market ahead of the northern hemisphere winter higher consumption months.  The U.S. Dollar firmed on the day to contribute toward the generally lower day. It was a softer day for Oil markets, Gold, Silver, Platinum, Palladium and Copper, the New York arabica market registered a further 4.6% decline on the day. Grains posted some gains and a firmer day for Wheat, Corn and Soybean, as did Orange Juice, Cotton, Cocoa and Sugar finish in positive territory on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.54% lower to see this Index registered at 484.72. The day starts with the U.S. Dollar trading at 1.6052 to Sterling and 1.264 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 84.71 per barrel.

The coffee markets started the day with a degree of buoyancy although in relatively thin volume at the outset. The London market remained in positive territory for much of the session although choppy with direction positive in the morning as buy orders met with limited upward resistance. The volume of trade remained thin throughout however, which once buyer support had been absorbed, failed to encourage further upward momentum and a generally slow and choppy session ensued.  After a similarly positive opening for New York yesterday, the morning session in this market was subdued and in light volume mildly positive.  The latter day news to come to the markets in the weather reports confirming rains to come to the Brazil coffee belt brought a degree of speculative liquidation back to the market in a continuation of long liquidation which was met with light shorts and industry support but with a lack of volume support this market drifted lower as the session progressed. 

The volumes on the coffee markets yesterday were not as impressive as the past few sessions and one might suggest that after the bruising that the markets have taken in the past few days as the speculative sector absorb the news of wetter weather in Brazil, there may be an opportunity for respite and a little consolidation ahead.  Although with first notice day for the prompt month in London to too far away and the question of the extent of the speculative longs being held in the New York arabica market in particular, there are still unpredictable and volatile times ahead. London had a mildly buoyant day yesterday, although finally the mood turned negative in sympathy with the continuation of downward pressure in New York. The latter market which spent much of the session under negative pressure, managed a marginal recovery toward the end of the day to finish, near to the days’ lows in both markets, and the close yesterday in negative territory, as follows:

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

NOV    2025 – 21                                            DEC    191.10 – 8.30
JAN     2039 – 20                                           MAR    195.30 – 8.20
MAR    2048 – 20                                           MAY    197.65 – 7.95
MAY    2061 – 19                                           JUL     199.30 – 7.85
JUL     2073 – 20                                    SEP     200.25 – 7.60
SEP     2083 – 21                                           DEC     200.25 – 6.80 
NOV    2079 – 21                                           MAR    200.25 – 6.80
JAN     2071 – 21                                           MAY    199.35 – 6.90
MAR    2078 – 21                                           JUL     198.15 – 7.15 
MAY    2071 – 21                                           SEP     197.65 – 7.00 

22nd October, 2014.

Vietnam Customs data has reflected that the countries first half of October exports have surged by 76% from the same time last year, to register 845,000 bags on 15th October. The trade in Vietnam has forecast exports for the month of October of mostly robusta coffees to reach around 1.67 million bags. This is understandable as the coffee supply registers increased shipments to the main consumer markets heading into the higher volume winter roasting season. The internal market in Vietnam has been more active over the past few weeks, as farmers and internal traders look to liquidate stocks ahead of this month’s start of another large new crop. Although the most recently softer London robusta market has seen this internal market somewhat stalled and one would expect that the majority of exports flowing to the markets are related to forward contract commitments rather than new business.

The new crop developing in Vietnam is thus far free of any climatic disruption and ripening well, ahead of the peak harvest which is anticipated to be in November. The current crop stocks are meanwhile estimated to be at a record high going into the new harvest this year, which will maintain a comfortable buffer supply to the consumer markets as the new harvest starts in earnest.  The October 2014 to September 2015 Vietnam new crop, of which close to 96% is robusta coffee, is currently forecast to be in excess of 27 million bags.

The Uganda Coffee Development Authority have reported the country’s coffee exports for the month of September were 16,378 bags or 7.30% lower than the same month last year, at a total of 207,923 bags.  This has contributed to the countries cumulative export figures for the total twelve months of the October to September 2014 coffee year at 82,800 bags or 2.31% lower than the same period in the previous coffee year, at 3,499,829 bags.    

The focus in Brazil meanwhile remains the now anticipated arrival of the summer rains to set the flowering for the next new Brazil 2015 / 2016 crop to come.  This with forecasters including local weather forecaster Somar predicting that rain should intensify toward the latter half of this week, through the weekend and cover most the main coffee growing areas in Minas Gerais through to next week.  In the meantime the Brazil Real is trading at a weaker 2.48 to the U.S. Dollar, to provide inspiration to the internal market for new crop coffee sales.    

The arbitrage between the markets narrowed yesterday to register this at 106.24 usc/Lb., while this equates to a relatively attractive 53.21% 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 posted a decrease of 1,800 bags yesterday, to register these certified stocks at 2,375,478 bags.  There was an increase of 7,375 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 28,170 bags.

It was a mostly buoyant day on the commodity markets yesterday, which registered steady gains in the Oil markets, while the U.S. Dollar firmed against other major currencies supported by the release of positively received U.S. housing data.  The Oil, Wheat, Cotton, Orange Juice, Gold, Platinum and Palladium markets posted positive gains on the day, although it was a relatively steady to flat finish for Copper, Soybean and the Coffee markets.  The Sugar, Cocoa and Corn markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.68% higher to see this Index registered at 487.346.  The day starts with the U.S. Dollar trading at 1.6127 to Sterling and 1.272 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 86.17 per barrel.

It was another lower opening on the coffee markets yesterday, with a degree of follow through in London, which was met with further downward pressure as the New York arabica market pushed lower on opening.  The morning session found underlying support and direction moved to the positive in both markets. The arrival of the America’s however brought back volume selling activity to the floor and both markets retraced their losses to set a new low for the session toward the latter half of the day. In a reversal of fortunes however, there was evidence of both speculative and industry participation at these levels and both markets gradually clawed back to unchanged toward the end of the day, having regained all lost ground during the session. The markets set the close on a steady note on the close, as follows:

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

NOV     2046 – 3                                              DEC     199.60 + 0.20
JAN     2059 – 1                                               MAR    203.75 + 0.25
MAR    2068 – 1                                               MAY    206.05 + 0.45
MAY    2080 – 2                                               JUL     207.70 + 0.55
JUL     2093 – 2                                               SEP     208.35 + 0.50 
SEP     2104 – 1                                               DEC    208.45 + 0.60 
NOV    2100 – 1                                               MAR    207.75 + 0.70
JAN     2092 Unch                                           MAY    206.85 + 0.60
MAR    2099 + 7                                              JUL     205.95 + 0.65 
MAY    2092 + 7                                              SEP     205.35 + 0.70 

21st October, 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 4.09% during the week of trade leading up to Tuesday 14th. October;  to register a net long position of 28,854 Lots on the day.  This net long which is the equivalent of 4,809,000 bags has most likely levelled off during the period of mixed trade, which has since followed.

The arbitrage between the markets narrowed yesterday to register this at 105.96 usc/Lb., while this equates to a relatively attractive 53.14% 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 posted a decrease of a modest 500 bags yesterday, to register these stocks at 2,377,311 bags.  There was an increase of 275 bags in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,795 bags.

It was a mixed day on the commodity markets yesterday, with weaker prospects indicated for Chinese economic growth in the fourth quarter, while the US Dollar lost some ground against other major currencies and ahead of the next round of reports from US for manufacturing data, to be released toward the end of this week. The Oil markets were buoyant yesterday, and an overall positive day for Gold, Silver Platinum, Palladium markets. It was a mildly positive day for Wheat, Soybeans much unchanged, with Corn, Orange Juice, Sugar, Coffee and Copper in negative territory on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.55% lower; to see this Index registered at 484.08. The day starts with the U.S. Dollar trading at 1.617 to Sterling and 1.283 to the Euro, while North Sea Oil is steady in in early trade and is selling at $ 85.06 per barrel.

The coffee markets opened following on from the weekend news of delayed rain to have reached the Brazil coffee growing areas, and with both markets triggering losses on opening, London mildly so although followed by the New York start which met with immediate seller pressure into a void of resistance to see this market gap lower by 2.06% on opening.  With New York taking the lead sentiment in London quickly followed suit to push this latter market lower and set a new floor where stops were triggered to steady out the markets and the bout of speculative liquidation eased off to be met with underlying buyer support, as volumes increased into the latter half of the days’ trade.  Overall a softer day with London regaining some lost ground toward the latter half of the day with 2.41% of the losses retained against this market and a close near to the lows on the day.  With close on half of the days total losses in New York posted from the opening bell, the rest of the day albeit in negative territory pivoted around the 200 usc/Lb., level in the prompt month with a mild 3.10% recovery from the lows of the day toward the latter half of the session.  This could not finally be sustained into the last hour of trade on the day to see this market whittle away the gains and register a close near to the days’ low, and set a softer close on both markets yesterday, as follows: 

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

NOV     2049 – 68                              DEC   199.40 – 11.25
JAN     2060 – 69                              MAR   203.50 – 11.10
MAR    2069 – 69                               MAY   205.60 – 11.05
MAY    2082 – 69                               JUL   207.15 – 10.85
JUL     2095 – 68                              SEP   207.85 – 10.40
SEP     2105 – 68                              DEC   207.85 – 10.20
NOV    2102 – 68                               MAR   207.05 – 10.10
JAN     2092 – 68                              MAY   206.25 –   9.95
MAR    2092 – 68                               JUL   205.30 –   9.85 
MAY    2085 – 68                               SEP   204.65 –   9.65

20th October, 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 14.79% in the week of trade leading up to Tuesday 14th. October;  to register a net long position of 47,719 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 2.08%, to register a net long on the day of 42,807 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 18.50% to register a net long of 38,201 lots on the day.  This net long position is the equivalent of 10,829,983 bags is the highest net long held in arabica coffee futures since March 2008, that has most likely decreased slightly over the period of overall more negative trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Export Centre of Nicaragua has reported that the country’s coffee exports for the month of September were 146,029 bags, an increase of 76.90% on that of the same month last year. This higher performance has contributed to the country’s cumulative coffee exports for the cumulative twelve months of the present October 2013 to September 2014 coffee year, although exports for the season registered a total of 1,770,044 bags or 8.20% lower than the same period in the previous coffee year.

There are positive reports coming forth from local forecasters in Brazil, to see slightly improved chances for rain over the next two weeks to come to the main coffee growing belt in Brazil.  This is forecast with anticipated heavier rainfall and improved dispersion over Brazil’s south east region to the end of October.  This news has subsequently dampened sentiment for the upside in the New York arabica market and one might expect this trend to continue, so long as the delayed rains arrive and set a more seasonal pattern until the reality and assessment of these rains are in play.

The Certified Robusta coffee stocks held against the London market were seen to increase by 138,000 bags or 7.40% over the two weeks of trade leading up to Monday 13th. October to register these stocks at 1,999,166 bags. 

The arbitrage between the markets narrowed on Friday to register at 114.08 usc/Lb., while this equates to a relatively attractive 54.16% 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 firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged on Friday, to register these stocks at 2,377,811 bags.   There was meanwhile 1,525 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,520 bags.

The commodity markets were mixed on Friday, as improved U.S. consumer data coming to the markets to provide a boost for sentiment, also adding muscle to the U.S. Dollar on the day. It was a positive day for Oil, Platinum and Palladium, whereas the Cocoa and Sugar markets were steady. The day posted losses on the Gold, Silver, Soybean, Corn, Coffee Wheat and Orange Juice markets which tended softer on the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.21% lower; to see this Index registered at 486.77.   The day starts with the U.S. Dollar steady and trading at 1.608 to Sterling and 1.273 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 85.77 per barrel.

The London market started the day on Friday on a softer note, as did New York open with a degree of buoyancy but subjected to downward pressure in both markets early on in the session.  This trend continued through the morning, although a mild recovery was posted within a relatively narrow range in modest volume and negative territory until the America’s came to the floor later in the day, whereupon the softer trend in both markets attracted reserved buying support to set a more steady momentum as the day progressed. The markets met with another bout of seller pressure toward the end of the day, with the overall negiative close accompanied by the news of prospective wetter weather to come to Brazil, to see these markets settle near to the lows of the day in both markets and a softer close on Friday, as follows: 

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

NOV 2117 – 37                          DEC 210.65 – 6.45
JAN     2129 – 39                          MAR 214.60 – 6.45
MAR    2138 – 39                                                MAY 216.65 – 6.40
MAY   2151 – 38                                             JUL 218.00 – 6.25 
JUL     2163 – 39                                                SEP 218.25 – 6.15
SEP     2173 – 39                                                DEC 218.05 – 6.20
NOV    2170 – 39                                                MAR    217.15 – 6.20
JAN     2160 – 39                                                MAY    216.20 – 6.30
MAR    2160 – 39                                                JUL     215.15 – 6.45
MAY    2153 – 39                                                SEP     214.30 – 6.45 

17th. October, 2014.
The Brazilian weather issues are for this week on something of a back foot, as market players are tending to show a degree of exhaustion following the past month of excitement over the persistent scare stories that relate to the hot and dry weather, in terms of its effects upon the next 2015 crop.  This has stalled the upside rally for the New York market and one might expect that with the delayed spring and summer rain season due to start during the second half of next week, that the market shall remain in something of a doldrums until the reality and assessment of these rains are in play.

