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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 77.90 usc/Lb., while this equates to a relatively attractive 46.29% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 525 bags yesterday, to register these stocks at 2,474,074 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,140 bags.

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

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

The London and New York markets started the day yesterday with the London market close to steady and the New York market posting some modest losses and with the New York market soon recovering in thin trade and to see both markets taking a steady track into the afternoon’s trade.  This positive stance was however short lived and with the volumes picking up both markets came under negative pressure and fell back into negative territory for the rest of the day’s trade.  The London market continued to end the day on a soft note and with 71% of the losses of the day intact, while the New York market ended the day on a likewise soft note and with 73% of the earlier losses of the day intact.  This close does little to inspire confidence and one might expect little better than a steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1998 – 27
SEP      1993 – 22                                                SEP     168.30 – 4.60
NOV     1988 – 21                                                DEC     172.10 – 4.55
JAN      1985 – 20                                                MAR    175.50 – 4.60
MAR     1990 – 20                                                MAY     177.65 – 4.60
MAY     1997 – 19                                                 JUL     179.50 – 4.50
JUL      2005 – 17                                                 SEP     180.95 – 4.35
SEP      2012 – 15                                                DEC      181.90 – 3.85
NOV     2017 – 15                                                 MAR     182.60 – 3.55
JAN      2008 – 15                                                 MAY     183.00 – 3.40

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 81.50 usc/Lb., while this equates to a relatively attractive 47.14% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 280 bags yesterday, to register these stocks at 2,474,599 bags.   There was meanwhile a larger in volume 3,000 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 9,140 bags.

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

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

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

21st. July, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 12.88% in the week of trade leading up to Tuesday 15th. July;  to register a net long position of 33,323 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.15%, to register a net long on the day of 44,830 Lots.

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

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

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

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

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

The arbitrage between the markets broadened on Friday to register this at 81.64 usc/Lb., while this equates to a relatively attractive 47.35% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,510 bags on Friday, to register these stocks at 2,474,879 bags.   There was meanwhile no change to the modest number of bags pending grading for the exchange; to register these pending grading stocks at 6,140 bags.

The commodity markets had another lacklustre day on Friday, with little in the way of significant directional news coming into play, but with the New York arabica Coffee market tending to be the late in the day star of the day.  The Sugar, Cocoa, New York arabica Coffee, Cotton, and Orange Juice markets had a day of buoyancy and the U.S. Oil, London robusta Coffee and Palladium markets were steady, while the Brent Oil, Natural Gas, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.23% lower; to see this Index registered at 526.86.   The day starts with the U.S. Dollar tending steady and trading at 1.709 to Sterling and 1.353 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 105.20 per barrel.

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

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

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

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 73.18 usc/Lb., while this still equates to a relatively attractive 44.66% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 7,601 bags yesterday, to register these stocks at 2,476,389 bags.   There was meanwhile a smaller in volume 926 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 6,140 bags.

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

The London and New York markets started the day yesterday on a steady note, but with the London market soon losing its way and moving down into negative territory, while the New York market shrugged off some negative pressure during thin trade, to maintain a hesitant steady track.   The London market recovered during the afternoon to join New York on a positive track but once again faltered near to the end of the day’s trade, while the New York market took a sideways stance.  The London market ended the day on a soft note and with 71.4% of the losses of the day intact, while the New York market ended the day on a positive note and with 45% of the earlier gains of the day intact.  This mixed close and with trade thin is unlikely to inspire confidence and one might expect to see much better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2002 – 10                                                JUL      161.70 + 1.35
SEP      1999 – 10                                                SEP     163.85 + 1.35
NOV     1995 – 8                                                  DEC     167.70 + 1.40
JAN      1994 – 7                                                  MAR    171.15 + 1.45
MAR     2000 – 6                                                  MAY    173.30 + 1.45
MAY     2006 – 6                                                  JUL      174.90 + 1.35
JUL      2012 – 6                                                  SEP      176.00 + 1.35
SEP      2017 – 6                                                  DEC     176.90 + 1.30
NOV     2022 – 6                                                  MAR     177.55 + 1.25
JAN      2013 – 6                                                  MAY     178.05 + 1.30

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

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

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 71.37 usc/Lb., while this still equates to a relatively attractive 43.92% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,708 bags yesterday, to register these stocks at 2,483,990 bags.   There was meanwhile a smaller in volume 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,214 bags.

The commodity markets remained generally lacklustre and mixed in trade yesterday, with still little in the way of direction coming from the first half of latest report and forecasts from the U.S. Federal Reserve, which have still to be completed.   The Oil, Natural Gas, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Gold, Platinum and Palladium markets showed some buoyancy, while the Sugar, Cocoa, London robusta Coffee, Cotton, Copper and Silver markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.23% lower; to see this Index registered at 526.91.   The day starts with the U.S. Dollar tending steady and trading at 1.714 to Sterling and 1.352 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.40 per barrel.

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

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

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

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 70.23 usc/Lb., while this still equates to a relatively attractive 43.37% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,245 bags yesterday, to register these stocks at 2,485,698 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,574 bags.

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

The London and New York markets started the day yesterday on a near to steady note, but with both markets very quickly moving into negative territory, which set the track for the afternoons trade.  The New York market that was also influenced by the negative nature of the macro commodity index increased its losses in mid-afternoon trade, but did manage to bounce off its lows, while the London market made a full recovery.  The London market ended the day on a steady note, while the New York market ended the day on a soft note, but having recovered 52.9% of the earlier losses of the day by the close.    This close provides little in the way of direction, but with perhaps the partial recovery in New York due to inspire some degree of confidence and along with a lack of producer selling activity likely to set the markets for a cautiously steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2025 – 1                                                  JUL      159.40 – 2.90
SEP      2022 – 1                                                 SEP      161.95 – 2.40
NOV     2013 – 1                                                 DEC      165.70 – 2.40
JAN      2008 – 3                                                 MAR     169.10 – 2.40
MAR     2014 – 3                                                 MAY     171.20 – 2.45
MAY     2021 – 3                                                  JUL      172.80 – 2.35
JUL      2028 – 3                                                  SEP      173.70 – 2.25
SEP      2035 – 3                                                  DEC     174.75 – 2.10
NOV     2040 – 3                                                  MAR     175.55 – 2.00
JAN      2031 – 3                                                  MAY     176.10 – 2.15

15th. July, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of the market increase their net long position within this market by 13.43% in the week of trade leading up to Tuesday 8th. July;  to register a net long position of 30,225 Lots on the day.  This net long which is the equivalent of 5,037,500 bags might well have been marginally reduced over the following days of mixed but overall softer trade, which has since followed.

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 72.59 usc/Lb., while this still equates to a relatively attractive 44.17% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 375 bags yesterday, to register these stocks at 2,486,943 bags.   There was meanwhile a very modest in volume 280 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,574 bags.

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

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

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

14th. July, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 1.8% in the week of trade leading up to Tuesday 8th. July;  to register a net long position of 37,061 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 0.59%, to register a net long on the day of 44,896 Lots.

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

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

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

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

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

The arbitrage between the markets narrowed on Friday to register this at 70.82 usc/Lb., while this still equates to a relatively attractive 43.88% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,004 bags on Friday, to register these stocks at 2,487,318 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,854 bags.

The commodity markets were again mixed in trade on Friday, but with many markets experiencing thin trade and within and overall softer direction for the macro commodity index.   The Natural Gas, Cocoa, Copper and Palladium markets were steady for the day, while the Oil, Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.74% lower; to see this Index registered at 530.00.   The day starts with the U.S. Dollar tending marginally softer and trading at 1.712 to Sterling and 1.363 to the Euro, while Brent Crude is close to steady in early trade and is selling at $ 105.25 per barrel.

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

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

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 71.87 usc/Lb., while this still equates to a relatively attractive 44.09% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 275 bags yesterday, to register these stocks at 2,488,322 bags.   There was meanwhile a larger in volume 1,980 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,854 bags.

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

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

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

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

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

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 79.64 usc/Lb., while this still equates to a very attractive 46.06% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,186 bags yesterday, to register these stocks at 2,488,597 bags.   There was meanwhile a smaller in volume 2,204 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 2,874 bags.

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

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

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

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

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 79.37 usc/Lb., while this still equates to a very attractive 45.89% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decline by 800 bags yesterday, to register these stocks at 2,485,411 bags.   There was meanwhile a similar in volume 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 5,078 bags.

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

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

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

8th. July, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 2.37% in the week of trade leading up to Tuesday 1st. July; to register a net long position of 38,760 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 0.94%, to register a net long on the day of 44,632 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 5.75%, to register a net long of 26,042 lots on the day.   This net long position that is the equivalent of 7,382,792 bags has most likely been marginally reduced over the period mixed but overall slightly softer trade which has since followed and likewise, the net long position of the Managed Money Funds.

The latest Commitment of Traders report from the London robusta coffee market has seen the Non Commercial Speculative sector of this market increase its net long position within the market by 11.82% in the week of trade leading up to Tuesday 1st. July; to register a net long of 26,647 Lots.   This net long which is the equivalent of 4,441,167 bags has most likely been marginally increased over the period of modestly positive trade, which has since followed.

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

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

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

The arbitrage between the markets broadened yesterday to register this at 78.66 usc/Lb., while this still equates to a very attractive 45.97% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decline by 7,096 bags yesterday, to register these stocks at 2,486,211 bags.   There was meanwhile a smaller in volume 3,813 bags decline to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,438 bags.

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

The London and New York markets started the day showing hesitant buoyancy in thin trade, but soon tending softer yesterday.    The London market did however recover from its modest losses, while the New York market maintained a track which was accentuated with the news on the dollar and the negative influences of the macro commodity index and followed by a reversal in fortunes for the London market, which drifted back into negative territory.   The London market continued to end the day on a soft note and with 75% of the losses of the day intact, but the New York market once again showed some muscle and while ending the day on a softer note, had recovered an impressive 87.7% of the earlier losses of the day by the close.   This rather late in the day partial recovery for the New York market might settle some nerves and with producer price fixation selling volumes low, one might expect to see a relatively steady start for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      2038 – 15                                                JUL      169.00 – 0.40
SEP      2038 – 18                                                SEP     171.10 – 0.70
NOV     2023 – 17                                                DEC     174.75 – 0.70
JAN      2014 – 20                                                MAR    178.05 – 0.65
MAR     2011 – 20                                                MAY     180.00 – 0.50
MAY     2015 – 22                                                 JUL     181.35 – 0.35
JUL      2021 – 23                                                 SEP     181.75 – 0.25
SEP      2027 – 26                                                 DEC    182.00 – 0.15
NOV     2035 – 27                                                 MAR    182.05 – 0.15
JAN      2039 – 27                                                 MAY    181.85 – 0.15

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

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

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

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

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

The arbitrage between the markets broadened on Friday to register this at 78.54 usc/Lb., while this still equates to a very attractive 45.72 price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged on Friday with the closure of the market due to the Independence Day holiday and long weekend, to register these stocks at 2,493,307 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

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

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

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

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 78.00 usc/Lb., while this still equates to a very attractive 45.4% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,345 bags yesterday, to register these stocks at 2,493,307 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

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

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

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

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

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

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

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

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

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

The arbitrage between the markets broadened yesterday to register this at 80.45 usc/Lb., while this still equates to a very attractive 46.42% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 320 bags yesterday, to register these stocks at 2,497,652 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

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

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

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

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 79.51 usc/Lb., while this still equates to a very attractive 46.15% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative firm arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 170 bags yesterday, to register these stocks at 2,497,972 bags.   There was meanwhile a larger in volume 3,923 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,251 bags.

The commodity markets were mixed in trade yesterday, but with most markets somewhat lacklustre in their trading activity in line with the holiday season that is now coming into play.   The Orange Juice, Gold, Silver, Platinum and Palladium markets were firmer in line with a soft U.S. dollar and the London robusta Coffee market was steady, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Soybean markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% higher; to see this Index registered at 546.58.   The day starts with the U.S. Dollar steady and trading at 1.715 to Sterling and 1.367 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 110.85 per barrel.

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

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

1st July, 2014. 

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

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

The arbitrage between the markets widened yesterday to register at 83.66 USc/Lb., this equates to an attractive 47.78% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices. 

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

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

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

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

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

30th June, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 0.97% in the week of trade leading up to Tuesday 24th June; to register a net long position of 39,702 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 1.05%, to register a net long on the day of 45,058 Lots.

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

The arbitrage between the markets narrowed on Friday to register at 80.29 USc/Lb., this equates to an attractive 46.53% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 14,125 bags on Friday to register these stocks at 2,508,201 bags. The pending grading stocks posted an increase of 604 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,016 bags on the day.

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

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

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

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

27th June, 2014.

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

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

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

The arbitrage between the markets narrowed yesterday to register at 88.90 USc/Lb., this equates to a very attractive 49.16% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.  

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

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

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

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

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

26th June, 2014.

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

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

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

The arbitrage between the markets widened yesterday to register at 90.60 usc/Lb., this equates to a very attractive 49.77% price discount for the London robusta coffee market. This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

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

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

25th June, 2014.

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

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

The arbitrage between the markets narrowed marginally yesterday to register at 86.80 usc/Lb., this equates to a very attractive 49.25% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

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

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

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

24th June, 2014.

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

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

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

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

The arbitrage between the markets widened yesterday to register at 87.50 usc/Lb., while this equates to a very attractive 49.32% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

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

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

23rd June, 2014.

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 2.06% in the week of trade leading up to Tuesday 17th June;  to register a net long position of 39,320 Lots on the day.  Over the same period the longer term in nature and steadier Index Fund sector of this market increased their net long position within the market by 1.64%, to register a net long on the day of 44,587 Lots.

 

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

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

The arbitrage between the markets widened yesterday to register this at 84.74 usc/Lb., while this equates to a very attractive 48.28% price discount for the London robusta coffee market.  This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

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

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

20th. June, 2014.

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

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

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 79.92 usc/Lb., while this still equates to a very attractive 47.26% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

The coffee markets opened the day yesterday with the London market tending softer and the New York market showing modest buoyancy, but with the London market soon recovering into positive territory, while the New York market turned south and moved into a negative track.  As the afternoon progressed the London market one again came under pressure and moved back into negative territory, while the New York market bounced off its lows and recovered some of its losses.  The London market continued to end the day on a soft note and with 72.7% of the losses of the day intact, while the New York market ended the day marginally softer but with only 22.7% of the earlier losses of the day intact.   It was however nevertheless and overall softer close and one that is unlikely to inspire little better than a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1959 – 15                                                JUL      167.00 + 0.25
SEP      1966 – 16                                               SEP      169.10 – 0.75
NOV     1972 – 19                                               DEC      172.60 – 0.80
JAN      1977 – 20                                               MAR     175.80 – 0.85
MAR     1986 – 20                                               MAY     177.65 – 0.95
MAY     1995 – 20                                                JUL      178.60 – 0.95
JUL      2006 – 19                                                SEP      178.65 – 0.85
SEP      2017 – 19                                               DEC      178.55 – 0.85
NOV     2028 – 19                                               MAR      178.30 – 0.90
JAN      2032 – 19                                               MAY      177.95 – 0.85

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

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

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

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

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

The arbitrage between the markets narrowed yesterday to register this at 79.95 usc/Lb., while this still equates to a very attractive 47.07% price discount for the London robusta coffee market.   This arbitrage is continuing to inspire consumer market roaster interest in robusta coffees, which assist to take some of the bite out of the comparative arabica coffee prices.   

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

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

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

The coffee markets opened the day yesterday with both markets hesitantly steady and indicating some degree of buoyancy, but with both markets soon starting to lose their way into early afternoon trade and taking a negative track.    The options expiry did however have a marked effect upon the fortunes for the London market that experienced a sharp recovery and moved back into positive territory, while the New York market continued to flounder and remain in negative territory.   The London market continued to maintain its positive stance and end the day on a positive note and with 60% of the gains of the day intact, while the New York market ended the day on a soft note and with 68.9% of the earlier losses of the day intact.    This rather mixed close provides little indication for trade today but perhaps with a weaker U.S. dollar it might assist to inspire a steady start for the London market and perhaps some modest positive correction for the New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1974 + 18                                               JUL      166.75 – 2.30
SEP      1982 + 12                                               SEP     169.85 – 2.10
NOV     1991 + 10                                                DEC    173.40 – 2.10
JAN      1997 + 9                                                 MAR    176.65 – 2.05
MAR     2006 + 8                                                 MAY    178.80 – 1.95
MAY     2015 + 7                                                  JUL    179.55 – 1.95
JUL      2025 + 7                                                  SEP    179.50 – 1.95
SEP      2036 + 7                                                 DEC    179.40 – 1.90
NOV     2047 + 7                                                  MAR   179.20 – 1.80
JAN      2051 + 7                                                  MAY   178.80 – 1.90

18th. June, 2014.
The National Coffee Institute of Costa Rica and contrary to the earlier forecast by the U.S. Department of Agriculture that foresees the next October 2014 to March 2014 crop to dip to 1,428,883 bags, has forecasted that this next crop shall in fact rise by 7.25% to total 1.6 million bags.   This more positive forecast related to fair weather conditions so far for the development of the cherries for this new crop, along with the improved inputs and controls for Roya or Leaf rust that have come with the improved prices and profitability of their coffee sales this year.

Underpinning this positive report from the National Coffee Institute in Costa Rica is a forecast on the part of Starbucks who are very active within the Mexican and Central American region as not only buyers, but with various farm assistance programs, who have forecasted that overall production from Mexico and Central America for the next 2014.2015 crop shall conservatively rise by at least 10% over the past crop.   This with the combined past crop estimated by many to have been approximately 15.8 million, would indicate a new regional combined crop of approximately 17.4 million bags.  