Meanwhile with the new Central American crop maturing and with the lower grown coffees already ripening, the indications are that weather conditions have been perfect for the development of this new crop and with the combination of Mexico and the Central Americans due to bring in a combined 1.5 to 2 million bags larger crop from their October to March harvest.    This regional crop to be something of the order of 18 million bags, which shall be added to the steadily increasing supply from Colombia, who are on track for a 12.5 to perhaps even 13 million bags crop for this new October 2014 to September 2015 coffee year.

There has been some talk over the warmer weather in Colombia over the recent weeks and an increase in the incidences of Coffee borer beetle or Broca, but the National Coffee Federation has reported that these incidences are isolated and are not seen to be a serious problem.   While with good prevailing value and profits from new crop sales, the farmers are financially strong enough to afford the chemical inputs that are necessary to control the problem.

With the new crop developing in Indonesia and weather conditions presently favourable for the coffee farmers, the even the more conservative of forecasts are talking in terms of a larger new crop to start impacting upon the market from April next year.   This new crop expected to recover from this year’s dismal crop of approximately 8 million bags to 9.5 million bags depending on which reports one cares to recognise, to something in the order of 11 million bags.   With some early forecasts tending to talk of even more impressive numbers, but it is still early days and while there is no doubt going to be increased Indonesian coffee supply for the second half of next year, the volume shall only become clear by the second quarter of the coming year.

The report from Nestle that sales for the first nine months of this year have been relatively soft and below predictions and with particular emphasis on slower sales in the developing Asian markets, contributes to some questions over global coffee consumption growth.   Particularly so, as over the past few years it has been the developing Asian markets have contributed too much of this growth.   While in the meantime with the economic woes in Europe which is the world’s largest market and combined with the rapid growth in market share of the parsimonious single serve coffee machines and capsules, this market is posting flat to lower consumption figures.   The Nestle sales were however not negative in compared to the previous year, but only below the targeted 5% factor, which is seen to be unachievable now and therefore, is not an indication of reduced coffee demand within the Asian markets.

The physical coffee market for the meantime remains lacklustre and cautious and with the majority of the consumer market industry players tending to step back to await the influence of the delayed rains in Brazil to step back into the market in more intensity, while the consumer market trade are likewise showing caution in terms of taking on longer term stocks.   Thus one can expect little in terms of physical trade aggression for the short term and until at least the end of the month, with the probability of some catch up excitement during November, once the Brazil situation can be more accurately assessed.

The arbitrage between the markets broadened yesterday to register this at 118.76 usc/Lb., while this equates to a relatively attractive 54.70% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged yesterday, to register these stocks at 2,377,811 bags.   There was meanwhile also no change recorded for the number of bags pending grading for the exchange; to register these pending grading stocks at 18,995 bags.

The commodity markets were mixed yesterday, but with some degree of buoyancy experienced within many markets and with good economic data from the U.S.A. assisting to counter the bearish news from Europe and Asia.   The Oil, Natural Gas, Sugar, New York arabica Coffee, Wheat, Corn, Soybean and Platinum markets showed buoyancy, while the Cocoa, London robusta Coffee, Cotton, Copper, Gold 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 1.09% higher; to see this Index registered at 487.79.   The day starts with the U.S. Dollar steady and trading at 1.609 to Sterling and 1.280 to the Euro, while North Sea Oil is showing buoyancy in early trade and is selling at $ 85.80 per barrel.

The London market started the day yesterday on a softer track, while the New York market in thin trade showed a degree of buoyancy.  The markets headed into the afternoon with the London market maintaining its soft stance and the New York market maintaining its buoyancy.   As the afternoon progressed the New York market added some more weight and the London market recovered most of its earlier losses, but with the London market struggling to move into positive territory.   The New York market ran out of steam later in the day and the London market carried on to end the day on a near to steady note and having recovered 88.9% of the earlier losses of the day, while the New York market ended the day on the positive side of par but with only 23.7% of the earlier in the day’s gains intact.   This was not really an inspirational 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.
                                                
NOV     2154 – 1                                                 DEC     217.10 + 1.10
JAN      2168 – 4                                                 MAR    221.05 + 1.15
MAR     2177 – 4                                                 MAY    223.05 + 1.20
MAY     2189 – 4                                                  JUL    224.25 + 1.25
JUL      2202 – 4                                                  SEP    224.40 + 1.10
SEP      2212 – 5                                                 DEC    224.25 + 0.90
NOV     2209 – 5                                                 MAR    223.35 + 0.65
JAN      2199 – 5                                                 MAY    222.50 + 0.55
MAR     2199 – 5                                                  JUL    221.60 + 0.55
MAY     2192 – 5                                                  SEP    220.75 + 0.55

16th. October, 2014.
The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by a marginal 11,211 bags or 0.19% during the month of September, to register these stocks at 6,027,292 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 7,027,292 bags, it would have equated to at least a very safe 14.3 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 pending but somewhat delayed spring and summer rain season in Brazil, which shall dictate the prospects for the next 2015 Brazil crop.

The Vietnam Customs Authority have reported that the countries coffee exports for the month of September were lower than traders forecasts for exports for the month of between 1.67 million to 2 million bags and have been registered at only 1.62 million bags, which is only marginally 0.4% lower than the previous months performance.   These exports having contributed to the country’s cumulative exports for the October 2013 to September 2014 coffee year having been 17.7% higher than the previous coffee year, at a total of 27.78 million bags.   This being a volume that shall most probably be mirrored during this new October 2014 to September 2015 coffee year, albeit that Vietnam with its mostly robusta coffee crop shall during this new coffee year, encounter increased competition from a larger new Indian crop that is soon to start and by April next year, a larger new Indonesian robusta coffee crop.

The U.S.A. based Commodities Weather Group came forth yesterday that while rains were expected for South East Brazil for the end of this month and throughout the coming month, that these rains would not completely cover all of the main arabica coffee and sugar growing areas in central and southern Brazil.   This report should have been seen to be potentially supportive for the New York market and was in fact followed by a modest degree of buoyancy for the market, but did not result in a rally and the buoyancy turned out to be short lived, as the report was somewhat countered by a more positive rainfall report from the well-respected Brazilian meteorologist Somar.

The Somar report indicated that rains were due to start in the main central and southern arabica coffee districts of Brazil by the second half of next week and would carry on from thereon, into the following month.  This report indicating that the prevailing market supportive dry weather in Brazil was in reality just two to three week delay in the start of the new spring and summer rain season, rather than an indication of a severely damaging drought for the next 2015 crop.   Thus it proved to be news that was negative for the end of the day market, with the New York market taking a dip and likewise, taking the wind out of the sails of the London market that had been showing buoyancy through the day.

The arbitrage between the markets narrowed yesterday to register this at 117.48 usc/Lb., while this equates to a relatively attractive 54.39% 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 seen to decrease by 8,650 bags yesterday, to register these stocks at 2,377,811 bags.   There was meanwhile a smaller in volume 6,070 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,995 bags.

The commodity markets were mixed yesterday, but overall are coming under pressure over dismal global economic forecasts and with the U.S.A. aside, prospects for soft medium to long term demand.   The Cocoa, Orange Juice, Gold and Silver markets showed some buoyancy and the London robusta Coffee and Platinum markets were near to steady, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, 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 1.11% lower; to see this Index registered at 487.36.   The day starts with the U.S. Dollar tending softer and trading at 1.597 to Sterling and 1.282 to the Euro, while North Sea Oil is showing softness in early trade and is selling at $ 82.40 per barrel.

The London market started the day yesterday showing good buoyancy and starting off on a positive track, while the New York market started the day on a steady thinly traded steady track.   The London market built upon its gains into the afternoon’s trade and with the New York market remaining mostly on the positive side of par, to add some further weight during the afternoon post the Commodities Weather Group’s Brazil forecast.  This was however short lived and the New York market once again came under pressure to drop back into negative territory and start on a gradual downside track that eventually had a negative influence upon sentiment and the fortunes for the London market.   The London market continued to end the day only near to steady, while the New York market ended the day on a soft note and with 79.7% of the earlier losses of the day intact.   This soft close within the more volatile New York market and despite some degree of support from  an overnight softer U.S. dollar is unlikely to inspire confidence and one would 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.
                                                
NOV     2155 unch                                              DEC     216.00 – 5.90
JAN      2172 – 2                                                 MAR    219.90 – 5.85
MAR     2181 – 3                                                 MAY    221.85 – 5.75
MAY     2193 – 3                                                  JUL    223.00 – 5.70
JUL      2206 – 1                                                  SEP    223.30 – 5.65
SEP      2217 unch                                             DEC     223.35 – 5.50
NOV     2214 unch                                             MAR     222.70 – 5.15
JAN      2204 unch                                             MAY     221.95 – 4.95
MAR     2204 unch                                              JUL     221.05 – 4.95
MAY     2197 unch                                              SEP     220.20 – 4.85

15th. October, 2014.
The National Coffee Organisation of Guatemala have reported that the country’s coffee exports for the month of September were 51,489 bags or 21.18% lower than the same month last year, at a total of 191,593 bags.  This has contributed to the countries cumulative exports for the just completed October 2013 to September 2014 coffee year being 533,690 bags or 14.56% lower than the same period in the previous coffee year, at a total of 3,132,243 bags.

The National Coffee Council of El Salvador have reported that the country’s coffee exports for the month of September were 35,580 bags or 79.16% lower than the same month last year, at a total of 9,367 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 just completed October 2013 to September 2014 coffee year being 674,332 bags or 57.48% lower than the same period in the previous coffee year, at a total of 498,736 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.

It is likewise the case for El Salvador’s neighbours for the coming new crop which while not expected to increase quite as dramatically as El Salvador, they are overall looking towards generally improved crops.   This with modest increases forecasted for Mexico, Guatemala and Nicaragua and as steady performance for Costa Rica, while the authorities in Honduras are talking about a rather impressive 1 million bags increase.   Thus adding approximately 1.7 million bags to overall regional production of mostly fine washed arabica coffees, from the coming harvest.  

While the majority of forecasts for the new Vietnam crop that is just starting have indicated a new crop that shall be similar to the previous crop of approximately 28.5 million bags, there was a report yesterday from officials in the main central highlands that their districts new crop might in fact be as much as 6.9% larger than the last crop.    Thus in terms of the new Vietnam crop so far and a crop that is made up from approximately 96% robusta coffees, there would appear to be little reason for concerns over medium to longer term supply from this the second largest producer and exporter.

There is however prospects for increasing demand for robusta coffees in the coming year as the growth in global coffee consumption is heavily weighted towards the price sensitive new markets and therefore robusta coffees, while with the relatively firm arabica coffee prices; there is inspiration for use of higher percentages of robusta coffees within the more price sensitive brands.   This factor made easier by the rapidly increasing market share that is being taken by single serve capsule coffee machines, which are by nature of their extraction process much friendlier towards the use of the presently half price robusta coffees in the blends.  

The arbitrage between the markets broadened yesterday to register this at 123.29 usc/Lb., while this equates to a relatively attractive 55.56% 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 3,286 bags yesterday, to register these stocks at 2,386,461 bags.   There was meanwhile a smaller in volume 2,200 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,925 bags.

The commodity markets were mixed yesterday and despite the softening nature of the oil markets and the buoyancy of the U.S. dollar, the overall macro commodity index was nevertheless relatively steady.  The Sugar, Cocoa, New York arabica Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy, while the Oil, Natural Gas, London robusta 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 0.03% higher; to see this Index registered at 492.83.   The day starts with the U.S. Dollar maintaining its recently acquired muscle and trading at 1.590 to Sterling and 1.264 to the Euro, while North Sea Oil is showing softness in early trade and is selling at $ 84.85 per barrel.

The London market started the day yesterday taking a softer track, while the New York market opened with a degree of buoyancy and with the London market soon recovering and with both markets heading into the afternoon on a modestly positive track.    This was however short lived and the London market soon slipped back into negative territory again and followed the New York market likewise, moving back into negative territory.  The New York market did however soon recover and while the London market remained within negative territory, the New York market maintained its renewed modest buoyancy.    The London market continued to end the day on a soft note and with 65.2% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 80.9% of the gains of the day intact.   This mixed close but with the New York market ending the day near to the highs is likely to inspire something of a positive start for the London market but perhaps only a hesitantly cautious steady to soft start for the New York market against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2155 – 14                                                DEC     221.90 + 3.80
JAN      2174 – 15                                                MAR    225.75 + 3.75
MAR     2184 – 15                                                MAY    227.60 + 3.80
MAY     2196 – 14                                                 JUL     228.70 + 3.65
JUL      2207 – 14                                                 SEP     228.95 + 3.55
SEP      2217 – 13                                                DEC     228.85 + 3.65
NOV     2214 – 13                                                MAR     227.85 + 3.45
JAN      2204 – 13                                                MAY     226.90 + 3.25
MAR     2204 – 13                                                 JUL     226.00 + 3.25
MAY     2197 – 13                                                 SEP     225.05 + 3.15

14th. October, 2014.
The respected Brazilian meteorologists Somar have reported yesterday that not only shall there be little chance of rain for the main central and southern arabica coffee districts for this week, but the temperatures are due to be very hot and generally well in excess of 30 Celsius, which shall be damaging for the modest early flowerings that occurred with some scattered showers a couple of weeks ago.   The report does however foresee that the prevailing dry air mass over South Eastern Brazil breaks up during the second half of next week, that it shall allow cold fronts to enter the country from the south and bring with them, some widespread rains.

Meanwhile the U.S.A. based meteorologists Commodity Weather Group have forecasted above average rainfall to come to South Eastern Brazil in the next 11 to 15 days, while they also forecast that the mild El Nino phenomenon could possibly soon start to occur within the Pacific Ocean that would bring with it above average rainfall for South Eastern Brazil.  Thus for the present there would appear to be a general consensus that the delayed start to the Brazil spring and summer rain season shall eventually develop into a normal rain season for the rest of the summer, but the question remains how much damage this delay might have already caused for the prospects of next year’s Brazil arabica coffee crop.

There is no doubt that some damage has been incurred but there is also the factor to consider that stressed coffee trees do tend to flower better, once the rains occur.   Therefore so long as the damage from the now low ground water retention levels and the coming days of hot weather is not too extreme, there is the possibility of a nevertheless good flowering to come.  This so long as the forecasts for fair follow on rains, might well limit the losses to the new crop potential and might likewise bring with these flowerings and rains some better new arabica coffee crop forecasts.    Albeit that there is no doubt that the new Brazil arabica coffee crop for 2015 is still likely to be a deficit crop and with this year’s relatively modest crop, shall result in the liquidation of most of the large carry over arabica coffee stocks from last year, to fuel near to steady Brazil arabica coffee supply through to the follow on 2016 crop.

The International Coffee Organisation have reported that the Roya or Leaf Rust affected coffee production from Mexico and Central America for the just completed October 2013 to September 2014 coffee year was 13.4% lower than the previous coffee year, at a total of 16.02 million bags.   This volume that is marginally more modest that private trade and industry reports that talk in terms of 16.3 to 16.5 million bags, they say has contributed to global arabica coffee production for the coffee year having been close to 4% lower than the previous coffee year, at a total of 85.3 million bags.

Mexico and Central America are however seemingly coming out of their Roya or Leaf Rust problems and with the combination of improved prices and state subsidies, their farmers are getting the infestation under control and with a much improve new crop starting to be harvested.  But the agricultural ministry in Peru is not showing as much confidence in their famers efforts to control Roya and with having caused a 22.4% dip in production for this year’s just completed new crop, which they have pegged at approximately 3.45 million bags and even lower than the private trade and industry reports of around 3.8 million bags.   One might hope thought that with the Agricultural Ministry having declared a state of emergency for 11 of the country’s coffee districts and presumably due to provide longer term assistance and the assistance of more profitable higher prices, that Peru shall follow the developments in Mexico and Central America towards improve controls and some degree of recovery for next year’s April to September new crop harvest.  Thus adding to growing washed arabica coffee supply to the consumer markets, which is already coming with the improved yields from Mexico, Central America and Colombia.
 
The arbitrage between the markets narrowed yesterday to register this at 118.81 usc/Lb., while this equates to a relatively attractive 54.47% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 250 bags yesterday, to register these stocks at 2,389,497 bags.   There was meanwhile a larger in volume 2,770 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 10,725 bags.

The commodity markets were mixed yesterday and despite the softening nature of the oil markets and the buoyancy of the U.S. dollar, the overall macro commodity index was relatively steady.   Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showed buoyancy and the Sugar market was steady, while the Oil, Natural Gas, New York arabica Coffee 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 0.28% higher; to see this Index registered at 492.69.   The day starts with the U.S. Dollar steady and trading at 1.608 to Sterling and 1.272 to the Euro, while North Sea Oil is relatively steady in early trade and is selling at $ 87.20 per barrel.

The London and New York markets started the day yesterday showing early buoyancy and carried this through to the afternoon, but with the New York market starting to come under pressure during the afternoon and heading back into negative territory, while the London market maintained its muscle.  This remained the track for the rest of the day for both markets and with the London market continuing to end the day on a positive note and with 65% of the earlier in the day’s gains intact, while the New York market ended the day on a softer note and with 82.1% of the earlier in the day’s losses intact.   This mixed close provides little in the way of guidance, but one might expect that with the fundamental of continued dry weather in Brazil that there might well be a degree of corrective buoyancy for the New York market and a near to steady start for the London market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2169 + 10                                               DEC     218.10 – 2.30
JAN      2189 + 13                                               MAR    222.00 – 2.20
MAR     2199 + 13                                               MAY    223.80 – 2.25
MAY     2210 + 13                                                JUL    225.05 – 2.30
JUL      2221 + 13                                                SEP    225.40 – 2.45
SEP      2230 + 13                                               DEC    225.20 – 2.40
NOV     2227 + 13                                               MAR    224.40 – 2.55
JAN      2217 + 13                                               MAY    223.65 – 2.70
MAR     2217 + 13                                                JUL    222.75 – 2.85
MAY     2210 + 13                                                SEP    221.90 – 3.25

13th. October, 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 8.9% in the week of trade leading up to Tuesday 7th. October;  to register a net long position of 41,572 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 2.76%, to register a net long on the day of 43,715 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 18.49, to register a net long of 32,236 lots on the day.   This net long position that is the equivalent of 9,138,763 bags has most likely been further increased over the period of overall more positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The question is that with the Managed Money Fund and the Non Commercial Speculative sectors of the New York market already holding substantial net long positions and most likely having extended these since the reports as at Tuesday last week, how much more appetite they might have to further extend these positions.  It is likely that some players might be experiencing a degree of exhaustion, but with commodity markets in general relatively soft and the equity markets having taken a dip, there might still be some money looking for a more exciting investment and so long as the rains are not in play in Brazil, the market might still have some degree of upside traction.  

Adding to the almost daily bouts of market supportive news emanating from Brazil, the countries National Coffee Council reported on Friday that they forecast little chance of rain for the main central and southern arabica coffee districts until the end of next week and therefore, the weather conditions have to be seen as unfavourable for the prospects of the next 2015 Brazil crop.    There was however some degree of hesitancy with this report, as there were no further defining numbers coming with it, albeit that previously they had already been talking in terms of a 2015 Brazil coffee crop potential that might dip below 40 million bags.   Meanwhile the report seemingly did little to inspire the relatively lacklustre coffee markets on Friday, which tended to run out of steam for the day.

The physical coffee market that are already quiet for the present tended to stall on Friday, with the largest of the consume markets Europe distracted by the majority of the leading roasters heading to Basel in Switzerland, for the annual coffee dinner.   This dinner preceded by the usual round of pre-dinner meetings, with the trade houses striving to generate some increase in buying interest.  

The positive effects of the weather issues upon the reference prices of the New York arabica coffee market and to a lesser degree the London robusta coffee market are however proving beneficial to the majority of the other coffee producers, who are looking to improved values for their exports in the coming months.  This improved price factor can be seen to be particularly significant for Mexico, Central America, Colombia, Vietnam and India, who are all now starting with their new crops and shall have large volumes of coffee to sell.   The problem is however with the consumer market traders reluctant to price fix and carry significant volumes of new crop stocks in terms of the potential to have to finance margin calls against rising futures market values, for the producers to encourage sales of new crop stocks in volume.

Thus one might expect and particularly so for the arabica coffees, to see rising competition between the producers to attract good value sales and this competition might be expected to be negative for export differentials relative to the New York market.   However if the delayed start to the rains in Brazil at the end of the month is followed by good rains for the coming month and the market starts to dip, one might expect to see some increase in consumer market buying interest, but with differentials needing to be relatively modest, for the trade to feel safe to take on such stocks and one would still foresee reason for softer washed arabica coffee differentials into the first quarter of the new year.

The arbitrage between the markets narrowed on Friday to register this at 121.70 usc/Lb., while this equates to a relatively attractive 55.22% 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 4,190 bags on Friday, to register these stocks at 2,389,747 bags.   There was meanwhile a larger in volume 7,200 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 7,955 bags.

The commodity markets were mostly side lined on Friday by the focus on the declining equity markets, which were reacting negatively to the prospects for softer global medium term growth.  The Cocoa, Cotton, Copper, Corn, Wheat, Soybean, Gold and Platinum markets showed some buoyancy, while the Oil, Natural Gas, Sugar, Coffee, Orange Juice 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 0.46% lower; to see this Index registered at 491.32.   The day starts with the U.S. Dollar steady and trading at 1.612 to Sterling and 1.268 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 88.40 per barrel.

The London and New York markets started the day with follow through buoyancy on Friday, but with the New York market losing its way and heading back into negative in thin early afternoon trade, while the London market remained relatively steady.  This dip in New York was however short lived and the market soon recovered as the afternoon progressed and moved back into positive territory, while the London market maintained its steady sideways stance.   The New York market once again lost its lustre in continued lacklustre trade, to slip back and join the London market on its sideways track.    The markets lost some more weight as the afternoon progressed, but with both shedding some of their losses near to the end of the day.   The London market ended the day on a soft note but having recovered 35.3% of the earlier losses of the day, while the New York market likewise ended the day on a soft note and having recovered 60.3% of the earlier losses of the day by the close.  This soft close might not be seen to be negative for sentiment, as the weather problems for Brazil remain in play and one might expect to see a steady to buoyant start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2159 – 22                                                DEC     220.40 – 1.25
JAN      2176 – 19                                                MAR    224.20 – 1.25
MAR     2186 – 19                                                MAY    226.05 – 1.15
MAY     2197 – 19                                                 JUL    227.35 – 0.95
JUL      2208 – 19                                                 SEP    227.85 – 0.70
SEP      2217 – 19                                                DEC    227.60 – 0.95
NOV     2214 – 19                                                MAR    226.95 – 1.10
JAN      2204 – 19                                                MAY    226.35 – 1.10
MAR     2204 – 19                                                 JUL    225.60 – 1.10
MAY     2197 – 19                                                 SEP    225.15 – 1.05

10th. October, 2014.
With apparently still a week and half to perhaps even two weeks or so prior to the start of the rain season for the South East of Brazil and therefore the main central and southern arabica coffee districts of the country, the reports are that not only are ground water retention levels falling rapidly, but so too the water reservoirs within these districts.   Thus the weather in Brazil continues to buoy market sentiment within the New York market, with the London robusta market following suit in a more restrained manner.

Meanwhile with the countries exporters seemingly well covered in stocks of both past and present crop coffees to support their short term forward contract export commitments and with many fearing the cost of funding margin calls for hedged stocks, the internal market in Brazil is relatively lacklustre in nature.   With many eager to sell into the prevailing relatively high priced market farmers, struggling to find buying interest from the countries exporters.

What is noticeable is the free selling activity on the part of the Brazilian coffee farmers over the past year, with coffee exports from Brazil for the first nine months of this calendar year already having reached 26.6 million bags and the cumulative exports for the past twelve months having reached a record 35.6 million bags.   These figures tending to illustrate the higher percentages of natural arabica coffees being used within the consumer market blends, in reaction to the relatively high prices for the washed arabica coffees.   The gap in prices between the washed arabica coffees and the natural arabica coffees is however starting to narrow in terms of the more aggressive selling activity out of Colombia and for forward sales from Honduras and thus one might speculate, that this shall add to the present slower selling activity out of Brazil.

The Brazilian Export Council has nevertheless reported that Brazil registered a 7.8% increase in coffee exports for the month of September at 2.94 million bags relative to the same month last year, but a much healthier 42.9% increase in the value of these sales relative to the same month last year.   This sharp increase in the value of the country’s exports would indicate that while the volume of sales might be dropping off for the countries farmers, their financial situation has significantly improved and that they are now better able to finance the carry of new crop coffee stocks.  This situation is further reducing the selling activity out of Brazil, which removes some of the negative effects of price fixation hedge selling over the New York market and thus assisting to further buoy this market.