Added to this potential 1.6 million bags increase in fine washed arabica coffee supply from Mexico and Central America for the forthcoming October 2014 to September 2015 coffee year, shall be the steadily improving production from Colombia, who with many new plantings now coming into full production might well see production increase to in excess of 12 million bags for the next coffee year.   Thus it would seem but it is early days still and there might still be some unforeseen weather problems that can occur, that with the additional modest increases in fine washed arabica coffees from Peru, that there shall be an approximate 2.5 to 3 million bags increase in fine washed arabica coffees from the Latin American countries for the coming coffee year.

This factor is potentially negative for speculative sentiment within the New York market for the last quarter of this year, should these improved figures be accompanied by good spring and summer rains in Brazil and with the corresponding forecasts for a reasonable new 2015 Brazil crop.   But it is of course early days and one still needs to live through the Brazil frost season and to see what the new rain season shall bring to the table and one might think that even though there is a medium to longer term bearish perspective developing for the market, it is unlikely to see strong fund and speculative liquidation for the New York market on the short term.  Albeit that there already is some degree of such liquidation in play and is being reflected in the prevailing softer prices.

The Karnataka Planters association in India have forecasted that the relatively modest monsoon rains that have been experienced so far during the prevailing monsoon season might impact negatively upon the prospects for the next crop, but it is early days still and there have nevertheless been fair rains.   While one might suggest that with the weakening of the reference prices of the international coffee prices over the past month, that this forecast is perhaps somewhat market manipulative in nature.

Meanwhile the softening of the reference prices of the London robusta coffee market is causing some degree of internal market price resistance within Vietnam, where farmers and internal traders are looking to liquidate their remaining past crop stocks ahead of the new and potentially bumper harvest that shall start in only four months’ time.   This is resulting in firming differentials being demanded by exporters and some slowing in sales, but one might also relate the prevailing lacklustre export sales to the slower summer roasting season within the main consumer markets, which impacts upon demand.

Tomorrow is the Corpus Christi holiday for Brazil and some other Latin American countries, as it is for some of the countries in Western Europe, which is likely to slow physical trade and with many taking Friday off to bridge the holiday into a long weekend, for the last couple of days of this week.   This would seemingly indicate some pre-weekend coverage to impact upon trade today and thereafter, a lacklustre couple of days to follow.

The arbitrage between the markets narrowed yesterday to register this at 82.59 usc/Lb., while this still equates to a very attractive 48.03% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,565 bags yesterday, to register these stocks at 2,527,107 bags.   There was meanwhile a similar in volume 2,652 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,994 bags.

The commodity markets were relatively flat yesterday and with the steady nature of the U.S. dollar assisting to dampen some spirits, while the fundamental of the problems in Iraq continued to buoy the oil markets, albeit that rising U.S. supply is capping this market.  The Brent Oil, Cocoa, Copper, Orange Juice, Silver, Platinum and Palladium markets experienced buoyancy, while the U.S. Oil, Sugar, Coffee, Cotton, 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 0.18% lower; to see this Index registered at 549.57.   The day starts with the U.S. Dollar steady and trading at 1.697 to Sterling and 1.354 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 113.85 per barrel.

The coffee markets opened the day yesterday with both markets hesitantly near to steady, but soon starting to lose their way and taking a negative track into the afternoon’s trade.   This negative stance continued for the rest of the day and with the New York market attracting high volumes of front month switch trading and some producer price fixation selling activity, to take the lead in the overall softer stance.  The London market continued to end the day on a softer note and with 76.3% of the losses of the day intact, while the New York market ended the day on a likewise softer stance and with 62.1% of the earlier in the day losses intact.   This overall soft close albeit that the markets managed to bounce a bit off their lows does little inspire confidence and one might expect to see at best a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1956 – 27                                                JUL      169.05 – 3.90
SEP      1970 – 29                                               SEP      171.95 – 3.85
NOV     1981 – 27                                                DEC     175.50 – 3.75
JAN      1988 – 27                                               MAR     178.70 – 3.70
MAR     1998 – 26                                               MAY     180.55 – 3.70
MAY     2008 – 26                                                JUL      181.50 – 3.55
JUL      2018 – 26                                                SEP      181.45 – 3.60
SEP      2029 – 26                                                DEC     181.30 – 3.55
NOV     2040 – 27                                                MAR     181.00 – 3.60
JAN      2044 – 27                                                MAY     180.70 – 3.65

17th. June, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 2.83% in the week of trade leading up to Tuesday 10th. June;  to register a net long position of 22,081 Lots on the day.  This speculative net long position within the London market which is the equivalent of 3,680,167 bags has most likely been marginally increased, over the following days of more positive trade.

The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 159,144 bags or 3.04% during the month of May to register these stocks at the end of the month at 5,396,742 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per month, equate to approximately 11.2 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 May stocks would have safely exceeded 13 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

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

The Uganda Coffee Development Authority have reported that the country’s exports for the month of May were 107,115 bags or 27.2% lower than the same month last year, at a total of 286,668 bags.    While these exports were in terms of value 12.3 million U.S. dollars or 25.52% lower than the same month last year, at a total of 35.9 million U.S. dollars.

This dip in exports for the month of May in Uganda does not however detract from the fact that the country’s exports that are dominated by the robusta coffees that account for approximately 75% of the crop, are still 7.3% higher for the first eight months of the present October 2013 to September 2014 coffee year.  Thus the country remains on track for exports for this coffee year of close to 3.3 million bags, which shall maintain its lead position as the largest coffee exporter in Africa.

The arbitrage between the markets narrowed yesterday to register this at 85.13 usc/Lb., while this still equates to a very attractive 48.42% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,312 bags yesterday, to register these stocks at 2,529,672 bags.   There was meanwhile a much higher in volume 13,064 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 17,646 bags.

The commodity markets were mixed but more settled yesterday, with trade seemingly heading into the slower and lacklustre summer holiday mood.  The Brent Oil, Sugar, Cocoa, Copper, Gold and Silver markets showed buoyancy and the London robusta Coffee market was steady, while the U.S. Oil, Natural Gas, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybeans, Platinum and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.29% lower; to see this Index registered at 550.55.   The day starts with the U.S. Dollar steady and trading at 1.697 to Sterling and 1.356 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 113.10 per barrel.

The coffee markets opened the day yesterday with the London market tending easier, but with the New York market taking a steady stance.   The London market did however soon recover and both markets entered the afternoon’s trade on a positive track and with the New York market attracting follow through support to trigger a modest rally, while the London market added more modest weight.  This positive stance was not however sustained and later in the day the New York market once again came under pressure to shed its earlier gains and likewise the London market, which had been trading within a narrower range.   The London market continued to end the day on a hesitantly steady note, while the New York market ended the day taking a modestly softer stance but with only 40.6% of the earlier losses of the day intact.    This is an uncertain close but with the markets having failed to hold on to their positive stance taken earlier in the day’s trade yesterday, one might expect to see little better than a steady to perhaps steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1983 unch                                              JUL      172.95 – 0.75
SEP      1999 – 1                                                 SEP      175.80 – 0.65
NOV     2008 – 1                                                 DEC      179.25 – 0.70
JAN      2015 – 3                                                 MAR     182.40 – 0.65
MAR     2024 – 4                                                 MAY     184.25 – 0.60
MAY     2034 – 4                                                  JUL      185.05 – 0.50
JUL      2044 – 4                                                  SEP      185.05 – 0.40
SEP      2055 – 3                                                  DEC     184.85 – 0.50
NOV     2067 – 3                                                  MAR     184.60 – 0.35
JAN      2071 – 3                                                  MAY     184.35 – 0.35

16th. June, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 0.16% in the week of trade leading up to Tuesday 10th. June;  to register a net long position of 40,149 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 1.84%, to register a net long on the day of 43,865 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 0.2%, to register a net long position of 26,246 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,440,625 bags has most likely been modestly increased over the following days of mixed but overall positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The markets were devoid of striking news to end off last week and with focus on Brazil news that was more related to soccer than to coffee, while the full mood weekend has passed without any talk of frosts for the coffee districts.  This frost season that has in reality not experienced any significant damage for twenty year, running from the middle of June and through to the middle of August and with July being the most vulnerable of the months, as are the full moons more conducive to clear skies and cold nights.

Thus some focus to be put upon the days preceding and following Saturday 12th. July and again, Sunday 10th. August.    By which time attention shall change to the prospects for the end September to December spring and early summer rains in Brazil, which shall provide some indication along with the resulting flowerings, of the prospects for the next 2015 Brazil crop that is in reality, the more important factor than the apparently modest deficit crop that is due this year.    

The kick back in fortunes for the reference prices of the London market has assisted to fuel some degree of increase in robusta coffee selling activity out of Vietnam by the end of last week, which was accompanied by renewed offers coming forth for new crop Indonesian robusta coffees.  However with the latest indications of a smaller crop for Indonesia this year the exporters are being obliged to cautiously demand relatively firm differentials for the Indonesian coffees, which is resulting in lacklustre interest from the consumer industry buyers and therefore, thin trade being experienced.

Meanwhile and contrary to the earlier forecast that Vietnam shall be due another bumper new crop and with an approximate 96 to 4 ratio of robusta and arabica coffees of 29.2 million bags to start being harvested in October, there has been a Bloomberg survey over 12 traders that has resulted in a slightly more modest average forecast for a new crop of 27.33 million bags.   This is nevertheless a good figure and would indicate sufficient robusta coffee for the coming October 2014 to September 2015 coffee year, albeit that the official Vietnam Coffee and Cocoa authorities are as is normally the case at this time of the year, talking and without specific data of weather issues that shall result in an even lower new crop.      

The arbitrage between the markets broadened on Friday to register this at 85.82 usc/Lb., while this still equates to a very attractive 48.64% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,835 bags on Friday, to register these stocks at 2,533,984 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,582 bags.

The commodity markets were selectively buoyed on Friday by the concerns over rising Middle East tension, which has come with the problems in Iraq and with some markets further buoyed by a softening of the U.S. dollar.  The Oil, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Cotton, 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 0.57% higher; to see this Index registered at 552.14.   The day starts with the U.S. Dollar steady and trading at 1.697 to Sterling and 1.353 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 112.40 per barrel.

The coffee markets opened the day on Friday with both markets steady to buoyant, but while the New York market maintained its buoyancy, the London market came under some early negative pressure.  This pressure was however short lived in London and with the New York market building upon its gains into afternoon trade the London market recovered and moved back into positive territory and with both markets registering good volumes.    The markets did however lose some of their steam as the day progressed and with both markets shedding some of their gains and particularly so for the New York market that suffered from a sharp reversal, but nevertheless with both markets ending the week on a positive note.  The London market continued to end the day on a positive note and with 51% of the earlier gains of the day intact, while the New York market likewise ended the day on a modestly positive note, but with only 22.7% of the earlier in the day’s gains intact.  The rather sharp reversal in fortunes for the New York market does seem to have dampened some spirits, to see the London market opening the day on a softer note and with the New York market near to steady against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1983 + 26                                               JUL      173.70 + 1.75
SEP      1998 + 26                                              SEP      176.45 + 1.75
NOV     2009 + 26                                              DEC      179.95 + 1.85
JAN      2018 + 26                                              MAR     183.05 + 1.90
MAR     2028 + 27                                              MAY     184.85 + 2.20
MAY     2038 + 27                                               JUL      185.55 + 2.35
JUL      2048 + 27                                               SEP      185.45 + 2.25
SEP      2058 + 29                                              DEC      185.35 + 2.30
NOV     2070 + 33                                               MAR     184.95 + 2.05
JAN      2074 + 43                                               MAY     184.70 + 1.90

13th. June, 2014.
The market is completely focused upon Brazil for the present and understandably so with little striking news in terms of weather and crops happening elsewhere, with the latest new crop forecast coming from Safras e Mercado, who have forecasted the new crop at 48.9 million bags.  This report has however pegged the well in advanced in terms of harvest new Conilon robusta crop at only 15.5 million bags and if one is to take into account the generally reported figures for this sector of the crop that are close to 1.5 million bags higher, it would already inflate this forecast to over 50 million bags.

Perhaps the more important figure to consider with the forecasts for the new arabica coffee crop that is yet to reach peak harvest is the size of the carryover arabica coffee stocks into this new crop, which is largely seen to be around 33.5 million bags.   These carryover stocks being estimated by various internal market players and international trade houses to be from as low as 7 million bags to as high as 15 million bags, but with most market players estimating these to be at least 10 million bags.   The bottom line is that with Brazil domestic consumption now seen to be below 21 million bags and export demand approximately 33 million bags, the overall demand is seen to be at most 54 million bags and so far the majority of new crop forecasts combined with carryover stocks indicates a surplus supply of Brazil coffees through to the next 2015 crop.

This said the markets are tending to run out of steam as the longs have been bought and the funds are now sitting and awaiting further news on the outturns of the new Brazil crop, which is causing a degree of exhaustion within the speculative sector of the coffee markets, but with consumer roasters having adjusted prices in line with the rise in the reference prices of the international markets this year, there is less restraint in terms of industry buying activity.  This would tend to be somewhat supportive and in this respect, would perhaps indicate that the markets are starting to settle in to a new trading range and one that is still modestly positive in terms of producer profitability but no longer a price level that would suggest that producers are making fantastic profits from their coffee crops.

Noticeable in their absence from the coffee news are the Mexicans and Central Americans and their reports on Roya or Leaf Rust, which had been very much the headline news last year and one might presume that with the combination of a number of state supported programs and the improved profits from the new crop sales, that the farmers in these countries are starting to get on top of the problem.   One that is controllable with the application of good fungicides and good field hygiene, albeit that despite all of these inputs there will always be some percentage of loss.

Nevertheless the early new crop forecasts for this Mexican and Central American producer bloc are talking in terms of an overall 1.5 million bags recovery for their combined fine washed arabica coffee crops for their new harvest that starts in the lower districts in October and starts to peak over December and January, which shall join what is potentially rising coffee supply from Colombia and Peru, to provide an approximate 2 million to perhaps even 2.5 million increase in Latin American washed arabica coffee supply for the forthcoming October 2014 to September 2015 coffee year.   This potentially improving supply factor is likely to contribute to longer term lacklustre speculative support for the New York market, which is mostly focused upon Latin American arabica coffee supply.

The arbitrage between the markets broadened yesterday to register this at 85.25 usc/Lb., while this still equates to a very attractive 48.80% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 750 bags yesterday, to register these stocks at 2,536,819 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,582 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 149,500 bags or 17.67% over the two weeks of trade leading up to Monday 9th. June, to register these stocks at 995,500 bags.  

The commodity markets remained generally lacklustre in trade yesterday; with the exception of the Oil markets that are reacting positively to the very dramatic developments with Iraq that are violent enough to even supersede the news from the start of the soccer world cup.    The Oil, Natural Gas, Coffee, Cotton, Corn, Gold and Silver markets had a day of buoyancy, while the Sugar, Cocoa, Copper, Orange Juice, Wheat 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 0.53% higher; to see this Index registered at 549.00.   The day starts with the U.S. Dollar tending softer and trading at 1.696 to Sterling and 1.357 to the Euro, while Brent Crude is showing some degree of follow through buoyancy in early trade and is selling at $ 113.60 per barrel.

The coffee markets opened the day yesterday with the London market steady and the New York market coming under some early negative pressure and with the London market losing its way and both markets coming under pressure in early afternoon trade.   The markets did however recover and move back into positive territory as the afternoon progressed and with volumes inflated by prompt month switch trading ahead of next week’s first notice day for the July contract in New York, the markets took on a steady stance for the rest of the day.   The London market continued to end the day on a positive note and with 70.6% of the gains of the day intact, while the New York market ended the day on a less convincing note with only 25% of the earlier gains of the day intact.  This nevertheless overall positive close and with a weaker U.S. dollar in play is likely to inspire a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1957 + 13                                               JUL      171.95 + 0.35
SEP      1972 + 12                                              SEP      174.70 + 0.40
NOV     1983 + 12                                              DEC      178.10 + 0.40
JAN      1992 + 12                                              MAR     181.15 + 0.45
MAR     2001 + 11                                              MAY     182.65 + 0.40
MAY     2011 + 12                                               JUL     183.20 + 0.40
JUL      2021 + 13                                              SEP      183.20 + 0.60
SEP      2029 + 13                                              DEC     183.05 + 0.70
NOV     2037 + 13                                              MAR     182.90 + 0.80
JAN      2031 + 13                                              MAY     182.00 + 1.05

12th. June, 2014.
A Reuters’ survey over six Indonesian related coffee dealers and analysts has concluded that contrary to some of the more positive forecasts that have been talking of Indonesia maintaining production in excess of 10 million bags, that the countries April 2014 to March 2015 coffee harvest has suffered from erratic weather conditions last year, which shall see production over these twelve months dip to 8.9 million bags.    Against this the survey has concluded that Indonesia with its growing domestic coffee market shall increase over the period to approximately 4.2 million bags, which shall reduce export potential to a relatively modest 4.7 million bags.  

One might however have to be cautious about such reports as while there is no doubt that Indonesia has a growing domestic coffee market that is not only related to the drinking of coffee but also to coffee flavoured sweets and confectionary, the country does also allow for the import of cheaper robusta coffees to fuel their price sensitive consumer market.  Therefore the dip in production might not necessarily impact as severely upon coffee exports from Indonesia but it does of course by importing cheaper coffees, still impact upon global coffee supply.