While the subject of Roya or Leaf Rust has not raised its head within the coffee news in the recent months, the problem remains for the Mexican and Central American farmers.    But with the much improved reference prices of the New York market and the related profitability from coffee sales is assisting along with various state supported programs within the individual countries, for farmers to invest in the inputs necessary to counter this infestation.   Thus for the present the earlier forecasts for overall larger crops from the coming new crop harvest, would appear to be realistic.   Albeit that there are many farmers within this region, who are still complaining of the struggle to finance their battle against Roya.

The Climate Prediction Centre in the U.S.A. has reported that they foresee an El Nino phenomenon starting to come into play within the Pacific Ocean by the first quarter of the coming year.   But for the present they expect that this shall only be a mild El Nino and therefore one would guess, that the El Nino shall have little influence upon Pacific Rim coffee production for the coming year.  In fact marginally drier weather in terms of Colombia and Peru would assist to reduce the impact upon the wet weather inspired Leaf Rust or Roya fungus upon the coffee trees, while an El Nino does usually bring increased rainfall to South East Brazil and could be beneficial to the development of the next 2015 crop.   So long as the rains do finally start by the end of this month, to bring with them new flowerings and continue into the new year, to set this potentially relatively modest new crop.

The arbitrage between the markets broadened yesterday to register this at 122.09 usc/Lb., while this equates to a relatively attractive 55.08% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged yesterday, to register these stocks at 2,385,557 bags.   There was meanwhile a 2,325 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,155 bags.

The commodity markets were mixed but overall the macro commodity index remained relatively steady yesterday, as was the U.S. dollar steady for the day.  The Natural Gas, Cocoa, London robusta Coffee, Copper, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the New York arabica Coffee market experienced another sharp rally for the day, while the Oil, Sugar, Cotton, Orange Juice and Wheat markets had a softer days trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.06% higher; to see this Index registered at 493.58.   The day starts with the U.S. Dollar steady and trading at 1.612 to Sterling and 1.270 to the Euro, while North Sea Oil remains soft in early trade and is selling at $ 87.65 per barrel.

The London market started the day yesterday on a softer track but was soon followed by a positive start for the New York market, which had its influence upon sentiment within the London market and a resulting recovery and with both markets maintaining a positive track into the afternoon and through for the rest of the day.  The London market ended the day on a firm note and with 70.8% of the earlier gains of the day intact, while the New York market ended the day on a very firm note and with 90.6% of the gains of the day intact.   This positive close likely 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.
                                                
NOV     2181 + 30                                               DEC     221.65 + 7.20
JAN      2195 + 34                                               MAR    225.45 + 7.15
MAR     2205 + 36                                               MAY    227.20 + 7.15
MAY     2216 + 38                                                JUL    228.30 + 7.20
JUL      2227 + 38                                                SEP    228.55 + 7.25
SEP      2236 + 39                                               DEC    228.55 + 7.25
NOV     2233 + 37                                               MAR    228.05 + 6.90
JAN      2223 + 27                                               MAY    227.45 + 6.70
MAR     2223 + 27                                               JUL     226.70 + 6.20
MAY     2216 + 27                                               SEP     226.20 + 5.85

9th. October, 2014.
The well respected Brazilian meteorologist Somar has reported that there might be some scattered showers in a weeks’ time, but that significant rainfall shall only enter the main central Brazil arabica coffee districts in approximately two weeks’ time.  This report further fuel the concerns over the late start to this year’s rain season in Brazil, with the report accompanied by reports of declining ground water retention levels, which indicates extreme stress for the coffee trees and further supports the many forecasts that this shall severely affect the potential of the next 2015 crop.

The present the general range of 2015 Brazil crop forecasts are very much in line with the F O Licht forecast for a 2015 Brazil crop of approximately 43 million bags, which would result in an approximately 9 million to 10 million bags deficit crop, so long as consumer market demand for Brazil coffees is retained at its present high levels.   There is however an approximate 3 million bags increase in overall washed arabica coffee supply due for the coming year and likewise an approximate 2 million bags increase in robusta coffee supply due during the coming year, which with the flexibility of consumer roaster blending, would take some of the bite out of such a deficit from Brazil.

Thus for the present the consumer market industry players and with relatively high consumer market stocks in hand, do not have reason to fear any disruption to overall coffee supply for the coming year and through to the middle of the following year.   There are however concerns over the influence that the funds and speculative sectors of the international coffee markets and with more emphasis upon the more volatile and related in terms of Brazil arabica coffees, shall have upon consumer market prices.    This so long as the funds continue to react to the declining Brazil arabica coffee supply could severely inflate wholesale prices and might have a market effect upon consumption within some markets, with the world’s largest market being Europe, already suffering from poor economic conditions.

Meanwhile despite rising levels of coffee exports being reported from Brazil, Colombia and Vietnam and with the former still shipping large volumes of carryover stocks from the 2013 crop, the world coffee supply to the consumer markets is overall flat.   This related to lower levels of coffee supply from most of the other producers who while dwarfed by Brazil and Vietnam in terms of supply, combine to flatten out the overall coffee supply to the still well stocked consumer market industries.   This is resulting in the consumer market industries for the present, remaining cautious and lacklustre in nature, with many buyers maintaining something of a hand to mouth approach to the market.  While the consumer market trade houses fearing the costs of margin calls for hedged coffee stocks, are reluctant buyers of longer term new crop stocks.

A survey of ten traders in Vietnam and with the new crop harvest starting, has resulted in an average forecast for the new Vietnam crop that is dominated by an approximate 96% share for the robusta coffees, of a close to last 28.17 million bags.    There is however some question as to the size of the past October 2013 to January 2014 crop in Vietnam, as with the combination of domestic consumption and the evidence of the export volumes over the past year, this crop would have seemed to have been much higher that most of the reports and presumably so if the new crop is to be similar in size, so too shall be the new crop.   While with the higher trading range for the coffee markets at present and the significant discount that is in play for the robusta coffees relative to arabica coffees, one might expect that with good robusta coffee supply from Vietnam and to be followed during next year by rising robusta coffee supply from India and Indonesia, that robusta coffees shall increase their share within the more price sensitive consumer market blends in the coming year.

The arbitrage between the markets narrowed yesterday to register this at 116.43 usc/Lb., while this equates to a relatively attractive 54.29% 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 increase by 1,980 bags yesterday, to register these stocks at 2,385,557 bags.   There was meanwhile a larger in volume 4,155 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,830 bags.

The commodity markets somewhat surprisingly did not react positively to the marginal reversal in the value of the U.S. dollar yesterday, with the dollar losing some of its lustre in line with the cautious statements emanating from the U.S. Federal Reserve Bank, who indicate that they might not be rushing into raising dollar interest rates during the second half of next year.    The Orange Juice, Wheat and Corn markets did however have a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Soybean, Gold, Silver and Platinum markets ended the day tending softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.46% lower; to see this Index registered at 493.28.   The day starts with the U.S. Dollar steady and trading at 1.618 to Sterling and 1.274 to the Euro, while North Sea Oil is showing some degree of buoyancy and is selling at $ 91.00 per barrel.

The London and New York markets started the day on a softer note and in thin and lacklustre trade, but with the New York market starting to pick up support in the early afternoon and recovering to head back into positive territory and with the London market recovering its losses as the afternoon progressed, but both markets tended to falter at the end of the day to stall the upside track of the markets.   The London market continued to end the day on a soft note and with 59.1% of the earlier losses of the day intact, while the New York market also closed on a soft note and with 35.5% of the earlier losses of the day intact.   This soft close with the markets tending to lose their way at the end of the day is unlikely to inspire much 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.
                                                
NOV     2151 – 25                                                DEC     214.45 – 1.90
JAN      2161 – 26                                                MAR    218.30 – 1.90
MAR     2169 – 26                                                MAY    220.05 – 1.85
MAY     2178 – 25                                                 JUL    221.10 – 1.60
JUL      2189 – 20                                                 SEP    221.30 – 1.50
SEP      2197 – 19                                                DEC    221.30 – 1.40
NOV     2196 – 19                                                MAR    221.15 – 1.45
JAN      2196 – 19                                                MAY    220.75 – 1.55
MAR     2196 – 19                                                 JUL    220.50 – 1.50
MAY     2189 – 19                                                 SEP    220.35 – 1.45

8th. October, 2014.
The Brazil Cooperative Cocatrel that represents approximately 5,000 coffee farmers has added its voice to the concerns over the prospects for the next 2015 Brazil crop, which are related to the late start to the Brazil rain season this year that instead of the rains coming in with some regularity in the first half of October, are now foreseen to only start their regular coverage from the last week of October onwards.   In this respect they have assessed that their Cooperatives 2015 crop potential might be as much as 30% lower than their normal production levels, as last registered in the 2013 crop.   This following their just completed crop this year, which they say was 40% lower than their 2013 crop.

The interesting factor about this report is the reference to a significant 40% dip in production for this year’s harvest from the previous year’s level, while for next year they are only talking about a 30% dip in potential production.  This rather contradicts the many other reports that concede that this year’s arabica coffee crop harvest was negatively affected by the partial drought during the first two months of this year, but with the potential for an even lower crop potential for next year.   Thus bringing in to question for the present, the accuracy of many of these reports and well illustrating that one needs to wait until December when post the November rains there shall be an ability to more accurately count the results of the flowerings and the budding new crop potential.

There is however in terms of the late start to the rains this year at least some more experience in terms of new 2015 crop evaluation as unlike the partial drought over January and February this year that was a first time experience for the Brazil farmers, there have been many years when rains have come late.    The worst having been in 1985, when the dry weather extended well into November and most certainly, did impact negatively upon production in 1986, albeit in the end, not as bad as some of the market supportive forecasts over December 1985 and January 1986 had indicated.

Albeit early in the month, the trade in Vietnam are talking in terms of coffee exports of mostly robusta coffees for the month of September being approximately 1.67 million bags.  These exports being related to the carryover stocks from the past crop, rather than the new crop coffees that are only due to start being harvested in the coming weeks.   One might comment that with most of these exports being related to existing forward contract commitments that that there is most probably some degree of accuracy to these trade estimates, as they have this data at hand.   There might however with the sudden surge in the reference prices of the London robusta coffee market over the past few days be some increase in discounted differential selling activity, which might with the related month end shipments slightly inflate this forecasted monthly export figure.  

There has however so far, not been much increase in selling aggression within the internal market in Vietnam, as the farm and internal trader past crop stocks are relatively low, with the majority of the carryover stocks being held mostly by the trade.   These latter stocks more often than not hedged at existing differentials, with negate the ability to further discount against the prices of the London market.   Thus eliminating the possibility of surging London prices to inspire short term aggressive selling and a flood of coffee to head toward not only the consumer roasters, but also to the alternative of the London Certified stocks.

The arbitrage between the markets narrowed yesterday to register this at 117.15 usc/Lb., while this equates to a relatively attractive 54.15% 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 39 bags yesterday, to register these stocks at 2,383,577 bags.   There was meanwhile a larger in volume 1,961 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 16,985 bags.

The commodity markets were mixed in trade yesterday with the now sideways track of the U.S. dollar tending to eliminate the negative effects of a firming dollar within many markets, but with the rising unemployment and flat economic prospects for the Euro zone bloc tending to dampen some spirits.   The Natural Gas, Sugar, London robusta Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean and Gold markets had a day of buoyancy, while the Oil, Cocoa, New York arabica Coffee and Silver markets ended the day softer.  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 495.54.   The day starts with the U.S. Dollar steady and trading at 1.606 to Sterling and 1.263 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 90.55 per barrel.

The London market started the day yesterday taking a softer track and with some producer price fixation selling pressure hanging over the market, while the New York market following an initial steady start tended to soften slightly in thin trade.   Both markets did however move well into positive territory for the afternoon’s more active trade, but without any of the excitement that was experienced during the previous day and with the London market holding on to a steady sideways positive track for the rest of the day, but with the New York market coming under late in the day pressure to move back into negative territory.   The London market ended the day on a modestly positive note and with 71.4% of the gains of the day intact, while the New York market ended the day on a softer note and with 78.1% of the losses of the day intact.    This mixed close and with the more volatile New York market tending to falter late in the day, might be conducive for a cautious steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2176 + 11                                                DEC     216.35 – 4.45
JAN      2187 + 10                                                MAR    220.20 – 4.25
MAR     2195 + 9                                                  MAY    221.90 – 4.20
MAY     2203 + 9                                                   JUL    222.70 – 4.10
JUL      2209 + 8                                                   SEP    222.80 – 3.85
SEP      2216 + 8                                                  DEC    222.70 – 3.90
NOV     2215 + 11                                                MAR    222.60 – 4.00
JAN      2215 + 15                                                MAY    222.30 – 4.05
MAR     2215 + 19                                                 JUL    222.00 – 4.15
MAY     2208 + 25                                                 SEP    221.80 – 3.90

7th. October, 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 19.58% during the week of trade leading up to Tuesday 30th. September;  to register a net long position of 26,753 Lots on the day.  This net long which is the equivalent of 4,458,833 bags has most likely been significantly increased during the period of mixed but overall positive trade, which has since followed.