This Indonesian report is in terms of the possibility of the decline in mostly robusta coffee supply from the country remains overshadowed by the larger new crop of mostly robusta coffees that is being forecasted for Vietnam, with this crop due to start being harvested in four months’ time.   Thus it really remains all about Brazil and with the more reliable forecasts for their new crop ranging between 48 million and 52 million bags, but with really no certainty until the grading outturn results from this new crop are clarified as until then, there is a lot of guess work in play.   Even though the size of this new crop shall really not have an impact upon global coffee supply through to July 2015, as the carryover stocks in Brazil from the past 2013 crop are sufficient to maintain continuity of supply.   But the continued speculation over the prospects for this present 2014 crop continue to bring volatility to the speculative and fund sector of the market and more so the New York market, which encountered a positive reaction yesterday, following the recent days of modest speculative liquidation.

The question really is now, what shall be the prospects for the next 2015 crop that shall with Brazil stocks due to diminish over the next twelve months, shall need to be at least 52 million bags, it the country is to safely maintain its market share within the consumer markets.   This shall remain a big question in terms of forecasts for this new crop until the end of the year as firstly Brazil has to once again pass safely through the frost season that can potentially damage the prospects of this next crop and then, be in receipt to normal spring and summer rains to support the flowering and early development of this next 2015 crop.   

Frost is unlikely for the coffee districts in Brazil but clear nights during the full moon week is always foreseen to be the most likely time for frosts and while most of the world look to the opening of the soccer world cup today, there are some who might be keeping an eye upon these days prior and post tomorrows full moon.   This week’s Friday 13th. Full moon shall be followed by the full moon that is due in the traditionally more threatening mid-winter month, on Saturday 12th. July.   With any concerns over the frost season due to wane in terms of speculative focus by the end of July, even though it shall remain a very unlikely risk through to mid-August.  

The arbitrage between the markets broadened yesterday to register this at 83.42 usc/Lb., while this still equates to a very attractive 48.61% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,838 bags yesterday, to register these stocks at 2,537,569 bags.   There was meanwhile a smaller in volume 818 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 4,582 bags.

The commodity markets remained generally lacklustre in trade yesterday, with most markets remaining within a narrow trading range.   There was however some excitement with the recovery for the Coffee markets and likewise with the dip in the Wheat market that is encountering forecasts for good crops due this year from most leading producers and including, a much larger Ukraine crop.    The Brent Oil, Cocoa, Coffee, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the U.S. Oil, Natural Gas, Sugar, Cotton, 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 0.11% lower; to see this Index registered at 546.08.   The day starts with the U.S. Dollar close to steady and trading at 1.680 to Sterling and 1.353 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 110.10 per barrel.

The coffee markets opened the day yesterday with the London market steady and the New York market showing some modest buoyancy and within and environment of thin and lacklustre trade, but as the day progressed and into the afternoon the lack of follow through downside movement within the markets buoyed speculative spirits and the combination of speculative support and consumer roaster price fixation buying assisted both market to take a steady upside track.   This continued for the rest of the day and with good volumes for the New York market being further assisted by moves on the part of the funds and traders, who are starting to switch from the July to September contracts ahead of the July contract first notice day on the Friday next week.    The London market continued to end the day on a very positive note and with 98.6% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 75.8% of the earlier gains of the day intact.  This overall positive close for the markets might well assist for a follow through steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1944 + 69                                               JUL      171.60 + 5.95
SEP      1960 + 66                                              SEP      174.30 + 6.00
NOV     1971 + 65                                              DEC      177.70 + 5.90
JAN      1980 + 65                                              MAR     180.70 + 5.85
MAR     1990 + 65                                              MAY     182.25 + 5.80
MAY     1999 + 66                                               JUL      182.80 + 5.85
JUL      2008 + 66                                               SEP      182.60 + 5.95
SEP      2016 + 66                                              DEC      182.35 + 6.05
NOV     2024 + 66                                              MAR      182.10 + 6.15
JAN      2018 + 64                                              MAY      181.75 + 6.80

11th. June, 2014.
The reports coming in from the early arabica coffee harvest in the early in the year semi drought affected main central coffee districts are indicating that outturn yields of green coffee are approximately 19% lower than normal, with higher percentages of smaller beans and defect beans coming out of the dried cherries.   This is of course reflective of approximately 60% of the overall Brazil coffee crop in terms of the importance of these effected districts and taking into account that within these districts, there are some farms that had supplementary irrigation to counter the negative effects of the dry conditions in January and February.   

Thus if one is to go with these early reports, one would foresee and overall negative effect to the new Brazil crop of approximately 11.4% and if applied to the original forecasts for a new crop of approximately 58 million bags, it would indicate a new crop of in excess of 51 million bags.  This is a figure that has already been voiced by some internal and international trade houses and therefore, one might consider it not unrealistic, albeit that it is early days and one might still be guessing the potential outturns that are due from the still to be harvested coffee cherries.

One might however comment that the official Brazil forecast for the new crop at 44.6 million bags or 44.56 million bags to be more precise and made up from 32.23 million bags of arabica coffees and 12.33 million bags of conilon robusta coffees is already very evidently questionable.   In this respect one might highlight the Conilon robusta share of this forecast and with these coffees far ahead of the arabica coffees in terms of this year’s harvest, which most Brazil industry reports have pegged at in excess of 17 million bags and around 17.3 million bags.  This would already add close to 5 million bags to the official overall coffee harvest forecast and already inflating this to over 49.5 million bags, which is the figure that has been voiced by the well-respected United States Department of Agriculture.  This aside from the fact that the official forecasts are traditionally conservative and therefore, one might think to add a little to their arabica coffee figure and by doing so, look to further indication of reality of a new crop that is in excess of 51 million bags.

These early indications of a less than originally thought damage to the new crop potential in Brazil has of course dented international coffee market sentiment and caused the past few weeks of speculative liquidation and decline for both the New York and London markets, which is becoming a concern for producers.   While with the declines there is the resulting price resistance being experienced within many countries and is especially evident within Vietnam, where the farmers and internal traders are holding back for higher prices relative to the reference prices of the London market and have significantly slowed exporter selling aggression over the past week.

However with still good past crop stocks in hand and the prospects for a large new crop that is forecasted at 29 million bags due to start being harvested in four months’ time, one would think that this internal market price resistance in Vietnam shall be short lived and that there remains no threat to medium to longer term consumer market robusta coffee supply.    These robusta coffees nevertheless in good demand, as they dominate the steadily growing new market coffee consumption, while being a relative price discounted attractive buy within the price sensitive brands within the traditional high volume consumer markets.

The arbitrage between the markets broadened yesterday to register this at 80.60 usc/Lb., while this still equates to a very attractive 48.66% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 762 bags yesterday, to register these stocks at 2,540,407 bags.   There was meanwhile a larger in volume 2,921 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 5,400 bags.

The commodity markets were generally lacklustre in trade yesterday, with most markets remaining within a narrow trading range.   The Cocoa, New York arabica Coffee, Copper, Orange Juice, Soybean, Gold, Silver and Platinum markets showed some buoyancy, while the Natural Gas, Sugar, London robusta Coffee, Cotton, Wheat, Corn and Palladium markets tended easier for the day. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.03% lower; to see this Index registered at 546.71.   The day starts with the U.S. Dollar close to showing modest buoyancy and trading at 1.676 to Sterling and 1.354 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.35 per barrel.

The coffee markets opened the day yesterday with the London market tending softer, while the New York market and following the previous days sell off, attracted some corrective support and showed buoyancy.   This remained very much the track for both markets for the rest of the day and with reasonable volumes for the afternoon’s trade, but with the markets remaining within a narrow trading range.   The London market continued to end the day modestly softer and with 53.3% of the losses of the day intact, while the New York market ended the day on a modestly positive note but with only 12% of the earlier gains of the day intact.  This rather unconvincing overall steady close is not expected to generate any real excitement for the markets 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.
                                                  
JUL      1875 – 8                                                 JUL      165.65 + 0.30
SEP      1894 – 5                                                SEP      168.30 + 0.35
NOV     1906 – 6                                                DEC      171.80 + 0.35
JAN      1915 – 6                                                MAR     174.85 + 0.40
MAR     1925 – 6                                                MAY     176.45 + 0.35
MAY     1933 – 8                                                 JUL     176.95 + 0.25
JUL      1942 – 8                                                 SEP     176.65 + 0.30
SEP      1950 – 8                                                DEC     176.30 + 0.45
NOV     1958 – 8                                                MAR     175.95 + 0.60
JAN      1954 – 9                                                MAY     174.95 + 0.60

10th. June, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 14.91% in the week of trade leading up to Tuesday 3rd. June;  to register a net long position of 21,474 Lots on the day.  This speculative net long position within the London market which is the equivalent of 3,579,000 bags has most likely been marginally reduced, over the following days of mixed trade but finally softer trade, which has since followed.

The more detailed coffee exports for the month of May from Brazil were announced yesterday to see green coffee exports reported to have been 380,000 bags or 16.74% higher than the same month last year, at a total of 2.65 million bags.  Added to this were the exports of value added soluble coffees calculated in terms of their green coffee equivalent, which were 31,444 bags or 10.45% lower than the same month last year, to total 269,402 bags.  Thus the cumulative exports for the month were 348,556 bags or 13.56% higher than the same month last year, at a total of 2,919,402 bags.  

This well illustrates the continued selling activity out of Brazil with significant past crop carryover arabica coffee stocks contributing to the steady coffee supply out of Brazil, while the evidence of this selling activity does tend to support the concept of the lesser drought damage figures that many have recently been forecasting as surely the farmers who know best, would be holding back and showing price resistance with their stocks, if they truly believed in severe damage to the new crop potential.   While with new or more recent sales starting to dominate the export volumes the value of the May coffee exports was 87.9 million U.S. dollars or 19.46% higher than the same month last year, at a total of 539.5 million U.S. dollars.  

The Ethiopian Trade Ministry and with a Fiscal year that runs from the 8th. July to the 7th. July have announced that the countries coffee exports for the first ten months of the July 2013 to early July 2014 year are 8.79% lower than the same period in the previous fiscal year, at a total of 2,266,667 bags.   They do not however appropriate the decline to being related to the size of the country’s coffee crop nor problems for their approximate 1.2 million coffee farmers, but rather blame the dip in exports upon infrastructure difficulties.

It is however always difficult to accurately assess the Ethiopian coffee crop as with a vibrant domestic market consumption and one that can encourage farmers to make informal sales, one might question what is the actual size of the Ethiopian crop of approximately 67% natural arabica coffees and 33% washed arabica coffees.  With reports on this leading African producers coffee crop talking in terms of around 5 million bags, to in excess of 6 million bags per annum.  One might in terms of the domestic market, tend to believe more in the higher rather than the lower figures.   While in terms of having a good domestic market in play, it does assist to take some of the volatility out of the farmers returns on crop, that come for such producers who are completely reliant upon the erratic export markets.

The Earth Sciences Minister in India has reported a relatively slow start to the countries June to September monsoon season which indicates that rainfall for the season might be approximately 93% of the average for the season, but one might comment that it is early days to be so accurate with such medium term rainfall forecasts.  Likewise that 93% of average is not really such a poor performance and is a forecast that might be seen to support the earlier forecasts on the part of the Indian Coffee Exporters Association that foresee an improved new crop due to start, during the last quarter of this year.

The arbitrage between the markets narrowed yesterday to register this at 79.94 usc/Lb., while this still equates to a very attractive 48.35% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday, to register these stocks at 2,539,645 bags.   There was meanwhile a modest 227 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,321 bags.

The commodity markets were mixed in trade yesterday, despite the good economic figures emanating in the markets, which would by nature indicate improved demand.   The Oil, Sugar, Cocoa, Orange Juice, Soybean, Gold, Silver and Platinum markets showed buoyancy and the Palladium market was steady, while the Natural Gas, London robusta Coffee, Cotton, Copper, Wheat and Corn markets were softer for the day and the New York arabica Coffee market took a further bath.   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 546.88.   The day starts with the U.S. Dollar close to steady and trading at 1.681 to Sterling and 1.359 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 110.90 per barrel.

The coffee markets opened the day yesterday tending softer in early trade and with many leading European markets on their Pentecost holiday, trade remained lacklustre into the afternoon and looking to lack excitement for the rest of the day.   This scenario did not however continue and once the Americans were on the field of play the speculative sector seemingly lost confidence and started to liquidate some of their longs, which triggered sell stops and with volume picking up, accelerated the losses in the New York market and with London following suit in a more modest manner.   The London market continued to end the day on a soft note and with 85.2% of the losses of the day intact, while the New York market ended the day on a very soft note and at three and half month lows with 96.4% of the losses of the day intact.   This somewhat unexpected soft close for the New York market might attract some catch up price fixation buying activity from the Europeans who are returning to work from their long weekend today, but one might not expect to see little better than modest corrective buoyancy against the soft prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1883 – 23                                                JUL      165.35 – 6.75
SEP      1899 – 23                                               SEP      167.95 – 6.70
NOV     1912 – 21                                               DEC      171.45 – 6.65
JAN      1921 – 22                                               MAR     174.45 – 6.50
MAR     1931 – 22                                               MAY     176.10 – 6.40
MAY     1941 – 21                                                JUL      176.70 – 6.30
JUL      1950 – 20                                                SEP      176.35 – 6.20
SEP      1958 – 20                                                DEC     175.85 – 6.05
NOV     1966 – 19                                                MAR     175.35 – 5.85
JAN      1965 – 20                                                MAY     174.35 – 5.80

9th. June, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 2.71% in the week of trade leading up to Tuesday 3rd. June;  to register a net long position of 40,085 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 2.17%, to register a net long on the day of 43,074 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 4.18%, to register a net long position of 26,299 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,455,650 bags has most likely been little changed over the following days of mixed but overall steady trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

Following a host of less dramatic new crop forecasts emanating from the combination of local and international trade and industry players in terms of this crop that is presently in harvest and with many now looking to a figure close to 50 million bags and some even in excess of 50 million bags, the National Coffee Council in Brazil came forth on Friday in a bid to dampen some of the resulting bearish spirits that have been starting to negatively affect the fortunes of the New York market.   In this respect the Coffee Council reiterated their earlier forecasts for a significant deficit new crop, which they have forecasted to be between 40.1 million bags and 43.3 million bags, but while this report was potentially supportive, it did not in terms of many seeing it to be somewhat market manipulative in nature, spark any immediate rally for the market.

The New York market can however expect to attract a degree of support for speculative sentiment in that following the announcement by Smuckers that they were raising their wholesale prices for their prominent Folgers and Dunkin’ Donut brands in North America, that Kraft Foods have announced on Saturday that they too shall follow suit.   In this respect to increase the wholesale prices for their likewise prominent Maxwell House brand or roast and roast and ground coffees, while excluding their instant coffees and single serve packs would be excluded.   This announcement confirming that with improved wholesale prices in play that the main stream coffee brands can now pay up for coffee stocks to fuel their brands, while raising the price bar for the smaller players in the market to likewise pay up and nevertheless remain competitive.  

Meanwhile with the coffee markets having softened over the past few weeks, the Coffee Exporters Association of India is forecasting that this shall act negatively upon the forthcoming coffee export volumes from India.  In this respect and following a modest 0.25% increase in the countries coffee exports for the first five months of this year, they now estimate the year shall end off with exports potentially 10% lower than the previous year.  They did however report at the same time that so far the weather conditions in India are conducive for a nice large new crop to start being harvested at the end of this year, so long as there are no unforeseen negative weather conditions coming into play.   

The physical coffee trade last week tended to be overall lacklustre in nature, with the softer nature of the international markets tending to inspire some degree of price resistance on the part of the producers while the consumer roasters heading into the slower summer roasting season, were cautiously hand to mouth in their buying activities.   This is likely to remain the nature of the markets for early this week as with much of the leading European markets on their Pentecost or Whit Monday holiday today, one can expect little excitement from this sector of the market until Wednesday and just ahead of the further distraction for most producers and consumers, which shall come with Thursdays opening of the Soccer World Cup in Brazil.  

The arbitrage between the markets broadened on Friday to register this at 85.65 usc/Lb., while this equates to a very attractive 49.77% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,883 bags on Friday, to register these stocks at 2,539,645 bags.   There was meanwhile a larger in volume 3,959 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 8,094 bags.

The commodity markets were in receipt of positive employment figures from the U.S.A., which follows the positive news of some degree of economic stimulus for the Euro Zone countries to end the week taking a steady stance.  This has since been followed by favourable balance of trade figures from China, which is likely to maintain some degree of overall buoyancy for this week.  The U.S. Oil, Cocoa, Sugar, Coffee, Wheat, Corn and Soybean markets had a day of buoyancy and the Natural Gas, Gold, Platinum and Palladium markets were steady, while the Brent Oil, Cotton, Copper, Orange Juice and Silver markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.37% higher; to see this Index registered at 547.80.   The day starts with the U.S. Dollar close to steady and trading at 1.682 to Sterling and 1.365 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 109.40 per barrel.

The coffee markets opened the day on Friday with a degree of hesitancy and showing mixed signs in thin and erratic trade, into the afternoon and with the London market remaining particularly lacklustre in nature.  The New York market did however and with producer price fixation selling volumes over the market thin, start to build up a little in the way of pre-weekend steam and show some buoyancy that was matched by improved value for the London market.   The London market continued to end the day on a positive note but with only 25% of the earlier gains of the day intact while the New York market fared better and ended the day on a positive note and with 63.4% of the gains of the day intact.   This overall positive close is however somewhat supportive and one might think that it shall inspire 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.
                                                  
JUL      1906 + 7                                                 JUL      172.10 + 2.95
SEP      1922 + 7                                                 SEP     174.65 + 3.00
NOV     1933 + 7                                                 DEC     178.10 + 3.05
JAN      1943 + 8                                                MAR     180.95 + 3.05
MAR     1953 + 9                                                MAY     182.50 + 3.00
MAY     1962 + 10                                               JUL     183.00 + 3.05
JUL      1970 + 8                                                 SEP     182.55 + 2.95
SEP      1978 + 10                                              DEC     181.90 + 2.85
NOV     1985 + 8                                                MAR     181.20 + 2.95
JAN      1985 + 8                                                MAY     180.15 + 3.00

6th. June, 2014.
The well respected United States Department of Agriculture have estimated that the recently completed new crop in Honduras that is already well sold, was registered at 4.6 million bags.  While with evidence of the development of the new crop cherries, they forecast that the forthcoming October 2014 to March 2015 harvest shall be 8.7% higher at 5 million bags.   It is always complicated however this matter of the Honduras crop as the evidence of the size of the crop that one would expect to be clarified by the export volumes is always clouded by the persistent leakage that comes with coffees being smuggled into neighbouring Guatemala, as farmers look to avoid tax and take advantage of the relatively higher prices being paid within the internal market in Guatemala.