The National Coffee Federation of Colombia have reported that the countries coffee production for the month of September was 52,000 bags or 6.05% higher than the same month last year, to total 912,000 bags.    While the countries coffee exports for the month were 149,000 bags or 21.88% higher than the same month last year, at a total of 830,000 bags.

This improved production performance and following many improved months has contributed to the Colombian cumulative production for the just completed October 2013 to September 2014 coffee year being 2,201,400 bags or 22.18% higher than the previous coffee year, at a total of 12,128,400 bags.   Likewise the countries cumulative exports for the just completed coffee year are 2,160,000 bags or 24.55% higher than the previous coffee year, at a total of 10,960,000 bags.

This very impressive performance from Colombia that had seen its El Nino and a following La Nina production dip to 7.7 million bags during the 2011/2012 coffee year, is forecasted with unforeseen weather issues aside, to increase further over the coming three to four years.   This steady increase related to the fact that there are many new plantings within the approximate 930,000 hectares of coffee farms that are still to come to maturity, with a target for annual crops that shall achieve at least 15 million bags per annum.   While one might guess that while the earlier forecasts were for a 2014/2015 crop of in excess of 12 million bags, that it is becoming more than likely that this new coffee year’s crop might well now exceed 13 million bags and likewise, exports to get closer to 12 million bags.

Thus with the more recent new crop forecasts from Mexico and Central America in mind and with the prospects for the next Peru crop to near to steady at around 4 million bags, one might estimate that fine washed arabica coffee supply from the Latin American producer bloc shall be in excess of 2.5 million bags higher for the coming calendar year.   To provide a combined crop of close to 36 million bags of mostly fine washed arabica coffees, to eliminate any risk of tight supply at the top end of the quality sector of the consumer markets.

This somewhat bearish fine washed arabica coffee news is however side-lined for the present by the weather news from Brazil where the forecasts for dry weather for the central and southern coffee districts in Brazil for this week which fuelled the rally in the New York market last week, have been followed by forecasts that this shall be followed by mostly dry weather for the following week.   This news and with accompanying forecasts that this shall be a reason for a 5 million bags to 6 million bags dip in mostly natural arabica coffee production for the 2015 Brazil crop, sparked the bulls within the New York market yesterday to set the market for strong rally from the start.

This rally triggered a host of stop loss price fixes and speculative and fund buy stops and perhaps accompanied by some trade hedge lifting, to see the market surge to two and half year highs.   The longer range forecasts are however for a wet end to the month and thereon for the month of November and thus one might think that with pocket relatively full that there might be reason to believe that the market is getting closer to a good value ceiling.   But no one can out guess the funds and thus yesterday’s excitement, might not have been the last lap of the coffee Grand Prix.

The arbitrage between the markets broadened yesterday to register this at 122.05 usc/Lb., while this equates to a relatively attractive 55.28% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 825 bags yesterday, to register these stocks at 2,383,616 bags.   There was meanwhile a larger in volume 4,335 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 18,946 bags.

The commodity markets were assisted yesterday by a modest reversal in the recent fortunes of the U.S. dollar, with the majority of the markets returning to some degree of buoyancy.   The Oil, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets showing buoyancy and the Coffee markets surged, while the Natural Gas market had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.70% higher; to see this Index registered at 494.08.   The day starts with the U.S. Dollar steady and trading at 1.607 to Sterling and 1.262 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 91.95 per barrel.

The London and New York markets started the day with a bang, with the speculative sector of the markets coming into forceful play and with both markets making a positive move against further medium term dry weather reports for Brazil, which immediately started to trigger buy stops and to cause a sharp rally within the markets.  This rally was accompanied by a similar rally for the more London market, which added less aggressive but nevertheless significant value.   The London market continued to end the day on a very positive note and with 94.4% of the gains of the day intact, while the New York market ended the day on a very firm note and with 75.3% of the earlier gains of the day intact.   This very positive close in constructive for the markets, but unless there is an immediate follow through one might see some profit taking and hedge selling coming into play for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                
NOV     2165 + 85                                               DEC     220.80 + 14.30
JAN      2177 + 84                                               MAR    224.45 + 14.15
MAR     2186 + 84                                               MAY    226.10 + 14.05
MAY     2194 + 84                                                JUL    226.80 + 13.70
JUL      2201 + 85                                               SEP     226.65 + 13.45
SEP      2208 + 85                                              DEC     226.60 + 13.05
NOV     2204 + 74                                              MAR     226.60 + 12.65
JAN      2200 + 65                                              MAY     226.35 + 12.40
MAR     2196 + 85                                               JUL     226.15 + 12.20
MAY     2183 + 96                                               SEP     225.70 + 11.25

6th. October, 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 10.38% in the week of trade leading up to Tuesday 30th. September;  to register a net long position of 38,175 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 3.17%, to register a net long on the day of 44,955 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 18.7%, to register a net long of 27,206 lots on the day.   This net long position that is the equivalent of 7,712,780 bags has most likely been significantly increased over the period of overall more positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

The National Coffee Council of Nicaragua have reported that following last year’s crop of 1.51 million bags and with the evidence of a nicely developing new crop on the trees, that they forecast a 7% increase in the size of their new crop that shall soon start to come into harvest and therefore, a new crop of approximately 1.61 million bags.   These figures are however somewhat conservative in terms of the evidence of the exports from the past crop that by August had already totalled 1,624,015 bags and figures that supported private trade and industry assessment of the past crop at approximately 1.8 million bags, but the private trade and industry reports to agree that the new crop shall be a potentially larger crop.  These reports indicating a new crop of approximately 1.9 to 2 million bags.

This report follows Wednesday’s report from the National Coffee Institute of Honduras which has forecasted an approximate 20% increase in the size of their new crop, to add an additional 1 million bags of regional fine washed arabica coffee supply for the consumer markets and based on a new crop of approximately 5.4 million bags.   While private trade and industry forecasts are also forecasting larger new crops for Mexico, Guatemala and El Salvador and therefore and approximate 2 million bags in overall regional fine washed arabica coffee supply from their combined new crops, to see the regional production with the inclusion of Costa Rica, Panama and the Dominican Republic total in excess of 18 million bags.

Of course these numbers in terms of the increase in overall fine washed arabica coffee supply from Mexico and Central America while impressive, are dwarfed by the potential damage in world overall coffee supply that might come with a partial drought in Brazil and its damage to the potential for the next 2015 crop.   Thus with the weather forecasts from Brazil presently indicating generally dry weather for the main central arabica coffee districts for this week, the concerns over the prospects for the next Brazil crop easily counter the negative effects of rising washed arabica coffee supply for sentiment, within the presently bullish speculative sector of the New York market.

The arbitrage between the markets narrowed on Friday to register this at 111.56 usc/Lb., while this equates to a relatively attractive 54.02% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,250 bags on Friday, to register these stocks at 2,382,791 bags.   There was meanwhile a smaller in volume 4,675 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 14,611 bags.

The Certified Robusta coffee stocks held against the London market were seen to increase by 245,667 bags or 15.21% over the two weeks of trade leading up to Monday 29th. September, to register these stocks at 1,861,117 bags.   This increase in the stocks was to be expected and one might think that now that the price structure of the London market is friendly to the carry of stocks, that they can be expected to steadily increase over the coming months.  

The commodity markets were mostly on the back foot on Friday, with the good economic figures from the U.S.A. and the muscle of the U.S. dollar impacting negatively within many of the markets.  The Natural Gas, Sugar. London robusta Coffee, Cotton, Copper, Wheat and Corn markets had a day of buoyancy, while the Oil, Cocoa, New York arabica Coffee, Orange Juice, 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 0.54% lower; to see this Index registered at 485.84.   The day starts with the U.S. Dollar steady and trading at 1.598 to Sterling and 1.253 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 91.65 per barrel.

The London and New York markets started the day with both markets showing some hesitant but early buoyancy in thin trade, but with both markets taking a dip in afternoon’s trade against some light producer price fixation hedge selling.   This was however short lived and the markets recovered and headed back into positive territory, with the speculative sector of the New York market remaining largely supportive and shrugging off the temptation to take pre-weekend profits.   The London market continued to end the day on a positive note and with 83.9% of the earlier gains of the day intact, but with the New York market losing its way by the end of the day’s trade and moving back into negative territory to end the day on a softer note, with 65.6% of the losses of the day intact.    This rather mixed close and with the speculative sector of the markets most probably experiencing some degree of exhaustion, is likely to set the markets for a cautiously hesitant steady start for early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.                                                  
                                                
NOV      2080 + 27                                              DEC     206.50 – 2.10
JAN      2093 + 26                                               MAR    210.30 – 2.20
MAR     2102 + 24                                               MAY    212.05 – 2.15
MAY     2110 + 22                                                JUL    213.10 – 2.25
JUL      2116 + 22                                                SEP    213.20 – 2.15
SEP      2123 + 21                                               DEC    213.55 – 2.05
NOV     2130 + 20                                               MAR    213.95 – 1.90
JAN      2135 + 20                                               MAY    213.95 – 2.00
MAR     2111 + 20                                                JUL    213.95 – 2.10
MAY     2087 + 20                                                SEP    214.95 – 1.95

3rd. October, 2014.

The coffee markets are currently guided by the influence of the speculative sector and the prevailing weather market, which has seen a continuation of reports supporting the news of a lack of rain thus far into October and continues to bolster sentiment.  These reports highlight concerns that are being raised over the thus far erratic rains over Brazil and the potential impact on the 2015 crop to come.  The forecasts meanwhile are mostly for precipitation to move into the main coffee growing areas in Brazil within the latter half of this month.  These weather developments and the effect upon the overall potential of the new crop to come will no doubt continue to draw speculative attention as the Brazil 2015/16 coffee crop progresses. 

There is meanwhile, presently a steady supply of Brazil arabica coffees coming to the consumer markets and this is likely to continue, with the support of the improved levels in New York and a weaker Brazil Real that is trading at 2.49 to the US Dollar today, to inspire origin selling activity.  Similarly, the new Colombia and Central America washed arabica and Vietnam robusta coffee harvests are soon to come into play, which would indicate that the already relatively well stocked consumer markets are, at least for the time being, able to watch these latest Brazil weather developments from the side lines.

The arbitrage between the markets broadened yesterday to register this at 118.74 usc/Lb., while this equates to a very attractive 55.88% 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 increase by 1,989 bags yesterday, to register these stocks at 2,389,041 bags.   There was meanwhile a larger in volume 5,554 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,936 bags. 

The commodity markets were mixed yesterday, many markets tending to lower and the influential energy markets softer on the day.  The commodity markets would appear to have absorbed the latest round of bearish economic figures to come from China, ahead of the Unites States Employment data to be released later today. It was a softer day for the Oil markets, Cocoa, Cotton, Copper, Orange Juice, Gold, Silver, Platinum and Palladium.  It was a mildly firmer day for Sugar, Wheat, Corn, Soybean and the Robusta coffee market near unchanged, whereas it was another positive close for Arabica coffee yesterday. 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 488.47.   The day starts with the U.S. Dollar trading at 1.612 to Sterling and 1.264 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 92.95 per barrel.

The London market opened the day yesterday in some buoyancy, which was followed by a firmer on opening market in New York.  The early buoyancy within New York yesterday met with speculative triggers along the way and the market registered a rapid 6.76% increase in value within the morning session.  The London robusta market followed suit although in less volatility and both markets settled into a new trading range with gains mostly intact although in somewhat choppy trade in New York, which registered a hefty 41,971 lots in total volume by the end of the session.  As the day progressed sellers returned to both markets to apply pressure to the gains made which in London was rapidly shed toward the latter half of the day.  London went on to lose 2.66% of the gains and a finish hardly changed on the day.  The downward seller pressure in New York was countered in the latter session to see this market retain 4.19% of the gains on the day, to set the close yesterday, in a positive range, as follows: 

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

NOV 2053 – 1                          DEC    208.60 + 8.20
JAN      2067 – 1                  MAR 212.50 + 8.00
MAR     2078 – 1                                  MAY   214.20 + 7.45
MAY     2088 Unch          JUL         215.35 + 7.35 
JUL      2094 Unch          SEP         215.35 + 7.20
SEP      2102 + 2          DEC         215.60 + 7.20
NOV     2110 + 4          MAR   215.85 + 7.15
JAN      2115 + 4          MAY   215.95 + 6.95
MAR     2091 + 7          JUL   216.05 + 6.80
MAY     2067 + 7                  SEP     216.40 + 6.65 

2nd. October, 2014.
The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of September were 8,505 bags or 22.57% lower than the same month last year, at a total of 62,160 bags.  This has contributed to the countries cumulative exports for the just completed October 2013 to September 2014 coffee year being 145,346 bags or 10.43% lower than the previous coffee year, at a total of 1,247,727 bags.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of August were 35,306 bags or 71.27% higher than the same month last year, at a total of 84,842 bags.  This has contributed to the countries cumulative exports for the just completed October 2013 to September 2014 coffee year being 116,139 bags or 2.68% lower than the previous coffee year, at a total of 4,223,882 bags.

The National Coffee Institute of Honduras and with the new crop coffee cherries getting closer to maturity have raised their earlier new crop forecast from their already positive forecast in June, to now forecast an approximate 20% increase in production for the new crop, which they now peg at approximately 5.4 million bags.   This figure with a relatively modest domestic consumption of approximately 276,000 bags per annum aside, would add approximately 1 million bags of increase in export potential from Honduras for this new October 2014 to September 2015 coffee year, to see exports in excess of 5.2 million bags.

The preliminary coffee export figures from Brazil have seen the countries coffee exports for the month of September being 302,700 bags or 12.3% higher than the same month last year, at a total of 2,763,100 bags.   These exports that are dominated by the natural arabica coffees from past crop stocks and new crop 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.

The recovery for the reference prices of the London market over the past couple of days can be expected to bring some increase in internal market selling activity of the remaining past crop stocks, but one cannot expect too much excitement for a few weeks still and until the new crop harvest starts to come into play by early next month.   Thus one cannot expect too much in terms of the negative effects of exporter price fixation hedge selling coming to this market, which is presently tending to track the more volatile activities within the New York arabica coffee market.

The well respected analysts Coffee Network have added to the bullish Brazil related news yesterday, by talking in terms of a 15% dip in the size of the next 2015 Brazil crop that shall be negatively affected by the slow start to the new rain season.  This factor in terms of their assessment of the just completed new crop of 47 million bags would indicate a 2015 Brazil crop that would be marginally below 40 million bags, which they say would contribute to a coffee supply for the October 2015 to September 2016 coffee year of approximately 144.9 million bags and therefore, a follow on world deficit coffee supply through to at least the second half of 2016.

This news added to the supportive mix of reports and the markets were once again buoyed yesterday by these reports and the continued concern over the erratic rains in Brazil, with so many now pointing towards the 40 million bags number for the coming year.   Meanwhile and until the rains pick up in volume and it would seem in terms of the main central arabica coffee districts in Brazil that this might not happen until closer to the end of this month, the New York market would appear to have the prospects of some degree of short term muscle.

The arbitrage between the markets broadened yesterday to register this at 106.60 usc/Lb., while this equates to a relatively attractive 53.19% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,353 bags yesterday, to register these stocks at 2,387,052 bags.   There was meanwhile a larger in volume 4,859 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 15,490 bags.

The commodity markets were mixed yesterday, but with many markets tending to steady and likewise, the macro commodity index. The firm nature of the U.S. dollar did however remain a dominant factor for many markets, to supress any significant chances of a recovery, with the exception of the rally within the Coffee markets.  The Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa 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 0.12% higher; to see this Index registered at 489.79.   The day starts with the U.S. Dollar marginally softer and trading at 1.621 to Sterling and 1.263 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 92.95 per barrel.

The London market opened the day yesterday with light selling pressure taking value lower but followed by a steady start for the New York market which soon started to add value and with technical support, assisting to add more value as the afternoon progressed.    This follow through buoyancy for the New York market soon started to have some effect upon sentiment within the London market and a modest recover, to see both markets enter the afternoon’s trade taking a positive track and with buy stops being triggered, adding value to both markets.   This positive track was sustained for the rest of the day and the London market continued to end the day on a positive note and with 96.8% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 82.9% of the gains of the day intact.   This overall positive close is supportive for sentiment and one might expect to see a near to steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.                                                  
                                                
NOV      2054 + 62                                              DEC     200.40 + 7.05
JAN      2068 + 61                                               MAR    204.50 + 7.05
MAR     2079 + 61                                               MAY    206.75 + 6.90
MAY     2088 + 61                                                JUL    208.00 + 6.75
JUL      2094 + 59                                                SEP    208.15 + 6.50
SEP      2100 + 57                                               DEC     208.40 + 6.45
NOV     2106 + 65                                               MAR     208.70 + 6.45
JAN      2111 + 64                                               MAY     209.00 + 6.50
MAR     2084 + 64                                                JUL     209.25 + 6.45
MAY     2060 + 64                                                SEP     209.75 + 6.65

1st. October, 2014.
The general opinion was that the last Vietnam crop was approximately 28 million bags and made up from approximately 26.9 million bags of robusta coffee and 1.1 million bags of arabica coffee.   There was of course approximately 3.4 million bags carryover stocks into this new crop in October last year, but it is something of a surprise with estimates for coffee exports for this month that would bring the October 2013 to September 2014 coffee exports up to 27.33 million bags, that Vietnam traders have estimated carryover stocks into the coming month of approximately 5 million bags.

These figures already make one question the actual size of the past October 2013 to January 2014 harvest, but when one considers a domestic market that is absorbing approximately 1.8 million bags, it does really make one think that the production estimates might have been overly conservative.   Thus it is not a surprise that there are now some traders in Vietnam who are talking of a past crop of having exceeded 30 million bags, which with not much in the way of a decline expected for the new crop, might likewise raise private trade and industry forecasts for the new crop that starts this month.

Meanwhile despite the apparent good supply of mostly robusta coffees from Vietnam, the relatively soft nature of the reference prices of the London market and the complacent attitude of the well-stocked consumer market industries is contributing to lacklustre trading activity within Vietnam.   One would think however that as soon as the new crop coffees start to hit the market in more volume in November and with the price structure of the London market attractive for the finance and carry of stocks, that one might see some increase in trade buying and likewise by early next year, and increase in the levels of the certified stocks held against the London market.  

Government export statistics from Sumatra the main coffee producing island of Indonesia have reported that the islands robusta coffee exports in September were 573,912 bags or 62.08% lower than the same month last year, at a total of 350,596 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 just completed October 2013 to September 2014 coffee year are 2,071,075 bags or 34.93% lower than the same period in the previous coffee year, at a total of 3,858,445 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 six to seven months and until such time as the potentially larger new crop shall start to come into play, so long as there are no further unforeseen weather problems for the island.   However the tighter robusta coffee supply from Indonesia is of no real concern for the consumer market robusta coffee buyers, who look to a good and steady medium to long term supply from Vietnam.

The markets were buoyed yesterday by further reports of concern over the erratic rains in Brazil, with some reports coming out with a new Brazil crop of below 44 million bags and some even hinting that if October remains relatively dry, a crop that might be might be lower than 40 million bags for next year.  All of these reports over the past couple of weeks, not being countered by any reports that talk in more positive numbers for Brazil for the coming year.  Thus for the present, these are numbers that fuel and support the speculative bulls within the market.

The arbitrage between the markets broadened yesterday to register this at 102.31 usc/Lb., while this equates to a relatively attractive 52.91% 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 1,820 bags yesterday, to register these stocks at 2,383,699 bags.   There was meanwhile a larger in volume 7,490 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 20,349 bags.

The commodity markets encountered an overall reversal in fortunes yesterday with the firm U.S. dollar dampening spirits within many markets, which took the macro commodity index lower.  The Coffee, Orange Juice and Platinum markets had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, 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 0.95% lower; to see this Index registered at 489.22.   The day starts with the U.S. Dollar showing buoyancy and trading at 1.618 to Sterling and 1.261 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 92.60 per barrel.

The London market and New York markets both started the day yesterday with a degree of follow through buoyancy in thin trade, but with the markets starting to come under pressure early in the afternoon’s trade, to see both markets head back below par and into negative territory.   This was however short lived as a modest recovery soon in terms of the prevailing thin trade, accentuated the technical buy stops within the market and set for somewhat sudden rally, which was mirrored by the positive nature of the London market.    The London market continued to end the day on a strong note and near to its highs of the day, while the New York market encountered some selling pressure later in the day but nevertheless ended the day on a positive note and with only 34.7% of the earlier gains of the day intact.    The hesitancy experienced later in the day in New York might well encourage some producer price fixation selling for the London market, while one might expect a cautiously 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.                                                  
                                                
NOV     1992 + 29                                               DEC     193.35 + 2.10
JAN      2007 + 29                                               MAR    197.45 + 2.05
MAR     2018 + 28                                               MAY    199.85 + 2.00
MAY     2027 + 27                                                JUL    201.25 + 2.00
JUL      2035 + 29                                                SEP    201.65 + 2.00
SEP      2043 + 31                                               DEC    201.95 + 1.90
NOV     2041 + 24                                               MAR    202.25 + 1.85
JAN      2047 + 24                                               MAY    202.50 + 1.80
MAR     2020 + 24                                                JUL    202.80 + 1.85
MAY     2020 + 24                                                SEP    203.10 + 1.80

30th. 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 17.48% during the week of trade leading up to Tuesday 23rd. September;  to register a net long position of 22,373 Lots on the day.  This net long which is the equivalent of 3,728,833 bags has most likely been marginally increased during the period of mixed but overall positive trade, which has since followed.

The scattered rain showers for the main central and south arabica coffee districts in Brazil last week and over the weekend have been overall quite modest and with only modest rains forecast for the next couple of weeks, the concerns over the prospects for the next 2015 Brazil arabica coffee crop are coming back into play for the related New York market.   This has resulted in a degree of cautious buoyancy for the New York market yesterday, which was not mirrored to the same degree within the relatively flat London robusta coffee market.

Meanwhile with the latest assessments of the present Brazil crop and forecasts for the next Brazil crop having been modest in volume, with these being related to the Brazil government’s Crop Supply Agency and the F O Licht reports on the 16th. and 26th. September respectively, the market sentiment has been modestly bullish in nature.    With what would seem to be little due to dampen spirits within the New York market, until there are reports of good rains within Brazil, which might assist to add further buoyancy to the market.

What has been noticeable over the recent weeks is the lack of early winter season buying aggression on the part of the main northern hemisphere consumer market industries, which is not only related to the good levels of consumer stocks but also to some insecurity in terms of clarity as to the reality of next year’s Brazil crop.  This uncertainty influencing a cautious stance on the part of the majority of the industry players, who look beyond Brazil to the prospects of increased coffee supply for the coming year from all the major producer blocs, with the exception of the still difficult to read Brazil.  

One might however be safe to assume that even with good rains for Brazil by the second half of October and from thereon, that the next Brazil crop shall at best be a modest rather than bumper crop and therefore despite increases in supply from the other producer blocs that it is unlikely that the deficit supply situation shall change before 2016 and therefore, it is left to the still substantial stocks to carry the industry for the coming year and into the second half of the following year.  Thus making one think that the downside for the more volatile and leading New York market is limited and that the present trading range has a degree of security, albeit that the advent of good rains might well see the market return to the lower side of this relatively broad 175 to 210 usc/Lb. trading range.

In the meantime while the arabica coffee market continues to post erratic and relatively sharp moves on a day to day basis, that London robusta market is seemingly settled within a thinner well supplied trading range, with producer selling activity relatively subdued for the present, in reaction to the relatively soft reference prices of the well discounted London robusta coffee market.   This market tending to look towards the nearby start of another large new Vietnam crop, which shall along with the prospects for larger new robusta coffee crops from Indonesia and India, guarantee safe robusta coffee supply for the foreseeable future.  

The arbitrage between the markets broadened yesterday to register this at 102.21 usc/Lb., while this equates to a relatively attractive 53.44% 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 250 bags yesterday, to register these stocks at 2,381,879 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 27,839 bags.

The commodity markets were overall positive yesterday, following the past week of steady overall losses within the markets.   The Oil, Natural Gas, Sugar, Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets showed buoyancy and the Cocoa market was steady, while the Cotton market tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.92% higher; to see this Index registered at 493.92.   The day starts with the U.S. Dollar near to steady and trading at 1.625 to Sterling and 1.269 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 96.25 per barrel.