Meanwhile in Central America in general the early summer rains have been conducive for the development of the new crop, while with the added value that the reference prices of the New York market has brought this year to the prices of this producer blocs fine washed arabica coffees is assisting farmer to finance their battles against Roya or Leaf Rust.   Therefore the forecasts for an overall 1.5 million bags improvement for the next year end regional harvest would seem to be a safe presumption, with this producer bloc likely to bring in approximately 17.5 million bags from their new crop.

The new Brazil arabica coffee harvest is picking up in intensity and internal market selling continues at a steady pace, which allows Brazil exporters to maintain steady sales to the consumer markets.   While with weather conditions normal for this time of the year and with only a few scattered showers taking place, the harvest is not being disrupted.   This harvest continuing to bring forth mixed reports in terms of losses in yields that have come with the partial drought for the main arabica coffee districts that took place in January and February this year, but with the majority of forecasts now seemingly indicating an overall new Conilon robusta and arabica crop of close to 50 million bags.  With the Brazil exporter Exportadora de Cafe Guaxupe forecasting 52 million bags yesterday, to further dampen speculative market spirits.

In terms of this new Brazil crop and while there is no doubt that the larger arabica sector will suffer a decline from the negative effects of partial drought, the Conilon robusta crop this year is estimated to be close to 1.5 million bags or over 9% higher than last year’s crop.   This will with the flexibility of the mostly price sensitive domestic Brazil coffee market most likely see this market utilise higher percentages of the more affordable and increased in availability Conilon robusta coffees, which shall free up additional new crop arabica coffees for the export markets.   This shall be over and above a good volume of carryover arabica coffee stocks, to ensure a steady supply of Brazil arabica coffees through to the next 2015 crop.

The Climate Prediction Centre of the U.S. National Weather Service has increased its potential for an El Nino phenomenon to develop in the Pacific Ocean this year to 70% for the coming three to four months and have applied an 80% chance factor, for the closing months of the year.   The question is however the potential intensity of this probable El Nino as if it is only a modest one it shall have little influence upon the Pacific Rim coffee countries that are dominated by Colombia, Peru and Indonesia, but if intense it would be devastating for their crop potential for the coming year.   Thus there shall be a close watch by market players on this issue of El Nino, during the rest of the year.  While on the positive side of El Nino which traditionally brings increased rains to south and central Brazil, it is a positive factor for the prospects for the next 2015 Brazil coffee crop.

There are already some who are playing the El Nino story and with the Vietnam Government forecasting yesterday that due to this phenomenon the country shall experience lighter rains for the second half of the year and thereon for next year’s rain season, which shall be negative for the prospects of their follow on 2015/2016 crop.  But they do concede that it shall have no bearing upon the prospects for their next year end crop, which many are already forecasting at a very good 29 million bags.   This longer term scare story is however still too far away to really manipulate market sentiment, with the reference prices of the London robusta coffee market having joined the New York market in the doldrums of speculative exhaustion, following the February to April bullish exuberance.  

The arbitrage between the markets narrowed yesterday to register this at 83.01 usc/Lb., while this equates to a very attractive 49.07% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 550 bags yesterday, to register these stocks at 2,542,528 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,053 bags.

The commodity markets were steady in trade yesterday, with the macro commodity index tending to take an overall sideways track and gaining some support from a marginally weaker dollar.  The Brent Oil, Natural Gas, Orange Juice, Gold, Silver, Platinum and Palladium markets showing buoyancy and the London robusta Coffee and Cocoa markets steady, while the U.S. Oil, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Corn and Soybean markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% lower; to see this Index registered at 545.77.   The day starts with the U.S. Dollar close to steady and trading at 1.681 to Sterling and 1.365 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 108.90 per barrel.

The coffee markets opened the day yesterday with both the London and New York markets taking a modestly softer stance in thinly traded early trade, but with both markets recovering in continued thin afternoon trade, but with the New York market coming under late in the day pressure and once again slipping back into negative territory.  The London market continued to hold on to its buoyancy and to end the day on a steady note and with 40% of the very modest gains of the day intact, while the New York market ended the day on a soft note and with 47.7% of the losses of the day intact.   This lacklustre close does little to inspire and one would think that the markets shall struggle to maintain a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1899 + 2                                                  JUL      170.20 – 1.05
SEP      1915 + 1                                                 SEP      171.65 – 0.95
NOV     1926 + 1                                                 DEC      175.05 – 0.95
JAN      1935 + 1                                                 MAR     177.90 – 0.80
MAR     1944 + 1                                                 MAY     179.50 – 0.65
MAY     1952 + 1                                                  JUL      179.95 – 0.55
JUL      1962 + 3                                                  SEP      179.60 – 0.55
SEP      1968 + 3                                                  DEC     179.05 – 0.05
NOV     1977 + 3                                                  MAR     178.25 + 0.20
JAN      1977 + 3                                                  MAY     177.15 + 0.15

5th. June, 2014.
The Colombian Coffee Federation has announced that the country’s coffee production for the month of May was 113,000 bags or 12.06% higher than the same month last year, at a total of 1,050,000 bags.   This increase has contributed to the country’s cumulative production for the first eight months of the present October 2013 to September 2014 coffee year to be 1,532,400 bags or 24.12% higher than the same period in the previous coffee year, at a total of 7,885,400 bags.

Supported by this growing production the Colombian coffee exports for the month of April are reported to have nevertheless been 23,000 bags or 2.69% lower than the same month last year, at a total of 831,000 bags.   This higher figure has contributed to the country’s cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year to be 1,780,000 bags or 31.02% higher than the same period in the previous coffee year, at a total of 7,519,000 bags.

These latest figures and with the Colombian Coffee Federation forecasting that production for this calendar year shall be 500,000 bags or 4.59% higher than last year at a total of 11.4 million bags, do much to partially counter the dip in fine washed arabica coffee production and exports from Mexico and the Central American to their north.   This dip being further countered by the fact that with the sharp rise in the reference prices of the New York market this year, there are many price sensitive consumer market industry players who are being pressured into reducing the percentages of fine washed arabica coffees in their main stream blends.

The confidence of speculative sentiment within the coffee markets took a further hit with the announcement by the Agricultural Minister in Brazil, who without providing specific figures stated that the partial drought over January and February within the main arabica coffee districts of Brazil has not caused as much damage to the prospects of the new crop as many have forecasted and most certainly the new crop shall be higher than the official CONAB forecast at 44.6 million bags.    This is however a factor that is already factored in by most market players, as the official forecast is by tradition a conservative one.  But adding to the bearish nature of this statement was the Agricultural Ministers statement that following good March to May rains and improved inputs that have been financed by the improved prices this year, that Brazil can expect a bumper coffee crop for next year.  

This report was however followed by a report from Armajaro Asset Management that this fund has forecasted the new Brazil crop to be a modest 47 to 49.5 million bags, but with this fund no doubt holding a significant long position within the coffee markets, one would not expect them to come forth with figures that are negative to the market.    Albeit that the higher figure they have announced, matches the forecast that was forwarded by the United States Department of Agriculture.   Thus this Armajaro report is seemingly not going to have much influence upon the direction of the market, which has become lacklustre and soft in nature.    
 
The arbitrage between the markets narrowed yesterday to register this at 84.15 usc/Lb., while this equates to a very attractive 49.44% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,271 bags yesterday, to register these stocks at 2,543,078 bags.   There was meanwhile a smaller in volume 1,375 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,053 bags.

The commodity markets were again mixed in trade yesterday, with many players now awaiting the outcome of the European Central Banks meeting and some clarity on what plans shall be made to provide economic stimulus for this leading consumer bloc.  The U.S. Oil, Cocoa, Orange Juice, Wheat, Soybean, Silver and Palladium markets showed buoyancy and the Natural Gas, London robusta Coffee and Soybean markets were steady, while the Brent Oil, Sugar, New York arabica Coffee, Cotton, Copper, 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 0.19% lower; to see this Index registered at 545.87.   The day starts with the U.S. Dollar steady and trading at 1.675 to Sterling and 1.361 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 108.25 per barrel.

The coffee markets opened the day yesterday with the London market showing some hesitant buoyancy, but with the New York market tending softer.   The New York market experienced a short term recovery during the afternoon’s trade while he London market continued to have an erratic day and trading either side of par, while the New York market again lost its way as the day progressed.  The London market continued to end the day on a steady note and with 11.1% of the earlier gains of the day intact, while the New York market ended the day on a soft note but having recovered 75% of the earlier losses of the day by the close.    This mixed and near to steady close that was also related to relatively thin trade for both markets does not provide much in the way of indication for direction and one might therefore expect a very slow and uncertain start but with perhaps some buoyancy for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1897 + 2                                                  JUL      170.20 – 0.95
SEP      1914 + 1                                                 SEP      172.60 – 1.00
NOV     1925 unch                                              DEC     176.00 – 1.00
JAN      1934 + 1                                                 MAR     178.70 – 1.05
MAR     1943 + 1                                                 MAY     180.15 – 1.10
MAY     1951 + 1                                                  JUL     180.50 – 1.25
JUL      1959 – 1                                                  SEP     180.05 – 1.15
SEP      1965 – 1                                                  DEC     179.10 – 1.10
NOV     1974 – 1                                                  MAR     178.05 – 1.15
JAN      1974 – 1                                                  MAY     177.00 – 1.10

4th. June, 2014.
Following the May export reports from Honduras and Costa Rica the National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of May were 67,987 bags or 14.55% lower than the same month last year, at a total of 399,165 bags.  This lower volume has contributed to the countries cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year having been 253,702 bags or 11% lower than the same period in the previous coffee year, at a total of 2,052,913 bags.

This lower volume of exports from Guatemala which is partially related to the devastating effects for Roya or Leaf Rust within the country over the past two years that has negatively affected approximately 70% of the country’s coffee farms, is also related to internal market price resistance for new crop coffees, which have inflated asking export differentials and turned flexible consumer market buyers towards more affordable alternatives from Colombia and Honduras.   Thus while one can expect that export volumes from Guatemala might be as much as 650,000 bags lower for the present coffee year as compared to last year at close to 3 million bags, the country remains a steady seller of relatively expensive new crop coffees.

In terms of Mexican and Central American coffees however and with the recently completed overall regional harvest estimated to have been approximately 3 million bags lower than the previous 2012/2013 harvest, the improved prices this year have allowed for considerable investment in combating Roya and the prospects for the new crop that starts in October are looking relatively favourable.   In this respect one might foresee that the forthcoming new crop might be as much as 1.5 million bags higher than the last crop, while in the meantime the dip in regional supply has been partially supplemented by the surge in Colombian washed arabica coffee supply and to a lesser extent this year, an improved new crop from Peru that is presently in harvest.

The market international coffee market values are however not really related to the top end washed arabica coffee supply that have been negatively affected by the problems in Mexico and Central America, but are related to the prospects for the partial drought affected new Brazil crop and on the longer term, the prospects for next year’s Brazil crop.   Thus while speculation upon the prospects for the volume due from the present Brazil harvest continues there is some focus upon the start of the frost season that shall influence next year’s Brazil crop and with the first real cold front now entering southern Brazil, but is not expected to be severe enough to bring frost to the arabica coffee districts of the country.

The recent dip in the value of the reference prices of the London robusta coffee market have slowed internal market selling activity in Vietnam and more so in Indonesia, with exporters and traders in Vietnam estimating that the June exports of mostly robusta coffees shall be between 2 to 2.83 million bags.   There are nevertheless still good stocks within the internal market hands and with a large new crop of approximately 29 million bags due to start in four months’ time, one can expect good volumes of robusta coffee exports to come from the country for the foreseeable future.  Especially so with relatively high bank lending rates in Vietnam, the farmers are forced to steadily liquidate stocks rather than hold stocks back, to play the market higher.   

Somewhat positive for the market in late trade yesterday and news that seemingly halted the slide in the New York market was the news that Smucker’s Coffee U.S.A. had announced their first significant price rise in three years for their prominent Folgers and Dunkin Donuts brands.   This move that is expected to open the door for rival main stream rosters such as Kraft and their Maxwell House brand to follow suit, indicates the industry’s ability to pay up for coffee supplies and re-establish some confidence in the New York market, which has suffered over the past three weeks since the CONAB report in Brazil indicated less damage than had been expected for the new Brazil crop and somewhat shattered speculative market confidence.  

The arbitrage between the markets broadened yesterday to register this at 85.19 usc/Lb., while this equates to a very attractive 49.78% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to register no change yesterday, to register these stocks at 2,546,349 bags.   There was meanwhile a 1,466 increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 10,678 bags.

The commodity markets were mixed in trade yesterday, but continue to lack excitement.  The Natural Gas, Sugar, Cocoa, Cotton, Orange Juice, Gold, Silver and Palladium markets had a day of buoyancy and the Oil and Platinum markets were near to steady, while the Coffee, Copper, Wheat, Corn and Soybean markets were softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% lower; to see this Index registered at 546.93.   The day starts with the U.S. Dollar steady and trading at 1.672 to Sterling and 1.361 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 109.20 per barrel.

The coffee markets opened the day yesterday with the London market softer and the New York market close to steady and with both market attracting some support into the afternoons trade, in thin trade.   The buoyancy within the markets was however short lived and both markets again came under pressure as volumes increased and moved into negative territory for the rest of the day, with speculative confidence waning and producer price fixation coming in over the markets.  The London market continued on a steady downside track to end the day on a soft note and with 84.4% of the losses of the day intact, while the New York market attracted a late in the day recovery that saw the market end the day on a modestly softer note and having recovered 76% of the earlier in the day losses by the close.   This late in the day recovery in New York might perhaps influence some degree of renewed confidence and retard producer selling activity and one might expect to see a hesitantly steady to modestly buoyant start for the markets in early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1895 – 38                                                JUL      171.15 – 1.20
SEP      1913 – 38                                                SEP     173.60 – 1.15
NOV     1925 – 38                                                DEC     177.00 – 1.15
JAN      1933 – 38                                               MAR     179.75 – 1.15
MAR     1942 – 37                                               MAY     181.25 – 1.10
MAY     1950 – 38                                                JUL      181.75 – 0.90
JUL      1960 – 38                                                SEP      181.20 – 0.75
SEP      1966 – 38                                                DEC     180.20 – 0.80
NOV     1975 – 38                                                MAR     179.20 – 0.65
JAN      1975 – 38                                                MAY     178.10 – 0.70

3rd. June, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 0.79% in the week of trade leading up to Tuesday 27th. May;  to register a net long position of 25,237 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,206,167 bags has most likely been marginally reduced, over the following days of mixed trade but finally softer trade, which has since followed.

The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of May were 196,098 bags or 38.98% higher than the same month last year, at a total of 699,148 bags.  This lower volume has contributed to the countries cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year having been 123,971 bags or 3.58% higher than the same period in the previous coffee year, at a total of 3,586,019 bags.

This total export figure of 3,586,019 bags is compiled from the month by month figures reported from October last year, but surprisingly the National Coffee Institute in Honduras now talk a figure of 3.18 million bags, which would equate to a be a much higher 282,048 bags or 8.15% dip in exports for the past eight months.   While they continue to forecast with four months to go, that the countries coffee exports for the present coffee year shall be 4.52 million bags, which shall be 179,981 bags or 4.15% higher than their coffee exports for the previous coffee year.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of May were 3,298 bags or 1.83% lower than the same month last year, at a total of 177,170 bags.  This lower volume has contributed to the countries cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year having been 139,952 bags or 13.73% lower than the same period in the previous coffee year, at a total of 879,540 bags.

The preliminary coffee export figures from Brazil for the month of May have indicated that the countries green coffee exports for the month were 390,000 bags or 16.96% higher than the same month last year, at a total of 2.69 million bags.    This rise in volume having been very much expected, as the positive nature of the reference prices of the New York market and the resulting firm prices of the washed arabica coffees, has influenced rising demand for the more affordable natural arabica coffees from Brazil, where farmers have remained active sellers of their significant 2013 crop stocks.

The Coffee Board of India have reported that the countries coffee exports for the first five months of this year were a modest 334 bags or 0.01% lower than the same period last year, at a total of 2,654,583 bags.   However with the improved value of the reference prices of the international coffee markets during this year, the value of these coffee exports was 9.32% higher at the equivalent of 433.1 million U.S. dollars.

This relatively steady export performance from India that is related to an approximate 40 to 60 ration of arabica and robusta coffees was related to a 31% rise in the exports of arabica coffees and a 15% dip in robusta coffee exports over the period, is despite the Board reporting that the new crop can be expected to be 2.1% lower, at a total of 5,191,667 bags.  But with perhaps the good value of the reference prices of the New York market, accelerating export sales of arabica coffees over the first five months of this year.

The arbitrage between the markets narrowed yesterday to register this at 84.67 usc/Lb., while this equates to a very attractive 49.13% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 645 bags yesterday, to register these stocks at 2,546,349 bags.   There was meanwhile a larger in volume 2,299 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 9,212 bags.