The London market and New York markets both started the day yesterday on a softer note and within and environment of thin trade, but with the New York market recovering as the morning progressed and finally having an influence to see both markets enter the afternoons trade on a positive track.   The fortunes of the New York market were however very erratic and with the continued thin trade accentuating the moves, to see the market shrug off a bout of negative price fixation pressure and to regain its muscle during the afternoon and gaining some added supportive input from the positive nature of the macro commodity index.   The London market continued to end the day on a modestly positive note and with only 34.8% of the earlier gains of the day intact, while the New York market ended the day on a much more positive note and with 88.1% of the earlier gains of the day intact.    This strong close on the part of the New York market might assist to inspire some degree of confidence and set the markets for a follow through positive start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1968 + 9                                                           
NOV     1963 + 8                                                 DEC     191.25 + 5.20
JAN      1978 + 9                                                 MAR    195.40 + 5.15
MAR     1990 + 10                                               MAY    197.85 + 5.15
MAY     2000 + 10                                                JUL    199.25 + 5.05
JUL      2006 + 7                                                  SEP    199.65 + 4.95
SEP      2012 + 7                                                 DEC    200.05 + 4.95
NOV     2017 + 6                                                 MAR    200.40 + 4.85
JAN      2023 + 6                                                 MAY    200.70 + 4.75
MAR     1996 + 6                                                  JUL    200.95 + 4.55

29th. 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 5.74% in the week of trade leading up to Tuesday 23rd. September;  to register a net long position of 34,586 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 0.29%, to register a net long on the day of 46,427 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 15.07%, to register a net long of 22,920 lots on the day.   This net long position that is the equivalent of 6,497,718 bags has most likely been marginally increased over the period of overall more positive trade that has since followed and likewise, the net long position of the Managed Money Funds.

Coffee exports from the producer bloc of Central America, Dominican Republic, Colombia and Peru but excluding the unreported exports from Mexico for the month of August, were 16.5% lower than the same month last year, at a total of 2.16 million bags.    This contributed to the cumulative exports for this fine washed arabica coffee producer bloc for the first eleven months of the present October 2013 to September 2014 coffee year being 4.81% lower than the same period in the previous coffee year, at a total of 25.64 million bags.   One would guess from previous years experiences that the unreported exports from Mexico over this period would have been close to 3 million bags and therefore, combined regional exports for these eleven months of close to 28.5 million bags.  

The German based analysts F O Licht reported on Friday morning that due to the damage done to the trees in the central arabica coffee districts over the partial drought in January and February this year, that they forecast the next 2015 Brazil crop to be a very modest 43 million bags.    This following their forecast for the present assessment of the present crop being 46 million bags, which is a relatively modest number compared to many other respectable private trade and industry reports.   Thus for the present with the questionable present crop number in mind, one would think that the even more modest forecast for next year’s crop might likewise be seen by many, to be somewhat questionable in its reliability.   There nevertheless was something of a modest recovery for the thinly traded markets on Friday, post the issue of this report.

The same F O Licht report has estimated that due to this year’s smaller Brazil crop that global coffee supply for the October 2014 to September 2015 coffee year shall be a deficit one of 145.5 million bags, as against global consumption of 152.9 million bags.    This 7.4 million bags deficit that is based on a Brazil crop of 46 million bags would if the Brazil factor were adjusted to the levels most are now talking, would be more in line with many other expectations of a deficit for the coming coffee year of around 5 million bags.   A deficit that for the medium term is easily countered by the good carryover stocks into the new coffee year and therefore a factor that is only modestly supportive for market sentiment, which is now more focused upon the prospects for the next 2015 Brazil crop and thereon, the global coffee supply for the October 2015 to September 2016 coffee year.

The Vietnam government forecasted on Friday that the country would export approximately 1.67 million bags of mostly robusta coffees in September, which would contribute to the country exporting 27.33 million bags of coffee over the present October 2013 to September 2014 coffee year.   This figure is approximately 15.5% higher than the country’s exports for the previous coffee year, with perhaps the lower volumes of exports from a smaller Indonesian robusta coffee crop this year, assisting for Vietnam to attract steady buying interest.

Meanwhile in terms of value the Vietnam Ministry of Agricultural and Rural Development have reported that the countries combined agro-forestry-fishery exports for the first nine months of 2014 were 11.4% higher than the same period last year, at a total of 22.66 billion U.S. dollars.    The value of coffee exports for this period was 12.4% of the total, at 2.81 billion U.S. dollars and therefore, well on the way to register a value of coffee exports well in excess of 3 billion U.S. dollars for the year.

Coffee being the leading player in terms of the countries agro exports and slightly higher than their rice exports that accounted for 10.1% of the value of overall agro-forestry-fishery exports for the first nine months of this year, but well behind the 24.93% share of the value of these exports that came from the seafood sector and the 19.46% share of the forestry related products.    The coffee share is nevertheless a significant one and thus one can presume, that the Vietnam coffee industry shall retain a good degree of respect on the part of the countries authorities for the foreseeable future.

The arbitrage between the markets narrowed yesterday to register this at 997.37 usc/Lb., while this equates to a relatively attractive 52.34% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 850 bags on Friday, to register these stocks at 2,382,129 bags.   There was meanwhile a larger in volume 2,200 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 26,464 bags.

The commodity markets were mixed on Friday and continued to be supressed by the positive nature of the U.S. dollar, which is dampening spirits within many markets but the overall macro commodity index took a positive stance for the day.   The Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat and Silver markets nevertheless had a positive day’s trade, while the Cocoa, 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 0.50% higher; to see this Index registered at 489.43.   The day starts with the U.S. Dollar maintaining its muscle and trading at 1.622 to Sterling and 1.267 to the Euro, while North Sea Oil is tending softer in early trade and is selling at $ 94.85 per barrel.

The London market and New York markets both started the day on Friday taking a modestly softer stance and within an environment of thin trade, but with both markets soon making a recovery and entering the afternoon on a modestly positive track.   The London market soon lost its way again and headed back into negative territory, while the New York market slipped back to par and with both markets then starting on a sideways track that was either side of par, but to be followed by a sudden rally in New York and with buy stops accentuating the gains that were mirrored by a positive stance developing in London.  The London market continued to end the day on a positive note and with 73.3% of the gains of the day intact, while the New York market ended the day on a positive note with 63.6% of the gains of the day intact.   This positive close is mildly supportive for sentiment today but with a firming U.S. dollar and the related weaker Brazil Real in play, the markets might well come under some degree of price fixation selling pressure as the day progresses against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1959 + 11                                                         
NOV     1955 + 11                                               DEC     186.05 + 3.75
JAN      1969 + 12                                               MAR    190.25 + 3.75
MAR     1980 + 10                                               MAY    192.70 + 3.75
MAY     1990 + 8                                                  JUL    194.20 + 3.70
JUL      1999 + 5                                                  SEP    194.70 + 3.65
SEP      2005 + 9                                                 DEC    195.10 + 3.60
NOV     2011 + 9                                                 MAR    195.55 + 3.55
JAN      2017 + 9                                                 MAY    195.95 + 3.50
MAR     1990 + 9                                                  JUL    196.40 + 3.50

26th. September, 2014.
There are presently only scattered rains over some of the South Eastern coffee districts of Brazil and with these expected to continue over the coming week, but with only scattered showers so far predicted for the majority of the main south and central arabica coffee districts.   The conditions are however becoming hot and humid in general and this is conducive for rains to come and for the present, the prospects are for more general rains in the coming weeks.   The uncertainty of the volume and coverage of the forthcoming rains does remain a factor to generate speculative reaction and one might expect that the coming weeks shall see the volatility of the New York arabica coffee market continue, which is an uncertainty that is impacting negatively upon physical trade for the present.

The National Coffee Institute of Honduras have forecasted that with a larger new crop developing, that they foresee exports for the forthcoming October 2014 to September 2015 coffee year to rise by 14.5% over the present coffee year.   These exports they forecast shall top 4.83 million bags of fine washed arabica coffees, which shall maintain the country’s dominant status within the Mexican and Central American producer bloc, while such a forecast would indicate expectations for a new crop that shall be close to 17% larger than the past crop and to exceed 5 million bags and thus, well above the earlier forecasts for a new crop of around 4.6 million bags.

This positive production forecast follows improved production reports from Nicaragua, where private industry players and based on this years exports are not talking of the past crop having been 12.5% larger than expectations, to total 1.8 million bags.  This positive result is now being estimated by many private trade and industry player, to be followed by a marginally larger new crop of between 1.9 million and 2 million bags.  

Neighbouring Costa Rica does not so far forecast any improvement for their new crop, which they estimate shall remain similar to the past crop of 1.5 million bags, but the rest of this leading fine washed arabica coffee producer bloc are forecasting much improved output for the new crop.   In this respect El Salvador are talking in terms of a 29% larger crop, Guatemala are talking in terms of a close to 10% larger new crop, while Mexico has expectations of a close to 5% larger new crop.

These forecasts added to the prospects for increased production for the new coffee year from Colombia, shall add over 2 million bags of fine washed arabica coffee supply for the period and therefore have to be seen to be somewhat bearish for the related New York market, where despite the past two years of dismal Roya or Leaf Rust affected crops, the combination of Mexico and Central America still contribute to 58.03% of the certified stocks.   This market presently only being supported by the uncertainty of the quality of the new rain season for the main central and southern coffee districts of Brazil, which produce the country’s arabica coffees.

Physical coffee trade this week continued to be lacklustre and thin, as the relatively well stocked consumer industry players are reluctant to believe in the present price trading range of the markets that is vulnerable to the possibility of good rainfall reports from Brazil, which is more of a possibility than poor rainfall reports.  Thus one might think that should the former possibility of good rains come to the market in the coming weeks, there might well be some good volume winter roasting season catch up physical coffee trade coming into play.

The arbitrage between the markets narrowed yesterday to register this at 94.12 usc/Lb., while this equates to a relatively attractive 51.63% 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 2,100 bags yesterday, to register these stocks at 2,382,979 bags.   There was meanwhile a larger in volume 2,750 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 28,664 bags.

The commodity markets yesterday were once again on the back foot, with the strong U.S. dollar and prospects for softer demand from China impacting upon sentiment.   The Natural Gas, Sugar and Gold markets showed some buoyancy, while the Oil, Cocoa, Coffee, Cotton, Copper, 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 0.67% lower; to see this Index registered at 487.01.   The day starts with the U.S. Dollar maintaining its muscle and trading at 1.631 to Sterling and 1.274 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and is selling at $ 95.45 per barrel.

The London market and New York markets both started the day yesterday with some early follow through buoyancy, in thin and hesitant trade.   This was however short lived as the afternoon’s trade brought with it some more aggressive selling pressure and with the volumes of trade picking up, both market moved into negative territory and with sell stops being triggered, the losses were accentuated.   There was however some buying support coming forth at the lows of the markets and both markets made some degree of recovery to take a softer sideways track through to the close.   The London market ended the day on a soft note, having recovered 53.3% of the earlier losses of the day by the close, while the New York market ended the day on a soft note and with 70.5% of the earlier losses of the day intact.    This overall soft close but with some degree of later in the day recovery ahead of it, is likely to set the markets for a cautious and hesitant 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      1948 – 25                                                         
NOV     1944 – 21                                                DEC     182.30 – 6.80
JAN      1957 – 22                                                MAR    186.50 – 6.75
MAR     1970 – 22                                                MAY    188.95 – 6.75
MAY     1982 – 23                                                 JUL    190.50 – 6.65
JUL      1994 – 23                                                SEP     191.05 – 6.60
SEP      1996 – 28                                                DEC     191.50 – 6.50
NOV     2002 – 28                                                MAR     192.00 – 6.40
JAN      2008 – 28                                                MAY     192.45 – 6.50
MAR     1981 – 29                                                 JUL     192.90 – 6.55

25th. September, 2014.
Yesterday saw the New York market lead the way to a technical rally that was accentuated by a lack of producer selling, which is to a degree likewise accentuated by a lack of consumer market buying interest.  Thus with the lacklustre nature of the physical coffee markets that are is in the doldrums of well stocked consumer markets and uncertainty over the prospects for the new Brazil rain season and its influence upon the next 2015 Brazil crop, the funds and speculative sector of the market followed the charts north.

This issue of Brazil weather had of course been expected to maintain volatility for the more related New York arabica coffee market as it has been the Brazil central arabica coffee districts that suffered during the partial drought in the first quarter of this year, for most of the last quarter of this year and it was perhaps not unexpected to see the market have this knee jerk reaction yesterday, as the market is fuelled by buy and sell stops.   Yesterday being one where following the earlier in the week reports from Brazil that the nearby rains might not be as good in volume as had earlier been predicted, the technical buy stops and accompanied by some industry stop loss buy stops, dominated the market direction.

This move yesterday adding 4.53% to the value of the New York market for the day and with the London market hanging onto its coat tails, this latter market added 1.87% to its value for the day.    Meanwhile following some days of the New York market threatening to break south out to the prevailing trading range, the market and with London following suit, has firmly returned into the pre Brazil rain season range.