The commodity markets were mixed in trade yesterday, but lacking excitement.  The Natural Gas, Cotton, Copper, Orange Juice, Soybean and Silver markets had a day of buoyancy and the Cocoa, London robusta Coffee, Platinum and Palladium markets were near to steady, while the Oil, Sugar, New York arabica Coffee, Wheat, Corn 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 0.11% lower; to see this Index registered at 547.41.   The day starts with the U.S. Dollar steady and trading at 1.674 to Sterling and 1.361 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 109.35 per barrel.

The coffee markets opened the day yesterday on a marginally softer note, but with the London market coming under some pressure and losing its way into the afternoon’s trade, while the New York market picked up some early afternoon support.   Both markets did however lose their way and with the New York market coming under speculative and fund liquidation pressure to set off on a steady downside track, while the London market turned softer but only marginally so.    The London market continued to end the day on a softer but near to steady note and having recovered 85.7% of the earlier losses of the day by the close, while the New York market ended the day on a soft note and with 96.3% of the losses of the day intact.   This mixed but overall soft close does little to inspire little better than a near to steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1933 – 4                                                  JUL      172.35 – 5.15
SEP      1951 – 5                                                 SEP      174.75 – 5.15
NOV     1963 – 6                                                 DEC      178.15 – 5.05
JAN      1971 – 8                                                 MAR     180.90 – 5.05
MAR     1979 – 7                                                 MAY     182.35 – 5.00
MAY     1988 – 7                                                  JUL      182.65 – 4.95
JUL      1998 – 5                                                  SEP      181.95 – 5.00
SEP      2004 – 5                                                 DEC      181.00 – 4.80
NOV     2013 – 5                                                 MAR      179.85 – 4.80
JAN      2013 – 5                                                 MAY      178.80 – 4.85

2nd. June, 2014.
The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market decrease their net long position within this market by 2.99% in the week of trade leading up to Tuesday 27th. May;  to register a net long position of 41,201 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 0.34%, to register a net long on the day of 44,031 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 5.78%, to register a net long position of 27,447 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,781,103 bags has most likely been marginally decreased over the following days of mixed but overall softer trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

With the month of May passed the Government Trade data from Sumatra as the main coffee growing island of Indonesia has reported that the islands Robusta coffee exports for the month of April were 249,659 bags or 66.31% lower than the same month last year, at a total of 126,822 bags.   This lower performance contributes to the islands cumulative robusta coffee exports from Sumatra for the first eight months of the present October 2013 to September 2014 coffee year to being 554,564 bags or 16.58% lower than the same period in the previous coffee year, at a total of 2,790,105 bags.

This dip in robusta coffee exports from Sumatra would tend to support the many private trade and industry forecasts for a weather related lower new robusta coffee crop that started to come into play in April, which contradict the more positive forecasts by the countries official trade and industry bodies.  But one might also appropriate the dip in robusta coffee exports for the month of May partially to the negative influences of internal market price resistance that has seen demands for relatively high prices for new crop coffees, which extrapolates to uncompetitive export price differentials being demanded by the countries exporters.   This with good volumes of more affordable Vietnam coffees chasing the consumer markets has dulled the demand from the consumers for the Indonesia robusta coffees, which is a scenario that one can expect to continue so long as the reference prices of the London market remain within their present lower trading range, or at least until such time as the new trading range becomes clearly set for the foreseeable future.

The dangers of official state intervention or price controls in the commodity markets has once again come to the fore in the Ivory Coast, with the pre crop sales by the Ivory Coast Coffee and Cocoa Council to the countries exporters that were based on farm gate prices to the countries farmers at the equivalent of US$ 1,290.00 per metric ton apparently resulting in many defaults.   This has left many exporters with forward export sales commitment to fill, struggling to fulfil contracts which were reliant upon the supply commitments of the Coffee and Cocoa Council.

The reason for the deficit supply is not being appropriated to problems with the size of the new crop, but is presumed to be related to farmers chasing better value from the neighbouring countries and supporting smugglers rather than the official state dictated price for new crop coffees.    It is however an unfortunate situation for all parties, as it negatively affects both the financial situation for the individual private exports and the export revenue for the state, from the countries coffee sales.

The flood of tourists that are soon due to enter Brazil for the forthcoming world cup have been preceded by a relatively high number of coffee industry tourists, who have been touring the main arabica coffee districts in Brazil to gain a better hands on perspective as to the actual extent of the damage done to the new crop potential and with the resulting forecasts.   These forecasts in terms of the consumer roaster industry players tend to remain confidential, but there are many trade coffee tours that result in public statements.

These reports so far have been relatively mixed in their numbers but with many still topping the 50 million bags mark and by nature with significant carryover stocks evident and supporting the view that despite a combined domestic market and export market demand for approximately 54 million bags per annum, there shall be more than sufficient Brazil coffee available through to the next 2015 crop and therefore, these reports contribute to a softening in speculative sentiment towards the New York market.   They have not however completely paddocked the bulls in the market as there still remains the question as to what shall be the prospects for the next 2015 Brazil crop that shall not have the advantage of the support from good carryover stocks and while the New York market might have taken a sorter track over the past few weeks, there does remain some degree of underlying speculative support.

The arbitrage between the markets narrowed on Friday to register this at 89.64 usc/Lb., while this equates to a very attractive 50.5% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 13,040 bags on Friday, to register these stocks at 2,545,704 bags.   There was meanwhile a smaller in volume 1,002 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 11,511 bags.

The commodity markets lacked excitement on Friday and suffered from overall lacklustre trade, which was not assisted much by a good number of Western European players taking a bridging long weekend holiday follow Thursday’s Ascension Day holiday.  The Cocoa, Cotton, Orange Juice and Palladium markets nevertheless showed some buoyancy for the day, while the Oil, Natural Gas, Sugar, Coffee, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.55% lower; to see this Index registered at 547.99.   The day starts with the U.S. Dollar near to steady and trading at 1.676 to Sterling and 1.363 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 109.90 per barrel.

The coffee markets opened the day of Friday on an early downside track in thin trade, which was something of a surprise in terms of the previous day’s buoyancy.  Both markets entered the afternoons trade maintaining their softer stance, but with the New York market coming under more severe negative pressure in line with the waning speculative support for the market that comes with the presently diminishing fears over medium term Brazil coffee supply.  The London market continued to end the day on a softer note, but having recovered 69.2% of the earlier losses of the day, while the New York market ended the day on a soft note and having only recovered 39% of the earlier losses of the day by the close.   This overall soft close for the market is unlikely to inspire little better than a cautiously steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
JUL      1937 – 12                                                JUL      177.50 – 4.45
SEP      1956 – 11                                               SEP      179.90 – 4.45
NOV     1969 – 11                                               DEC      183.20 – 4.40
JAN      1979 – 12                                               MAR     185.95 – 4.35
MAR     1986 – 13                                               MAY     187.35 – 4.00
MAY     1995 – 14                                                JUL      187.60 – 3.75
JUL      2003 – 14                                                SEP      186.95 – 3.50
SEP      2009 – 14                                               DEC      185.80 – 3.40
NOV     2018 – 14                                               MAR      184.65 – 3.35
JAN      2018 – 14                                               MAY      183.65 – 3.35

30th. May, 2014.
Firstly apologies for the typo errors and grammatical errors in yesterday’s report, which suffered from interruptions that were related to a series of phone calls and a somewhat confusing paragraph, ensued.   The Companhia Nacional de Abastecimento (CONAB) or National Food Supply Agency new Brazil crop forecast on the morning of the 15th. May, was in fact for 44.6 million bags.   This figure was well above the many speculative suggestions prior to the scheduled report, which suggested that this traditionally very conservative forecast would only indicate a new crop of between 39 and 40.5 million bags.  Thus this forecast when it came out at 44.6 million and when adjusted for the approximate 10% below reality factor, indicated a new crop that is more likely to be 49.5 million bags.

Countering the recent reports that Brazil shall have a carryover stock of mostly arabica coffees from the past crop into the partial drought affected new Brazil crop this year that varied between 8 million to 12.5 million bags, the respected Brazil analysts Safras e Mercado have announced yesterday that these stocks would only be a more modest 5.34 million to 8 million bags, as at the end of June.   This report tended to buoy some of the waning speculative spirits in trade yesterday, as it does by nature indicate a tighter supply for the coming year.

However if one is to believe in a new crop of 49.5 million bags as against a domestic market and export market demand of between 53 million and 54 million bags per annum, these stocks even if they are more modest than many if not most believe in, there is no indication of tight supply of Brazil coffees for the foreseeable future.   But only time shall tell and in this respect the evidence of the yield outturns from the new arabica harvest that shall really only start to become clearer by August and following this, the late September to November spring and summer rainfall and the resulting flowering for the new 2015 Brazil crop, which shall indicate the crop potential for next year.

A new Brazil crop that shall potentially not have the advantage of significantly large carryover stocks and one that shall need to exceed 50 million bags, if there is not to be a tight Brazil coffee supply for the follow on 2015/2016 coffee year.   Thus Brazil crop and weather news is due to bring much volatility to the market and a seesaw in speculative sentiment for the rest of the year, as one can expect many in the way of conflicting reports and forecasts to come into play for the rest of the year.

Meanwhile there has been slow and steady selling activity within the internal market in Brazil over the past week and despite a dip in the reference prices of the international markets, while the main arabica coffee districts have been in receipt of wide spread rain showers to assist to maintain ground water retention levels for the dry winter harvest season.   Thus in terms of Brazil coffee supply to the consumer markets, there have been no real hiccups.

The dip in value of the London market this week tended to slow internal market selling activity within the Asian robusta coffee producing countries and slowed selling aggression on the part of Vietnams exporters for the week, but with last night’s recovery expected to encourage some more activity for trade today, the recovery is perhaps not enough to inspire any selling aggression.   There are however following a large past crop and with a large new crop forecasted for the end of this year in Vietnam, good robusta coffee stocks held within internal market farm and trade hands that now with only four to five months to come to the market ahead of the new crop, some pressure for farmers and internal traders to remain steady sellers.  

The arbitrage between the markets broadened yesterday to register this at 93.54 usc/Lb., while this equates to a very attractive 51.41% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 630 bags yesterday, to register these stocks at 2,558,744 bags.   There was meanwhile a larger in volume 6,027 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 10,509 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 287,000 bags over the two weeks of trade leading up to Monday 26th. May;  to register these stocks at a still relatively modest 846,000 bags.  However with the London market having returned to a normal price structure following many moths of an inverted structure that was negative for the carry of stocks and a good flow of robusta coffees now coming to the consumer markets, one can expect these stocks to steadily increase through the year.

The commodity markets lacked participation from many leading European players yesterday, as they celebrated the Ascension Day holiday, while they shrugged off news of a relatively dismal GDP growth for the U.S.A. for the first quarter of the year, as it was seen to have been bad weather affected and of no significance to present circumstances.   The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Soybean, Platinum and Palladium markets had a day of buoyancy, while the Oil, Copper, Orange Juice, 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 0.18% higher; to see this Index registered at 551.03.   The day starts with the U.S. Dollar near to steady and trading at 1.673 to Sterling and 1.360 to the Euro, while Brent Crude is steady in early trade and is selling at $ 109.60 per barrel.

The coffee markets opened the day yesterday with some predictable buoyancy in thin trade that maintained their positive track into the afternoon’s trade, with the combination of light roaster buying activity and speculative buying under the markets to assist towards this buoyancy.  This remained the track for the rest of the day and with the London market ending the day on a positive note and with 95.5% of the gains of the day intact and with the New York market likewise ending the day on a positive note and with 85.3% of the gains of the day intact.   This overall positive close is likely to inspire some confidence and with the funds unlikely to be aggressive sellers ahead of the month end today, one might expect some degree of follow through buoyancy for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     1948 + 42                                                          
JUL      1949 + 42                                               JUL      181.95 + 5.80
SEP      1967 + 42                                              SEP      184.35 + 5.80
NOV     1980 + 42                                               DEC     187.60 + 5.70
JAN      1991 + 42                                              MAR     190.30 + 5.65
MAR     1999 + 41                                              MAY     191.35 + 5.60
MAY     2009 + 41                                               JUL      191.35 + 5.40
JUL      2017 + 41                                               SEP      190.45 + 5.10
SEP      2023 + 41                                               DEC     189.20 + 4.70
NOV     2032 + 41                                               MAR     188.00 + 4.40

29th. May, 2014.
The report from the U.S. Department of Agriculture that pegged the next Vietnam crop of which approximately 96% shall be robusta coffees at a bumper 29.2 million bags has unsurprisingly impacted upon speculative sentiment within the related London robusta coffee market, which is anyhow under pressure from the dampening of speculative spirits within the coffee market in general.    These having been shocked out of their bullish trend by the official new Brazil crop forecast from CONAB who by forecasting a 46.6 million bags figure, indicated a realistic new Brazil crop figure of close to 50 million bags.   

There is still some surprise that the Companhia Nacional de Abastecimento (CONAB) or National Food Supply Agency came forth with this figure that was 4 to 5 million bags higher than had been predicted on the morning of the 15th. May, but perhaps even though Brazil accounts for approximately 34% of world coffee production and 14% of world coffee consumption the fact that coffee exports now only account for approximately 3% of Brazils exports the officials are no longer so inspired to be market manipulative in their crop reports.   While this report that by nature of its squashing the earlier forecasts for a much more modest new crop for this year has further turned speculative focus upon the relatively aggressive internal market selling of past crop arabica coffee stocks and forward sales of new crop coffees, which would indicate that the farmers who should know best the situation, likewise do not believe in an overly dramatic dip in the new crop potential.

This rather dramatic change in market sentiment over the past week and a half is in the meantime having some influence upon the selling aggression on the part of the producers in general, with many looking to be more aggressive in their selling activity ahead of a potential for further losses and for the present, there is a good supply of coffees on offer to the consumer industries from all of the major producer blocs.   Albeit that there remains some degree of price resistance from many producers, which continues to buoy the asking export differentials for new sales and particularly so from the fine washed arabica coffee producer bloc.    This latter producer bloc better able to so value add their new sales, as until there is a significant recovery in the production levels from the Roya or Leaf Rust affected Mexico and Central American bloc and despite the improved supply from Colombia, supply of these coffees remains relatively tight.

In terms of African robusta production and exports the Ivory Coast which remains the third largest coffee producer in Africa following Ethiopia and Uganda and likewise the third largest coffee exporter following Uganda and Ethiopia, has come forth with their latest export figures.  In this respect they report that the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year are 35,133 bags or 6.47% higher than the same period in the previous coffee year, at a total of 577,867 bags.   This figure is however well below the forecasted exports of approximately 1.6 million bags and one might expect to see some more aggressive selling and export activity to come from this country, for the coming months.    

The coffee markets with most of the major players in the leading West European market on their Ascension Day holiday today and with many players due to take tomorrow off and turn it into a long weekend can be expected to be lackluster in terms of physical coffee trade, through to the end of the week.  But this should have no impact upon the speculative and fund activity with the New York and London markets that are operating as usual today and tomorrow, with this sector of the market presently the dominating factor in market direction.  

The arbitrage between the markets narrowed yesterday to register this at 89.65 usc/Lb., while this equates to a very attractive 50.89% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,024 bags yesterday, to register these stocks at 2,558,114 bags.   There was meanwhile a larger in volume 6,027 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 11,698 bags.

The commodity markets are presently within a narrow trading range, while with positive economic figures from both North America and Europe the equity markets are attracting investment activity.  The Natural Gas, Sugar, Corn, Soybean, Silver and Palladium markets had a day of buoyancy, while the Oil, Cocoa, Coffee, Cotton, Copper, 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 0.09% lower; to see this Index registered at 550.04.   The day starts with the U.S. Dollar steady and trading at 1.672 to Sterling and 1.359 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.30 per barrel.

The coffee markets opened the day yesterday taking a softer stance but in follow through lacklustre and thin trade, with the markets taking a downside negative track into the afternoons trade and with speculative liquidation dominating direction and volumes picking up, but with the New York market bucking the trend later in the afternoon to bounce of its lows and post a partial recovery while the London market continued to head south.  The London market ended the day on a soft note and with 95.1% of the losses of the day intact, while the New York market ended the day on a softer note but having recovered 62.6% of the earlier losses of the day by the close.   This overall negative close does not inspire confidence, but there might be some sentimental support due from the late in the day partial recovery in New York that shall restrain sellers and set the markets for a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     1906 – 59                                              
JUL      1907 – 77                                                JUL      176.15 – 3.20
SEP      1925 – 77                                               SEP      178.55 – 3.15
NOV     1938 – 76                                                DEC     181.90 – 3.00
JAN      1949 – 75                                               MAR     184.65 – 2.95
MAR     1958 – 74                                               MAY     185.75 – 2.75
MAY     1968 – 73                                                JUL      185.95 – 2.55
JUL      1976 – 72                                                SEP      185.35 – 2.50
SEP      1982 – 72                                                DEC     184.50 – 2.65
NOV     1991 – 72                                                MAR     183.60 – 2.75

28th. May, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 12.71% in the week of trade leading up to Tuesday 20th. May;  to register a net long position of 25,437 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,239,500 bags has most likely been further reduced, over the following days of mixed but overall negative trade which has since followed.

The National Coffee Council in El Salvador have reported that the countries coffee exports for the month of April were 64,876 bags or 50.32% lower than the same month last year, at a total of 64,052 bags.   This modest performance has contributed to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year to be 354,645 bags or 52.14% lower than the same period in the previous coffee year, at a total of 325,485 bags.   

This dip in exports from El Salvador was however to have been expected, as aside from the country having been the most severely affected by Roya or Leaf Rust within Central America, many of the country’s dominant commercial farming sector had taken some aggressive steps in terms of pruning of diseased fields, to counter the problem.   Thus resulting in a very modest crop from the last October 2013 to March 2014 harvest, which many have estimated to have been between only 500,000 and 700,000 bags.