Aside from these issues of Brazil, there remains no other supportive producer news for the markets in play, as on the contrary, most of the news is in fact relatively bearish in nature.   The Colombian crop is forecasted larger for the coming year, the overall Mexican and Central American crops are forecasted larger for the coming year, the Indonesian crop is forecasted larger for the coming year, the Indian crop is forecasted larger for the coming year and the Vietnam crop aside from their questionable Coffee and Cocoa Association report, is forecasted to be steady for the coming year.   Thus one sits with the markets completely in the hands of Brazil weather that is of course not a new scenario, as this country by its sheer dominance in terms of usually around 36% of world production and likewise in excess of 30% of consumer market supply, has always been the major driving force of market sentiment.

There was little in the way of producer news yesterday other than the report that the Cameroon’s robusta coffee exports up to the end of August and therefore for the first nine months of their December 2013 to November 2014 robusta coffee year were 35,233 bags or 15.26% higher than the same period in the previous coffee year, at 260,833 bags.   Meanwhile in terms of the countries smaller arabica coffee production that works on a more conventional October to September coffee year, their arabica coffee exports for the first eleven months of the present October 2013 to September 2014 coffee year are 9,400 bags or 22.44% lower than the same period in the previous coffee year, at a total of 32,483 bags.

The arbitrage between the markets broadened yesterday to register this at 99.97 usc/Lb., while this equates to a relatively attractive 52.87% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 8,249 bags yesterday, to register these stocks at 2,380,879 bags.   There was meanwhile a same in volume 8,249 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 31,414 bags.

The commodity markets tended to steady yesterday, following some days of a downside drift.   The Oil, Natural Gas, Sugar, Cocoa, Coffee, Wheat, Corn, and Soybean markets took a positive track and the Orange Juice market was steady, while the Copper, Gold, Silver and Platinum markets were marginally softer in nature.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.62% higher; to see this Index registered at 490.31.   The day starts with the U.S. Dollar maintaining its muscle and trading at 1.631 to Sterling and 1.276 to the Euro, while North Sea Oil is near to steady in early trade and is selling at $ 95.30 per barrel.

The London market started the day yesterday on a steady note and likewise the New York market, with the latter New York market soon picking up a degree of buoyancy.   The markets entered the afternoon with the London market maintaining its steady stance, while the New York market added to its buoyancy but taking a short term reversal to near to par, before returning to its upside track.   Later on in the day and with volumes picking up, the New York market started to add some weight and triggering buy stops to accentuate its gains, the market started on a swift and aggressive rally.   Initially the London market did not follow suit, but finally the stability of the recovery for the New York market that managed to shrug off some short term thin in volume producer price fixation and profit taking selling pressure, had its influence and the London market moved up into positive territory.   The London market continued to end the day on a positive note and with 94.7% of the gains of the day intact, while the New York market ended the day on a very positive note and with 92.1% of the gains of the day intact.   This very positive close and near to the highs for both markets, is likely to inspire a follow through steady start for the early trade today, but one that could be vulnerable to some producer selling and speculative profit taking if the markets do not soon add to the prices set yesterday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1973 + 43                                                         
NOV     1965 + 36                                               DEC     189.10 + 8.20
JAN      1979 + 36                                               MAR    193.25 + 8.20
MAR     1992 + 35                                               MAY    195.70 + 8.15
MAY     2005 + 34                                                JUL    197.15 + 8.05
JUL      2017 + 34                                               SEP     197.65 + 8.00
SEP      2024 + 33                                               DEC    198.00 + 8.00
NOV     2030 + 33                                               MAR    198.40 + 7.95
JAN      2036 + 33                                               MAY    198.95 + 8.05
MAR     2010 + 33                                                JUL    199.45 + 8.10

24th. September, 2014.
The National Export Centre of Nicaragua has reported that the country’s coffee exports for the month of August were 24,432 bags or 15.28% lower than the same month last year, at a total of 135,429 bags.   This lower performance has contributed to the country’s cumulative coffee exports for the first eleven months of the present October 2013 to September 2014 coffee year to be 221,214 bags or 11.99% lower than the same period in the previous coffee year, at a total of 1,624,015 bags.

One might comment however that in the previous coffee year that Nicaragua had relatively excessive carryover stocks from the 2011/2012 coffee year of approximately 280,000 bags above normal and that therefore, the dip in cumulative exports this year does not actually reflect such a large dip in the last harvest.   While all indications are that while the overall producer bloc of Mexico and Central America is looking to a post intense Roya infestation new crop that shall be approximately 10% larger than the last crop, that Nicaragua shall not bring in a larger new crop.

The Coffee Federation in Colombia have forecasted that the following this year’s coffee crop that they estimate shall be between 11.5 million and 12 million bags and most likely the higher figure, that they forecast the crop in 2015 to rise to 13 million bags.  This forecast that to most within the industry would seem to be realistic if of course with unforeseen weather problems aside, but so far there would seem to be no reason for concern for the longer term weather prospects for Colombia.   Making note in this respect, that the possibility of a mild El Nino phenomenon in the Pacific and somewhat drier weather for Colombia, would nevertheless bring enough rain and would in fact be beneficial in terms of modestly drier weather being conducive for less intensity in Roya or Leaf Rust problems for the farms.

With the new and mostly robusta coffee crop due to start in three to four weeks’ time in Vietnam, the Vietnam Coffee and Cocoa Association have forecast that this new crop shall decline to a more modest 25 million bags, due to aging trees and excessive rains in some districts in the past few months.    This lower crop forecast is however somewhat questionable, as the association has traditionally preceded their new crops with similar dismal forecasts, which have traditionally proved to be unfounded.

Contrary to this somewhat official new crop forecast from Vietnam, the private trade and industry forecasts vary between 27 million to 28.5 million bags and with some even talking the number higher.   Thus for the present and the reaction within the related London robusta coffee market to this report yesterday would so indicate, the report has had not been able to buoy speculative spirits for the robusta coffee prices.  

Meanwhile even though traditionally the new crop harvest starts in the middle of October with the end to the rain season, there are many farmers who are forecasting that the dry season might come a little later and that the new crop harvest might not start to come into play in force until November.   This factor supporting a degree of price resistance within the internal market in Vietnam for the remaining and dwindling past crop coffee stocks, but to a degree this price resistance is also related to the soft nature of the reference prices of the London robusta coffee market.

The arbitrage between the markets broadened yesterday to register this at 93.40 usc/Lb., while this equates to a relatively attractive 51.63% 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 4,875 bags yesterday, to register these stocks at 2,389,128 bags.   There was meanwhile a larger in volume 10,525 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 23,165 bags.

The commodity markets continue to struggle yesterday and with the overall macro commodity index remaining somewhat negative, with the markets having to work with a relatively steady to firm U.S. dollar.  The U.S. Oil, Sugar, New York arabica Coffee, Cotton, Gold, Silver and Platinum markets had a day of buoyancy, while the Brent Oil, Natural Gas, Cocoa, London robusta Coffee, Copper, 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 0.16% lower; to see this Index registered at 487.30.   The day starts with the U.S. Dollar near to steady and trading at 1.639 to Sterling and 1.285 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 95.30 per barrel.

The London and New York markets started the day yesterday showing a degree of buoyancy in thin and lacklustre trade, which continued into the afternoon, when the London market started to falter while the New York market continued to add some more weight and set something of a rally.   This rally in New York was however short lived and while the London market headed south the New York market started to shed its gains and only show relatively modest buoyancy.   The London market continued to end the day on a soft note and with 63.6% of the losses of the day intact, while the New York market ended the day on a modestly positive note and with only 28% of the earlier in the day’s gains intact.   This relatively shaky close is unlikely to inspire and one might expect 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      1930 unch                                                        
NOV     1929 – 7                                                  DEC     180.90 + 1.50
JAN      1943 – 8                                                  MAR    185.05 + 1.50
MAR     1957 – 7                                                  MAY    187.55 + 1.55
MAY     1971 – 7                                                   JUL     189.10 + 1.55
JUL      1983 – 7                                                   SEP     189.65 + 1.45
SEP      1991 – 7                                                  DEC     190.00 + 1.45
NOV     1997 – 7                                                  MAR     190.45 + 1.40
JAN      2003 – 7                                                  MAY     190.90 + 1.45
MAR     1977 – 7                                                   JUL     191.35 + 1.40

23rd. 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 12.62% during the week of trade leading up to Tuesday 16th. September;  to register a net long position of 27,111 Lots on the day.  This net long which is the equivalent of 4,518,500 bags has most likely been marginally reduced during the period of mixed but overall negative trade, which has since followed.

The Global Commodity Weather Group have confirmed scattered showers over many of the main south and central coffee districts in Brazil which shall start triggering flowering for the new crop, with further rain showers due for the second half of this week and more than likely to follow on during next week.    These flowerings shall require reasonable follow on rains for the coming month to set the new prospects for the next 2015 crop, which medium to long term weather forecasts so far, indicate shall be the case.    Thus for the present, the issues of rain in Brazil are not playing a part in terms of speculative market sentiment that is presently taking as wait and see stance.

The Uganda Coffee Development Authority have reported that the country’s coffee exports for the month of August were 50,305 bags or 15.8% lower than the same month last year, at a total of 268,033 bags.    This dip in exports for the month has contributed to the countries cumulative exports for the first eleven months of the present October 2013 to September 2014 coffee year being 62,521 bags or 1.86% lower than the same period in the previous coffee year, at a still good total of 3,295,807 bags.    

These exports from Uganda that are made up from an approximate ratio of 78 to 22 robusta and arabica coffees, continues to maintain Uganda’s status as Africa’s leading coffee exporter in volume, but it topped in terms of value by the Ethiopian exports that are related to 100% higher value arabica coffees.   The country is nevertheless on a steady growth curve and with a host of state and private farm assistance programs in play, which are supporting new plantings and improve farm inputs, to further grow the Uganda coffee industry.   An industry that further benefits from the free market policy of the state, which results in the farmers being able to quickly achieve the full financial benefits from their coffee sales, to further encourage their investment in coffee production.

The new and potentially large Colombian main crop is starting in the coming weeks and to be followed soon after, but the start of the new and larger Mexican and Central American crops.    Thus one can expect a good attendance at the Latin American focused Speciality Coffee Fair that is due to take place in Medellin Colombia from the 2nd. to 5th. October.   Including many traders coming in from the developed markets of North America, Europe and Japan, as they focus on the prospect of their purchases of new crop fine washed arabica coffees from Latin America for the coming year.

The arbitrage between the markets broadened yesterday to register this at 95.73 usc/Lb., while this equates to a relatively attractive 52.15% 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 increase by 2,475 bags yesterday, to register these stocks at 2,394,003 bags.   There was meanwhile a similar in volume 1,925 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,640 bags.

The commodity markets continue to struggle with the prospects of slower but nevertheless still good growth in China and dismal growth in the Euro zone tending to dampen some spirits, as does the renewed muscle of the U.S. dollar continue to impact upon most of the markets.   The better than expected PMI index figures from China are however positive and might well assist towards a degree of stability, following the recent steady decline of the macro commodity index.  The Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Wheat and Gold markets had a day of buoyancy and particularly the Ebola threat influenced Cocoa Market, while the London robusta Coffee market was close to steady and the Oil, Cotton, Copper, Corn, Soybean, 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 0.25% lower; to see this Index registered at 488.07.   The day starts with the U.S. Dollar near to steady and trading at 1.637 to Sterling and 1.285 to the Euro, while North Sea Oil is steady in early trade and is selling at $ 95.85 per barrel.

The London and New York markets started the day yesterday registering thin and hesitant trade and taking a softer stance which carried through into the afternoon, when the New York market regained some cautious buoyancy and with the lack of volume of producer selling in the market, assisting to bring in a degree of cautious stability.   There was a short bout of selling that did however come into play as the afternoon progressed to take the New York back into negative territory and with the London market losing some more weight, but this was short lived for the more volatile New York market which soon started back on an upside track and with the London market sporting a late in the day partial recovery.  The London market continued to end the day on a modestly softer note and having recovered 75% of the earlier losses of the day, while the New York market ended the day on a positive note and with 75.7% of the gains of the day intact.  This overall steady to positive close is likely to inspire a follow through steady but slow start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
SEP      1930 unch                                                        
NOV     1936 – 4                                                  DEC     179.40 + 1.40
JAN      1951 – 2                                                 MAR     183.55 + 1.35
MAR     1964 – 2                                                 MAY     186.00 + 1.35
MAY     1978 – 2                                                  JUL     187.55 + 1.30
JUL      1990 – 2                                                  SEP     188.20 + 1.35
SEP      1998 – 2                                                 DEC     188.55 + 1.35
NOV     2004 – 2                                                 MAR     189.05 + 1.35
JAN      2010 – 2                                                 MAY     189.45 + 1.25
MAR     1984 – 2                                                  JUL     189.95 + 1.30

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