The fine washed arabica producer bloc of Central America, Dominican Republic, Colombia and Peru but excluding Mexico who have not been contributing export figures over the recent months have reported that their combined exports for the month of April were 4.14% lower than the same month last year, at a total of 2.3 million bags.   This figure contributed to the bloc’s cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year and following surging export volumes from Colombia to still be 2.3% higher than the same period in the previous coffee year, at a total of 14.68 million bags.  While with a larger new Mitaca crop now starting in Colombia and a larger new crop in Peru, one would expect that this producer bloc’s combined exports shall maintain steady to positive figures for the coming months.

Even though the coffee markets have taken a dip in value over the past couple of weeks and since the official CONAB new crop forecast came out much higher than had been expected, the Agricultural Ministry in Brazil have reported that should the coffee market firm up later in the year again, they would release state retention coffee stocks into the market.   This relatively bearish for the market statement is accompanied by a marginally weaker Brazil real that is now trading at 2.237 to the U.S. dollar, which is maintaining active arabica coffee selling within the internal market in Brazil and is contributing to the softer nature of the New York market.

The Vietnam General Statistics Office have reported that the countries coffee exports of mostly robusta coffees for the month of May to have been 19.4% lower than the previous month, at a total of 2,833,333 bags.  This figure and following a negative revision for the countries April exports, would indicate that the countries cumulative exports for the first eight months of the present October 2013 to September 2014 coffee year are 15.6% higher than the same period in the previous coffee year, at a total of 21 million bags.

The much respected U.S. Department of Agriculture have forecast that the forthcoming new Vietnam coffee crop shall be buoyed by the combination of favourable weather this year and improved profits to fuel farm inputs, to see the country bring in a bumper crop from the October 2014 to January 2013 harvest.  This crop which they foresee to be 29.2 million bags shall be made up by an approximate 96 to 4 ratio of robusta and arabica coffees, which shall ensure a steady supply of robusta coffees for next year and is a report that contributes to a dampening of speculative spirits within the London robusta coffee market.  Albeit that the good discounts offered by robusta coffees, will contribute to increased demand.

The arbitrage between the markets narrowed yesterday to register this at 89.99 usc/Lb., while this equates to a very attractive 50.18% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,160 bags yesterday, to register these stocks at 2,559,138 bags.   There was meanwhile a smaller in volume 640 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 5,671 bags.

The commodity markets appeared to lose some support in post long weekend holiday trade yesterday, while money was directed towards the buoyant equity markets.  The Natural Gas, Cocoa and Copper markets had a day of buoyancy, while the Oil, Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, 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 0.80% lower; to see this Index registered at 550.56.   The day starts with the U.S. Dollar near to steady and trading at 1.681 to Sterling and 1.363 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.70 per barrel.

The coffee markets opened the day yesterday taking a softer stance but in lacklustre and thin post long weekend holiday trade, with both markets softening further into the afternoon’s trade.   The New York market did however bounce back for a period during the afternoon and with the thin volumes of trade assisting to accentuate the recovery into positive territory, while the London market maintained its softer track.   The London market continued to end the day on a soft note and with 95% of the losses of the day intact, while the New York market and with the negative influences of the macro commodity index adding to its demise slipped back from its recovery to end the day on a soft note and with 61.4% of the earlier losses of the day intact.  This overall soft close is unlikely to inspire much 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.
                                                  
MAY     1965 – 34                                              
JUL      1984 – 19                                                JUL      179.35 – 2.55
SEP      2002 – 15                                                SEP     181.70 – 2.55
NOV     2014 – 15                                                DEC     184.90 – 2.60
JAN      2024 – 14                                                MAR    187.60 – 2.55
MAR     2032 – 15                                                MAY     188.50 – 2.55
MAY     2041 – 16                                                 JUL     188.50 – 2.55
JUL      2048 – 16                                                 SEP     187.85 – 2.50
SEP      2054 – 18                                                 DEC    187.15 – 2.10
NOV     2063 – 17                                                 MAR    186.35 – 1.75

26th. May, 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 0.46% in the week of trade leading up to Tuesday 20th. May; to register a net long position of 42,473 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 0.37%, to register a net long on the day of 44,183 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 5.26%, to register a net long position of 29,131 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 8,258,509 bags has most likely been marginally decreased over the following days of mixed but overall softer trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

Contrary to earlier estimates that with the new crop already started that Brazils farmer have so far forward sold only 20% of this new crop, a new poll taken from ten leading trade houses has indicated that as much as 39% of the new crop has been sold forward.   This figure if correct is significantly higher than is normal for this early in the year and makes one question the farmers belief in a significant decline in the potential for the new crop and the potential for this decline to further buoy the medium to longer term prices, by their willingness to be such ready sellers.

But if this forward sale factor is correct and with farmers already holding good value for a significant percentage of their new crop, it would slow selling activity for the short term and with the resulting low volumes of price fixation hedge selling into the international markets, take some of the negative pressure off these markets.   At least until post the forthcoming June and July frost period, which while only a very remote threat, it remains as a factor and one that should it occur, would significantly increase the speculative support for and the value of the reference prices of the New York market.   The most likely times for frost to occur being related to the clear sky’s during the days either side of the full moon, which shall occur on 13 TH June and the 12 TH July, this year.

There is of course no doubt that there has been some damage done by the hot and dry weather over January and February, but one might suggest that the evidence of this selling actively is supportive for the less dramatic new crop forecasts as still being as much as close to 50 million bags, rather than some of the emotive reports that peg it as being less than 45 million bags.    Therefore for the present, one might be looking to a deficit new crop of approximately 4 million bags, as against carryover stocks of close to 12 million bags, which would guarantee a steady supply of Brail coffees into the next 2015 crop.

The National Cocoa and Coffee Board of the Cameroun have reported that the countries robusta coffee exports for the month of April were 12,017 bags or 21.57% lower than the same month last year, at a total of 43,700 bags.  This contributes to the countries cumulative robusta coffee exports for the first five months of their December 2013 to November 2014 robusta coffee year being 12,150 bags or 11.92% lower than the same period in the previous robusta coffee year, at a total of 89,783 bags.   Meanwhile the Board has reported in terms of the countries smaller arabica coffee crop which works on a more conventional October to September coffee year, that exports of arabica coffee for the first seven months of this coffee year are 8,900 bags or 56.39% lower than the same period in the previous arabica coffee year, at a total of a very modest 6,883 bags.

The arbitrage between the markets broadened on Friday to register this at 91.05 usc/Lb., while this equates to a very attractive 50.06% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,315 bags on Friday, to register these stocks at 2,561,298 bags.   There was meanwhile a similar in volume 2,565 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 5,031 bags.

The commodity markets ahead of the long weekend with the U.S.A. closed today for their Memorial Day holiday and the U.K. closed today for their Spring Bank Holiday were relatively quiet and lacklustre on Friday.  The Oil, Natural Gas, Cocoa, New York arabica Coffee, Copper and Corn markets showed some buoyancy, while the Sugar, London robusta Coffee, Cotton, Orange Juice, Wheat, 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 0.20% lower; to see this Index registered at 554.99.   The day starts with the U.S. Dollar near to steady and trading at 1.684 to Sterling and 1.363 to the Euro, while Brent Crude is steady at $ 110.00 per barrel.

The coffee markets opened the day on Friday on a steady note and with a degree of buoyancy coming into play for the New York market, while the London market came under price fixation selling pressure.   The London market continued to end the slow and lacklustre days trade on a soft note and with 80% of the losses of the day intact, while the New York market following an overall positive days trade came under pressure late in the day and shed 81% of its earlier gains but to nevertheless end the day on a modestly positive note.    There shall be no trade for the markets today and one would think that unless there is some striking news forthcoming today which is unlikely, that the markets shall start the day tomorrow on a cautiously steady note against the pre long weekend prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     1999 – 2                                                
JUL      2003 – 16                                                JUL      181.90 + 0.55
SEP      2017 – 15                                                SEP     184.25 + 0.55
NOV     2029 – 15                                                DEC     187.50 + 0.50
JAN      2038 – 16                                               MAR     190.15 + 0.55
MAR     2047 – 15                                               MAY     191.05 + 0.35
MAY     2057 – 13                                               JUL      191.05 unch
JUL      2064 – 13                                               SEP      190.35 – 0.05
SEP      2072 – 13                                               DEC     189.25 unch
NOV     2080 – 17                                               MAR     188.10 + 0.10

23rd May, 2014.

The United States Department of Agriculture have come forth with their latest review and forecast for the coffee crop in Guatemala.  They have subsequently reviewed their earlier forecast for this October 2013 to September 2014 crop to be slightly lower, at 3.419,0000 bags from a prior estimate at 3.88 million bags.  Following the outbreak of roya, many producers have heavily pruned back their trees.  The USDA estimate that around 10% of the area planted to coffee has seen severe pruning, and some replanting activity. 

The concerted efforts by Guatemala stakeholders, and technical assistance provided by the Guatemalan Coffee Association to assist producers to improve crop techniques has all contributed toward limiting the damage that has been caused by the roya outbreak.  The USDA attaché has in this latest forecast estimated production for this crop year to fall by 19% on that of the previous crop year. The forecast for Guatemala coffee production for the coming October 2014 to September 2015 crop year is for production to register a modest recovery against this year’s crop and an estimate for the new crop to come from October this year, to reach an estimated 3,615,000 bags.

While the new and somewhat contentious arabica crop harvest is starting up in Brazil, the peak harvest period is still to come and so too, the anticipated reports of out turn against the new crop deliveries.  One might expect that this will continue to be a focal subject, as the harvest predictions continue to debate over the potential size of this crop which has suffered through an extraordinary weather anomaly. The weather heading into the weekend is forecast to remain mild and dry, with a cold front expected to move into the coffee growing areas next week. In the meantime the internal market is muted and sales slower with a softer reference price in the New York market and a steady Brazil Real which is trading at 2.214 to the US Dollar today.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,329 bags yesterday, to register these stocks at 2,558,983 bags. There was no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 7,596 bags.

It was a mixed day on the commodity markets yesterday and the leading Oil markets turning lower during the course of the day. Overall it was a day of mixed results and a positive day for Coffee, Cocoa, Copper, Orange Juice, Corn, Soybean, Gold, Silver, Platinum and Palladium,  although a negative day for Sugar, Cotton and Wheat. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% lower; to see this Index registered at 556.128. The day starts with the U.S. Dollar trading at 1.6864 to Sterling and 1.365 to the Euro, while Brent Crude is steady in early trade and is selling at $ 110.67 per barrel.

The coffee markets will be closed on Monday with holidays in both London and New York on the day.  The markets opened with a degree of follow through selling activity yesterday and both markets opened on a lower note.  The initial flurry of activity settled within a new lower range in both markets and the morning session in both London and New York took on a lower intensity, in lighter volume and London in particular remained steady through to the afternoon and within a narrow range. The New York arabica faltered later in the morning and encountered a degree of long liquidation in relatively thin volume.  The lows were though quickly taken up by underlying buyer support and some industry fixation activity, to prop up the market which seemed to reinvigorate confidence in upward momentum as the session progressed. The positive tone taken on by New York similarly leant a boost to the idling London market and late in the session both markets recovered back to positive territory, although this was not quite sustained to the last minutes of the day.  Both markets moved toward the close with some buoyancy, and settled in London on a mildly positive note, while New York clambered back from the lows of the day, to settle hardly changed on the close, to set the prices yesterday, as follows:  

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

MAY 2001 +  9 
JUL 2019 +  7         JUL 181.35 – 0.05 
SEP 2032 +  8         SEP 183.70  Unch
NOV 2044 +  8         DEC 187.00 + 0.05
JAN 2054 +  9       MAR 189.60 + 0.10
MAR 2062 + 10 MAY 190.70 + 0.20
MAY 2070 + 11 JUL 191.05 + 0.30
JUL 2067 + 12 SEP 190.40 + 0.30 
SEP 2085 + 12 DEC 189.25 + 0.30
NOV 2097 +  8 MAR 188.00 + 0.25


22nd May, 2014.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 501 bags yesterday, to register these stocks at 2,565,312 bags. There was a 2,960 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 7,596 bags.  

The commodity markets maintained an overall steady track during trade yesterday, with positive signs of improvement in China’s manufacturing and factory sector providing some buoyancy to the day.  The Oil markets were steady, along with the Copper, Corn and Gold markets, while a positive close for Cocoa, Cotton Orange Juice, Soybean, Platinum and Palladium and a softer close on the day for Coffee, Wheat and Silver markets.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.04% lower; to see this Index registered at 556.602. The day starts with the U.S. Dollar trading at 1.6889 to Sterling and 1.366 to the Euro, while Brent Crude is steady in early trade and is selling at $ 111.24 per barrel.  

It was a quiet start to the day in the coffee markets yesterday; both opening the day on a hesitantly steady note and with early volume muted, both markets turned mildly softer through the morning session.  The New York market however gradually posted a recovery to opening levels although the regained territory quickly met with sellers waiting at the top.  This applied some pressure to the market removing the newly built confidence in momentum and a lower afternoon session ensued in New York, with spread activity adding to the relatively modest volume on the day.  It was a generally lacklustre day in London in the absence of producer activity and this sector seemingly withdrawn from this prevailing lower market.  London did however recover briefly in the afternoon’s trade, but with both markets again coming under pressure and dipping quickly lower again, toward the end of the day. The New York market finished near to the low on the day, while London managed to regain marginal ground by the end of the day, to see the markets close on a softer note and both in negative territory, against the prices set yesterday, as follows:


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

 MAY 1992 – 49 
JUL   2012 – 24         JUL 181.40 – 4.30 
SEP 2024 – 24         SEP 183.70 – 4.25
NOV 2036 – 24         DEC 186.95 – 4.25
JAN 2045 – 25         MAR 189.50 – 4.25
MAR     2052 – 26                       MAY 190.50 – 4.35 
MAY     2059 – 26                       JUL 190.75 – 4.45
JUL     2065 – 28                       SEP 190.10 – 4.50 
SEP     2073 – 28                       DEC 188.95 – 4.70
NOV     2089 – 28                       MAR     187.75 – 4.90

21st. May, 2014.
With the questionable in size new Brazil crop now being harvested there is likewise forward selling of this new crop coming into play, with estimates that approximately 20% of this new crop had already been sold by the end of April.   Sales have however slowed over the past week, as with the reference prices of the New York market having softened while the Brazil real remains at a steady 2.21 to the U.S. dollar, many arabica coffee farmers have not been inspired to be aggressive new crop sellers.  But despite the recent dip in the value of the international coffee markets, there remains sufficient selling activity out of Brazil, to ensure a steady supply of Brazil coffee to the consumer markets, for the foreseeable future.

The United States Department of Agriculture are coming forth with a host of further crop forecasts and following the forecasts for Brazil, Colombia, Peru and Ethiopia, have forecast that the next Mexican harvest that starts coming into play at the end of this year, shall be 2.63% higher than the recently completed new crop, to total 3.9 million bags.   This forecast that has pegged the new crop that is now in play at 3.8 million bags is however questioned by many market players, who have assessed the latest new crop as being in excess of 4 million bags.   It is nevertheless a forecast that does confirm the perception that with the influences of improved profits from the prevailing market prices, that it shall assist farmers to increase inputs and chemical controls, so as to ensure a larger overall new crop from the producer bloc of Mexico and Central America for their October 2014 to March 2015 harvest.

The USDA have also come forth with forecasts for El Salvador and Costa Rica and have forecast a 33% increase for the next crop from El Salvador, which they have pegged at a still relatively modest crop of 675,000 bags.   While despite the reluctance of the Coffee Institute to start talking new crop figures, the USDA have forecasted a 3.2% decline from the last crop and a new crop to start coming in at the end of this year, which shall be a relatively modest 1,380,000 bags.

The USDA have contradicted the relatively positive new crop forecast from the Indonesian Coffee Exporters and Industry Association who have been talking in terms of a figure of 11.67 million bags, in that the USDA forecast this new crop to be a modest 8.9 million bags.   This is a marked difference but there have been many other private trade forecasts that have likewise been talking in terms of a new crop that shall be less than 10 million bags and therefore, it remains a case of having to wait until the end of the year to see what the evidence of coffee sales and exports shall indicate.

One might comment that it is actually very difficult to actually assess the Indonesian coffee crop, as there is so much in the way of informal and unquantifiable trade that carries on within this country with a growing domestic market for coffee.   One might however and especially with the rising domestic market demand factor in play, be safe to presume that there shall be a tightening export coffee supply from Indonesia for the rest of this year and the first half of next year.

The prospects for relatively modest robusta coffee export volumes from Indonesia for the foreseeable future are however of no real concern to the consumer markets, so long as Vietnam continues to bring in their large crops and with forecasts so far, for another large new crop to start being harvested in October.   The dip in the value of the London robusta coffee market has however resulted in a degree of price resistance and slowed internal market selling activity of the past crop stocks in Vietnam, which is putting some pressure on exporters to pay up to cover coffees necessary to fulfil forward sales commitments.

The arbitrage between the markets broadened yesterday to register this at 93.35 usc/Lb., while this equates to a very attractive 50.27% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 496 bags yesterday, to register these stocks at 2,565,813 bags.   There was meanwhile a larger in volume 960 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 4,695 bags.

The commodity markets again had a mixed day yesterday and with most markets remaining within a narrow trading range, but registered and overall positive day.  The Oil, Cocoa, New York arabica Coffee, Cotton, Corn, Soybean, Gold, Silver and Palladium markets were steady to buoyant, while the Natural Gas, London robusta Coffee, Sugar, Copper, Orange Juice, Wheat and Platinum markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% higher; to see this Index registered at 556.82.   The day starts with the U.S. Dollar near to steady and trading at 1.684 to Sterling and 1.370 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 111.10 per barrel.

The London market opened the day tending softer in thin trade, while the New York market showed modest buoyancy in likewise thin trade.  The London market did however recover in the afternoon’s trade, but with both markets again coming under pressure and dipping back into negative territory as the afternoon progressed, but with the New York market finding support at the lows and recovering late in the day.  The London market continued to end the day on a near to steady note and having recovered 92.9% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 79.5% of the gains of the day intact.    This could be seen to be an overall positive close and one that might assist to influence a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2041 – 1                                                
JUL      2036 – 1                                                 JUL      185.70 + 2.20
SEP      2049 – 2                                                SEP      187.95 + 2.20
NOV     2060 – 4                                                 DEC     191.20 + 2.35
JAN      2070 – 4                                                MAR     193.75 + 2.45
MAR     2078 – 4                                                MAY     194.85 + 2.45
MAY     2085 – 4                                                 JUL      195.20 + 2.55
JUL      2093 – 2                                                 SEP      194.60 + 2.20
SEP      2101 – 2                                                 DEC     193.65 + 2.00
NOV     2117 unch                                              MAR    192.65 + 1.80

20th. May, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 4.05% in the week of trade leading up to Tuesday 13th. May;  to register a net long position of 29,142 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,857,000 bags has most likely been further reduced, over the following days of mixed but overall negative trade which has since followed.

The National Export Association of Nicaragua have reported that the countries coffee exports for the month of April were 72,136 bags or 26.87% lower than the same month last year, at a total of 196,303 bags.  This lower volume has contributed to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year having been 360,199 bags or 33.14% lower than the same period in the previous coffee year, at a total of 726,805 bags.

This is a rather dramatic dip in export performance for the first seven months of this year, but it has been accentuated by the fact that the country exported approximately 300,000 bags of carryover stocks from the past crop during October and November 2012, which inflated the previous coffee years export data.   While in terms of the dip in exports for the month of April this year, this is not only related to what is no doubt a Roya affected lower new crop, but is also related to a degree of price resistance from the consumer markets for Central American coffees, where exporters have been demanding positive differentials against the already firm price levels of the reference prices of the New York market.

The Ugandan Coffee Development Authority has reported that the country’s exports for the month of April were 35% higher than the same month last year, to total 336,676 bags.   These exports that are made up from a 68.91 to 31.09 mix of robusta and arabica coffees contribute to an export performance of 3.85 million bags over the past twelve months, which might support the forecasts that are in the market for Uganda to soon crack the 4 million bags coffee exports per annum mark and shall in this respect, remain the second largest producer in Africa but with a modest domestic consumption, the largest exporter in Africa.  

Meanwhile in terms of African production the United States Department of Agriculture have forecasted that the Ethiopian coffee production for the present 2013 to 2014 coffee year shall remain the similar to the past coffee year at 6.35 million bags, but shall most likely rise marginally for the next October 2014 to September 2015 coffee year.   However with a vibrant domestic consumption in Ethiopia these crops do not indicate and export potential of much more than 3.3 million bags per annum, which is a figure that this latest forecasts would suggest shall remain in place for both the present and the forthcoming coffee year.  

The United States Department of Agriculture who contributed to last week’s negative turn in market sentiment with a forecast that despite the damage the new Brazil crop would be approximately 49.5 million bags have come forth with a forecast that the new Peru crop of mostly fine washed arabica coffees which has started, shall be 15% higher than the past crop, at a total of 4.5 million bags.

The USDA have likewise forecasted that the Colombian coffee production shall increase for the next October 2014 to September 2015 coffee year, to total 11.9 million bags of fine washed arabica coffee, which is perhaps a conservative number as already there are many talking a growth to well in excess of 12 million bags for the next coffee year.   Thus adding to the perception that the tighter washed arabica coffee supply that came with Roya in Mexico and Central America, shall not continue as aside from these forecasts for rising supply of these coffees from the main South American producers, the forecasts are for overall larger new crops from Mexico and Central America for the next harvest that starts in the last quarter of this year.

The arbitrage between the markets narrowed on Friday to register this at 91.10 usc/Lb., while this equates to a very attractive 49.65% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,895 bags yesterday, to register these stocks at 2,566,309 bags.   There was meanwhile a similar in volume 2,880 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 3,735 bags.

The commodity markets again had a mixed day yesterday, but registered and overall positive day.  The Oil, Natural Gas, Cocoa and Copper, Orange Juice, Soybean, Gold, Silver, Platinum and Palladium markets were steady to buoyant for the day, while the Sugar, Coffee, Cotton, Wheat and Corn markets had a softer day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.44% higher; to see this Index registered at 556.73.   The day starts with the U.S. Dollar steady and trading at 1.681 to Sterling and 1.371 to the Euro, while Brent Crude is steady in early trade and is selling at $ 110.65 per barrel.

The London and New York markets both opened the day on cautious steady note in thin trade yesterday and within an environment of thin trade and showed some degree of modest buoyancy into the afternoons trade, but with the speculative sector of the markets seemingly suffering from exhaustion and losing some degree of confidence while the industry is a slow buyer and awaiting new lows, the markets faltered later in the day and drifted lower in value.  The London market ended the day on a softer note but having recovered 69% of the earlier losses of the day, while the New York market ended the day on a soft note and with 75.6% of the earlier losses of the day intact.   This overall soft close is unlikely to inspire and one might expect to see little better than a steady close for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2042 – 9                                                 MAY      180.15 – 2.35
JUL      2037 – 9                                                  JUL      183.50 – 1.55
SEP      2051 – 9                                                  SEP     185.75 – 1.55
NOV     2064 – 7                                                  DEC     188.85 – 1.55
JAN      2074 – 7                                                 MAR     191.30 – 1.55
MAR     2082 – 6                                                 MAY     192.40 – 1.35
MAY     2089 – 6                                                  JUL      192.65 – 1.20
JUL      2095 – 7                                                  SEP      192.40 – 1.20
SEP      2103 – 5                                                 DEC      191.65 – 1.25
NOV     2117 unch                                              MAR     190.85 – 1.25

19th. May, 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 5.57% in the week of trade leading up to Tuesday 13th. May; to register a net long position of 42,668 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 1.05%, to register a net long on the day of 44,345 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 9.5%, to register a net long position of 27,675 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,845,740 bags has most likely been marginally decreased over the following days of mixed but overall softer trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 279,187 bags or 5.63% during the month of April to register these stocks at the end of the month at 5,237,598 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per month, equate to approximately 10.9 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 March stocks would have safely exceeded 13 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

While even if one is to deduct the partially aged stocks held within the U.S.A. based warehouse of the New York exchange, the coffee stocks at the end of April were the equivalent of in excess of 11.5 weeks of roaster demand.   This good cover is ahead of the slower summer roasting season and is to a degree, a modestly bearish factor for the New York market.   Albeit that it is a factor that is well shadowed by the ongoing concerns over the new Brazil crop, even though CONAB pulled the wind out of the sales of the speculative bulls last week, with its much higher than any had expected, new crop forecast.   But perhaps with the softer nature of the reference prices of the New York market that has since followed both of these CONAB and U.S. month end stocks reports, one might soon expect to see some contradictory lower new Brazil crop reports start coming out of Brazil.

The National Coffee Institute in Honduras have announced that due to the more attractive prices being paid for the brand name origin Guatemala for new crop coffees, that the incidences of coffee smuggling from Honduras into their neighbouring country are on the increase.   While this is to a lesser degree and by the dictates of geographical logistics also happening into neighbouring Nicaragua, albeit that this latter country does not offer the same premiums as the high flying Guatemalan name and image.

These advantageous price activities which the National Coffee Institute of Honduras have estimated, has already resulted in approximately 380,000 bags of new crop coffees being smuggled out of the country, they estimate shall reduce their earlier export forecast by 7% of the present October 2013 to September 2014 coffee year and thus, a new forecast of approximately 4.2 million bags.  This if true, would result in a marginally lower export performance than the 4.34 million bags exported over the previous 2012 to 2013 coffee year.

The arbitrage between the markets narrowed on Friday to register this at 92.24 usc/Lb., while this equates to a very attractive 49.85% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,100 bags on Friday, to register these stocks at 2,569,204 bags.   There was meanwhile a marginally larger in volume 1,925 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 6,615 bags.

The commodity markets again had a mixed day on Friday, but taking an overall negative track.  The Oil, Cocoa and Copper markets had a day of buoyancy, while the Natural Gas Sugar, Cotton, Orange Juice, Wheat, Corn, Soybeans, Gold, Silver, Platinum and Palladium markets had a softer days trade and the Coffee markets fell out of a very speculative and shaky bed.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.64% lower; to see this Index registered at 555.62.   The day starts with the U.S. Dollar near to steady and trading at 1.682 to Sterling and 1.371 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 110.85 per barrel.

The London and New York markets both opened the day on a softer note on Friday, with the rising certified stocks having some modest impact upon sentiment in the London market, as did the U.S. April stock levels and the less dramatic than expected CONAB report impact negatively upon sentiment in the New York market.    This softer opening in both markets started to attract catch up producer fixation pressure and with profit taking being triggered and consumer roasters stepping back from the markets and awaiting new lows to do business, the downside track continued through the afternoon’s trade.   The London market continued to end the day on the lows of the day and with 98.9% of the losses of the day intact, as did the New York market end the day near to the lows and with 93.6% of the losses of the day intact.  This overall soft close and near to the lows of the day on Friday, is unlikely to inspire confidence for early trade today and one might expect to see a steady to soft start for the day against the prices set on Friday, as follows;

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2051 – 87                                               MAY     182.50 – 11.65
JUL      2046 – 92                                                JUL     185.05 – 11.75
SEP      2060 – 92                                               SEP     187.30 – 11.75
NOV     2071 – 92                                               DEC     190.40 – 11.60
JAN      2081 – 91                                               MAR    192.85 – 11.45
MAR     2088 – 89                                               MAY    193.75 – 10.95
MAY     2095 – 88                                                JUL    193.85 – 10.60
JUL      2102 – 87                                                SEP    193.60 – 10.15
SEP      2108 – 87                                                DEC    92.90 – 9.90
NOV     2117 – 87                                                MAR    192.10 – 9.70

16th. May, 2014.
The Vietnam customs have announced their official coffee export figure for the country’s exports of mostly robusta coffees for the month of April, which were 24.3% lower than the previous month and marginally below official forecasts, but well above the countries trader’s forecasts.   These exports that are reported at 3,512,500 bags contribute to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year being 1,829,736 bags or 11.2% higher than the same period in the previous coffee year, to total 18,166,667 bags.

Vietnam is however forecasting coffee exports for the present coffee year of 25.3 million bags and therefore, indicating exports over this month and the four months to follow of in excess of 7 million bags and therefore a steady flow of coffees for the foreseeable future.   The monthly volumes are however expected to dip to below 2 million bags per month, which shall open the doors for alternative robusta coffee supply to the consumer markets, from the new Indonesian, Indian, Ugandan and West African coffee crops.   The former Indonesian new crop coffee is only just starting to come to the market, with volumes questionable in terms of the relatively positive official new crop figure, as against some of the trade that have recently been talking this crop lower.

The market is however all about Brazil and the official Companhia Nacional de Abastecimento (CONAB) or National Food Supply Agency new crop came out a little earlier than had been expected yesterday, with this forecast predicting that the new crop that has started to be harvested shall be 44.57 million bags, which is 9% lower than its earlier forecast in early January and prior to the devastating hot and dry weather that impacted over the main arabica coffee districts in January and February.  It is however a figure that is well above what many had been expecting from this traditionally conservative agency, who many had been anticipating would be talking a figure closer to 40 million bags, but it was nevertheless a report that predictably buoyed the New York market and with the London market following suit.

The question is what is the reality of this new crop that can really only be assessed post the harvest and around September this year, but as the CONAB reports are historically over 10% below reality, one might view this report to be indicating a new crop of around 49.52 million bags.   This is a figure that rather accurately matches the earlier in the week and negative for the market forecast by the United States Department of Agriculture forecasts, which might for the short term be the figure that most shall now start to believe in.   A figure that indicates an approximate 4 million bags deficit crop.

This 4 million bags deficit is however not a problem in terms of Brazil coffee supply for the foreseeable future as while the USDA indicated relatively modest 6.3 million bags of carryover stocks of mainly arabica coffees, the private trade and industry players have been talking a figure of in excess of 12 million bags.   Thus whomever one is to believe in terms of the carryover stocks there is apparently more than sufficient Brazil coffee to carry through to the next 2015 crop and the question remains now, what shall the size of this crop be and until the last quarter of this year and the evidence of the quality and intensity of the spring and summer rains and the resulting flowerings towards the new crop, this shall remain a question.    Albeit that many are already talking the negative effects of the partial drought earlier in the year to the coffee trees, being reason to believe in a further modest deficit crop for the coming year.

But in the meantime the Brazil figures are not proving to be as threatening as was foreseen in March this year and while they are sufficiently worrying in terms of reduced coffee supply to buoy the markets for the medium term, they are not following yesterday’s CONAB report, dramatic enough to fuel a further intense rally.    They might however assist to maintain the present relatively positive and profitable for producers trading range, but could well start to attract the negative influences of increased volumes of producer price fixation selling activity, against the perception that there shall indeed be more than sufficient coffee supply for the next twelve months.  Thus capping the upside potential of the markets, which might set a relatively nearby ceiling to the markets for the short term.

The arbitrage between the markets broadened yesterday to register this at 99.82 usc/Lb., while this equates to a very attractive 50.72% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,339 bags yesterday, to register these stocks at 2,570,304 bags.   There was meanwhile a smaller in volume 570 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 4,690 bags.

The Certified Robusta coffee stocks held against the London market predictably increased by 289,500 bags or 107.42% in the two weeks of trade leading up to Monday 12th. May: to register these stocks at a still relatively modest 559,000 bags.   This increase was to be expected as with the price structure of the London market having returned to normal following many months of an inverted structure that was not conducive to the trade financing the carry of stocks, there has been a steady off take of coffee stocks from Vietnam.

The commodity markets again had a mixed day yesterday, but on an overall negative track.  The Brent Oil, Natural Gas and Cocoa markets had a day of buoyancy and the Coffee markets were sharply higher, while the U.S. Oil, Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybeans, 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 0.30% lower; to see this Index registered at 559.19.   The day starts with the U.S. Dollar near to steady and trading at 1.679 to Sterling and 1.372 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 109.00 per barrel.

The London market opened the day on a steady note and with the New York market showing some early buoyancy, but with both markets soon starting to add value in thin trade.   The excitement came however once the CONAB report came to the table, with the New York market immediately attracting support and with buy stops being triggered, to accelerate the rally and with the London market following in a more modest manner.  The London market continued to end the day on a positive note and on the highs of the day, while the New York market ended the day on a very positive note and with 92.99% of the gains of the day intact.   This positive close is conducive to a steady start for early trade today, but one would think that trade shall be cautious and possibly marginally softer against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2138 + 43                                               MAY     194.15 + 13.40
JUL      2138 + 47                                                JUL     186.80 + 12.60
SEP      2152 + 46                                               SEP     199.05 + 12.60
NOV     2163 + 44                                               DEC     202.00 + 12.55
JAN      2172 + 43                                               MAR    204.30 + 12.50
MAR     2177 + 42                                               MAY    204.70 + 11.65
MAY     2183 + 42                                                JUL    204.45 + 11.10
JUL      2189 + 42                                                SEP    203.75 + 10.65
SEP      2195 + 42                                               DEC    202.80 + 9.85
NOV     2204 + 42                                               MAR    201.80 + 9.10

15th. May, 2014.
The late spring rains have been good for Vietnam that now heads into its summer rain season and with reasonable profits from their coffee sales in hand, the farms are expected to apply full inputs towards the development of their new crop coffee cherries.  This seemingly indicating yet another good crop of mostly robusta coffees is due from the country, as the end of this year and one that shall fuel follow through high export volumes for the coming year.

Presumably with the same steady performance of the present October 2013 to September 2014 coffee year, within which the country is forecasted to export in excess of 25.3 million bags of coffee.   These exports made up by a 95.5% to 4.5% ratio of robusta and arabica coffees and an impressive performance in terms of the country that has a domestic consumption that is getting close to 2 million bags per annum, with the potential to keep on a steady upside track.   

There is also a longer term positive story that comes with the past two decades success story of Vietnam that has seen the country grow from their modest exports of 344,000 bags of coffee in the October 1985 to September 1986 coffee year to the present levels, is the influence that Vietnam is having and by example, upon its neighbouring countries.   In this respect there are signs of increasing production within Laos and Cambodia and now that the politics are returning to normal, investments in coffee farming in Burma or Myanmar, which should see the regional coffee production steadily, increase over the coming years.

But one might comment that with regional South East Asian coffee consumption growing by approximately 6% per annum, that there is good reason for regional production to follow suit, it is to both maintain profitable export volumes to the main consumer markets and to fuel the growing regional coffee demand.   While by the very nature of this regional demand, is an added influence upon the farmers in Asia to wish to grow and be part of the coffee industry.   Yet another Asian success story, of which there are so many.

Meanwhile the official Companhia Nacional de Abastecimento (CONAB) or National Food Supply Agency new crop forecast is due out late in the day today and with this agency having talked in terms of a 46.5 to 50.1 million bags during their last forecast on the 9th. January and prior to the two month dry weather spell that has done damage to the crop potential, it is most likely that they shall come forth with some significantly lower numbers.    These will no doubt do something to counter the negative sentiment that came with the earlier in the week USDA report, which talked in terms of a significantly higher 49.5 million bags and might well come forth to buoy the presently soft nature of the New York market, for the end of this week.

The arbitrage between the markets narrowed yesterday to register this at 89.35 usc/Lb., while this equates to a still very attractive 48.51% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,073 bags yesterday, to register these stocks at 2,571,643 bags.   There was meanwhile a smaller in volume 1,285 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 4,120 bags.

The approved European based warehouses of these stocks in Antwerp, Barcelona, Bremen and Hamburg presently account for 1,904,567 bags or 74,06% of the stocks, as against the balance being held within the U.S.A. based warehouses in Houston, Miami, New Orleans and New York.    While in terms of the makeup of these stocks the producer bloc of Mexico and Central Americas Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua continue to dominate and account for 1,516,648 bags or 58.98% of the stocks and followed by Peru with 537,319 bags or 20.89% of the stocks and the East Africans Burundi, Rwanda, Tanzania and Uganda who jointly contribute 333,254 bags or 12.96% of the stocks.

What is noticeable and coming with the much improved production levels in Colombia over the past year, is that this country that has been off the board in terms of their contribution towards the New York Certified stocks for the past few years is that Colombia now account for 100,977 bags or 3.93% of the stocks, with the prospects for this share to increase in the coming years.   While the balance of the stocks at present, are related to India, who account for 83,445 bags.

The commodity markets had a mixed day yesterday, but overall positive day yesterday.  The Oil, Sugar, Copper, Orange Juice, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Natural Gas, Cocoa, Coffee, Cotton, 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 0.26% higher; to see this Index registered at 560.87.   The day starts with the U.S. Dollar steady and trading at 1.677 to Sterling and 1.371 to the Euro, while Brent Crude is steady too soft in early trade and is selling at $ 109.70 per barrel.

The London market opened the day on a steady note and with the New York market showing some early buoyancy, but with both markets unable to hold above par and tending softer into the afternoons trade, which was noticeably thin and lacklustre for the more speculative and volatile New York market.   The London market continued to end the day having bounced back from the earlier lows and with only 26.9% of the earlier losses of the day intact, while the New York market ended the day on a softer note and with 68.7% of the losses of the day intact.   One would think however that despite the negative nature of the close yesterday that the prospects for a supportive for sentiment CONAB report to the fore, might well inspire some precautionary industry buying and a steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2095 – 1                                                 MAY     180.75 – 2.90
JUL      2091 – 7                                                  JUL     184.20 – 2.75
SEP      2106 – 7                                                 SEP     186.45 – 2.75
NOV     2119 – 5                                                 DEC     189.45 – 2.70
JAN      2129 – 4                                                 MAR    191.80 – 2.75
MAR     2135 – 3                                                 MAY    193.05 – 2.45
MAY     2141 – 2                                                  JUL     193.35 – 2.35
JUL      2147 – 2                                                  SEP     193.10 – 2.40
SEP      2153 – 2                                                 DEC     192.95 – 2.20
NOV     2162 – 2                                                  MAR    192.70 – 1.95

14th. May, 2014.
There are reports from farmers in India that the recent rains have been favourable for good flowerings towards the next crop, which shall start being harvested at the end of this year, with some early forecasts talking in terms of a new crop of at least 5.17 million bags.   While with the past crop coffees still being marketed, there not yet been any official report on the size of this past crop that some internal market players have been talking down, but with many talking in terms of something in the order of 5.05 million bags.

The well respected U.S. Department of Agriculture have forecasted a much improved October 2014 to September 2015 coffee crop for Kenya, which they have pegged at approximately 900,000 bags of fine washed arabica coffees.   This would be a significant improvement over the estimated crop of 790,000 bags, for the present coffee year.

The U.S. Department of Agriculture have likewise forecasted an improved crop for the October 2014 to September 2015 coffee year for Tanzania, which they estimate shall be approximately 1.15 million bags.  This new crop that is related to an approximate 70 to 30 ratio of arabica and robusta coffees would be something of a recovery for the country, which produced 1.07 million bags during the 2012 to 2013 coffee year, but only approximately 910,000 bags during the present coffee year.

The U.S. Department of Agriculture have furthermore forecasted that Africa’s second largest coffee producer and largest coffee exporter Uganda shall see continued growth in its coffee production and a coffee crop of approximately 4 million bags for the forthcoming October 2014 to September 2015, which they foresee shall support exports of approximately 3.8 million bags during this next coffee year.  This would be a significant improvement over the production for the present coffee year but is perhaps not so unrealistic or unachievable, in comparison to the 3.67 million bags produced during the 2012 to 2013 coffee year, while the ratio of production is heavily weighted towards the robusta coffee sector of the country’s coffee industry, which accounts for approximately 78% of the coffees produced.

These positive forecasts for improved East African production are while regionally positive, small numbers in terms of global coffee production within which the African continent now accounts for approximately 10% of global coffee production and 13% of global coffee exports.   But it is heartening news in terms of the continents lethargic coffee industry over the past few decades, as against the approximate 23% market share that Africa held in terms of world coffee supply thirty years ago.  Thus one would hope that these are early signs of overall recovery and that with the encouragement of free market policy’s returning to most countries and with the continent that is the origin of all coffees ideally suited to good levels of coffee production, that coffee production in both East and West Africa shall steadily grow over the coming years.

With just five months to go until the new crop harvest is due to start, Vietnam’s trade sector estimate that approximately 40% of the countries past crop coffees that came from an approximate 28 million bags crop remain within the country, but this has yet to influence aggressive internal market selling aggression.   There are however steady sales and exports out of Vietnam and one can expect high volumes of exports to continue, for the next five months and to most likely continue for the coming year, as all indications are towards another large new crop.

The arbitrage between the markets narrowed yesterday to register this at 91.79 usc/Lb., while this equates to a still very attractive 49.10% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,486 bags yesterday, to register these stocks at 2,573,716 bags.   There was meanwhile a larger in volume 7,010 bags decline in the number of bags pending grading for the exchange; to register these pending grading stocks at 5,405 bags.

The commodity markets had a mixed day yesterday, but shrugged off the negative news of soft economic manufacturing data from China and seemingly focused upon the positive economic forecasts for the U.S.A. and the Euro zone countries.   The Oil, Sugar, Cocoa, Orange Juice, Corn, Soybean, Silver and Platinum markets had a day of buoyancy, while the Natural Gas, Coffee, Cotton, Copper, Wheat and Gold markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.26% higher; to see this Index registered at 559.42.   The day starts with the U.S. Dollar near to steady and trading at 1.685 to Sterling and 1.372 to the Euro, while Brent Crude is showing a degree of buoyancy in early trade and is selling at $ 109.55 per barrel.

The London and New York markets started the day yesterday on a follow through positive note, but with both markets taking a dip into the early afternoon trade and while the New York market experienced a short recovery, the London market continued on a steady downside track and followed later in the day by a softer New York market.   The London market continued to end the day on a softer note and with 71.1% of the losses of the day intact, while the New York market likewise ended the day on a soft note and with 67.6% of the earlier losses of the day intact.   This overall soft close was not dramatic 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.
                                                  
MAY     2096 – 39                                               MAY     183.65 – 2.45
JUL      2098 – 32                                                JUL     186.95 – 2.30
SEP      2113 – 32                                               SEP     189.20 – 2.30
NOV     2124 – 33                                               DEC     192.15 – 2.05
JAN      2133 – 33                                               MAR    194.55 – 2.05
MAR     2138 – 35                                               MAY    195.50 – 1.85
MAY     2143 – 36                                                JUL     195.70 – 1.75
JUL      2149 – 36                                               SEP      195.50 – 1.55
SEP      2155 – 36                                               DEC     195.15 – 1.50
NOV     2164 – 36                                                MAR    194.65 – 1.60

13th. May, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 1.61% in the week of trade leading up to Tuesday 6th. May;  to register a net long position of 30,373 Lots on the day.  This speculative net long position within the London market which is the equivalent of 5,062,167 bags has most likely been further reduced, over the following days of mixed trade which has since followed.

Further taking some of the wind out of the sails of the speculative bulls in the markets is the report from the well-respected U.S. Department of Agriculture whose locally based attaché has forecasted that even with the damaging effects of the hot and dry first two months of the year over the main arabica coffee districts in Brazil, the new crop shall only be 8% lower than last year’s crop, to total 49.5 million bags.   This crop made up by 33.1 million bags of arabica coffees which is 6.3 million bags or 15.99% drop from their pre drought forecast and 16.4 million bags of conilon robusta coffees, which are 2.1 million bags or 14.69% higher than their late last year forecast.  

The same report did however estimate the carryover stocks into the new crop of 6.3 million bags, which is a relatively modest figure, compared to the many private trade and industry forecasts for these stocks to be approximately 12.5 million bags.     Nevertheless if one is to go with these latest USDA figures the combination of carryover stocks and new crop coffees would indicate a coffee supply through to the next 2015 crop of 55.8 million bags as against their forecasts for domestic consumption of 20.1 million bags and export demand of 32.88 million bags, which equates to a modest surplus coffee supply of 2.82 million bags.

Thus while the report that does concede that a further review has to be made further into the new crop harvest and when there shall be more clarity from the grading outturns as to how much damage might have been done to the crop potential in the leading arabica coffee districts, it nevertheless does confirm that there shall be very modest carryover stocks into the next 2015 crop.    This is a factor that while the report may be seen to be a little negative to the market, does highlight how critical shall be the weather conditions towards the development of the next 2015 crop in the last quarter of this year, as unless this crop is a good one of in excess of 55 million bags, there shall be a real problem of Brazil coffee supply for the follow on 2015/2016 coffee year and one would not expect the report to dampen the overall positive market sentiment.   Especially so as one can still expect to soon see some more dramatic reports emanating from Brazil that shall talk in terms of more excessive damage, albeit that many might be somewhat market manipulative in nature.

The ongoing debate between the farmers and their government in Colombia following the recent strikes have stalled, but the government say that they are willing to come back to the table and further discuss the issue of re-financing the state supported farm debt programs.   Thus for the present and especially so in terms of the country’s coffee farmers who are presently in receipt of profitable prices, one cannot foresee much of a threat for disruption of steady Colombian coffee supply to the consumer markets.   Albeit that the problem is not only related to longer term debt finance for the farmers, but also to accusations of corruption in terms of the outstanding price support program for the coffee farmers, which took place during last year’s dismal price trading range.

Meanwhile in Indonesia the third largest coffee producer and with a new crop of 11.67 million bags if one is to believe the latest official forecasts, there are forecasts that domestic coffee consumption that is estimated at 5 million bags for this year, shall increase by 33% over the next couple of years to total 6.67 million bags.  Thus unless something can be done to encourage the countries farmers with their relatively dismal 760 Kgs. per hectare average production, the prospects are for steadily declining coffee supply from the country that is in fact still the fourth largest exporter, to the consumer markets.    

The arbitrage between the markets broadened yesterday to register this at 92.63 usc/Lb., while this equates to a still very attractive 48.95% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,870 bags yesterday, to register these stocks at 2,576,202 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,415 bags.

The commodity markets had a mixed day yesterday, but with the overall macro commodity index showing a degree of modest buoyancy.  The Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper, Orange Juice, Gold, Silver, Platinum and Palladium markets showed buoyancy, while the Cotton, What, Corn and Soybean markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.23% higher; to see this Index registered at 557.97.   The day starts with the soft U.S. Dollar near to steady and trading at 1.687 to Sterling and 1.376 to the Euro, while Brent Crude is showing a degree of buoyancy in early trade and is selling at $ 108.55 per barrel.

The London market started the day yesterday on a modestly follow through softer note in thin trade, while the New York market started the day taking a steady stance.   There was a follow through dip into negative territory, but as the afternoon progressed the New York market recovered and started to take a steady upside track and followed by a recover for the London market.   The London market continued to end the day on a positive note and with 71.2% of the gains of the day intact, while the New York market ended the day on a relatively strong note and with 90.7% of the gains of the day intact.    This overall positive close is perhaps constructive for a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2135 + 37                                               MAY     186.10 + 5.30
JUL      2130 + 37                                                JUL     189.25 + 5.35
SEP      2145 + 37                                               SEP     191.50 + 5.35
NOV     2157 + 36                                               DEC     194.20 + 5.35
JAN      2166 + 37                                               MAR    196.60 + 5.45
MAR     2173 + 37                                               MAY    197.35 + 5.25
MAY     2179 + 36                                                JUL     197.45 + 5.05
JUL      2185 + 35                                               SEP      197.05 + 4.65
SEP      2191 + 33                                               DEC     196.65 + 4.35
NOV     2200 + 33                                               MAR     196.25 + 4.15

12th. May, 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 1.61% in the week of trade leading up to Tuesday 6th. May;  to register a net long position of 45,187 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 0.09%, to register a net long on the day of 44,814 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 0.78%, to register a net long position of 30,579 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 8,669,011 bags has most likely been sharply decreased over the following days of overall softer trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

With the new crop harvest starting in Peru, the Agricultural Ministry who had previously forecasted a 7% increase in the size of this year’s new crop are now forecasting that this crop shall now be 614,000 bags or 14% higher than last year’s crop, to total approximately 5 million bags.   This positive forecast is being supported by the countries private industry Coffee Association, but they are talking more of the benefits of improved prices this year encouraging farmers to improve inputs, towards next year’s crop.

While in the meantime with hopes for a Brazil inspired improvement in the international market prices, the farmers in Peru have been showing price resistance with their early new crop coffees, with is tending to partially stall export selling activity from the countries exporters.   Last week’s collapse in the reference prices of the New York market might however have an effect and unless there is a quick recovery for the market; one might soon expect to see increasing selling activity of fine washed arabica new crop coffees out of Peru.

It would appear that the old adage that no news is good news has played its part in market sentiment, in terms of last week’s topically important Santos International Coffee Seminar, which was sponsored by The Santos Commerce Association and held in Guarujá, São Paulo, Brazil.   This seminar with all of the leading players in the Brazil coffee industry and with many international major trade and industry players participating was expected to generate a host of dramatic damaged crop reports, but aside from the very much predictable semiofficial low crop potential from the Fundacao Procafe research group, there was no further negative comments of note forthcoming.

This lack of general confirmation of a dramatic dip in the new arabica coffee crop potential has taken the wind out of many speculative sails and especially so, as it was accompanied by confirmation of a 10.98% year by year increase in export volumes for the month of April, which further makes one question the farmers and internal market belief in the severity of the potential loss factor from the hot and dry weather during the first two months of this year.   Weather conditions that are not undeniable and there are still very low water reserves and water restrictions taking place in cities in the states of Minas Gerais and Sao Paulo, but how much damage the low January and February rains might have caused to the new crop potential, is now being seen to be possibly more modest that many had predicted.

But perhaps since the sharp dip in the value of the international coffee markets last week, one might soon expect to see some renewed market manipulative new crop forecasts starting to emanate from Brazil.   Perhaps as early as during this week, as there are still significant unsold past crop arabica coffees in hand and there is no doubt that Brazils farmers would love to add value to both these and to their potentially more modest new arabica crop.

Aside from the negative effects upon the market that came with speculative and fund liquidation last week, was some selling pressure from producers.  Many had been awaiting new highs and losing confidence, started to jump in with catch up price fixation selling pressure, as against consumer roasters stepping back to await new lows.  Thus last week registered an overall sharp downside correction for the New York arabica coffee market, which was followed by the London robusta coffee market.

The arbitrage between the markets narrowed on Friday to register this at 88.96 usc/Lb., while this equates to a still very attractive 48.37% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,725 bags on Friday, to register these stocks at 2,578,072 bags.   There was meanwhile no change to the number of bags pending grading for the exchange; to register these pending grading stocks at 12,415 bags.

The commodity markets had another dull day on Friday, with the dollar steady and nothing striking in news coming forth to set direction.   The Copper and Soybean markets showed buoyancy and the Gold, Platinum and Palladium markets were steady, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Orange Juice, Wheat, Corn and Silver markets were softer for the day and with the Coffee markets taking a rather dramatic tumble.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.71% lower; to see this Index registered at 556.69.   The day starts with the soft U.S. Dollar steady and trading at 1.686 to Sterling and 1.376 to the Euro, while Brent Crude is showing a degree of buoyancy in early trade and is selling at $ 108.15 per barrel.

The London and New York markets started the day on Friday on a marginally softer track and with the New York market attracting a modest pip back into positive territory in early thin trade, but with both markets encountering steady selling pressure and increasing their losses through the afternoons trade.   The downside track was however more steady than is often encountered when sell stops are aggressively being triggered, but both markets nevertheless were unable to buck the trend.   The London market continued to end the day on a soft note and with 82% of the losses of the day intact, while the New York market ended the day on an extremely soft note and with 95.5% of the earlier losses of the day intact.    This soft close and with the charts looking negative is likely to inspire 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.
                                                  
MAY     2098 – 38                                               MAY     180.80 – 12.15
JUL      2093 – 41                                                JUL     183.90 – 11.60
SEP      2108 – 41                                               SEP     186.15 – 11.55
NOV     2121 – 40                                               DEC     188.85 – 11.40
JAN      2129 – 38                                               MAR    191.15 – 11.40
MAR     2136 – 37                                               MAY    192.10 – 10.95
MAY     2143 – 37                                                JUL     192.40 – 10.20
JUL      2150 – 37                                                SEP     192.40 – 9.45
SEP      2158 – 37                                                DEC    192.30 – 8.75
NOV     2167 – 37                                                MAR    192.10 – 8.05

9th. May, 2014.
The more detailed coffee exports for the month of April were announced by the Council of Green Coffee Exporters yesterday, which confirmed that the countries green coffee exports for the month were 270,000 bags or 10.98% higher than the same month last year, at a total of 2,730,000 bags.   Added to this were the exports of value added soluble coffees for the month which were 37,819 bags or 12.18% lower than the same month last year, at a total of 272,701 bags.

The combination of green and soluble coffees therefore confirms that Brazil’s coffee exports for the month of April were 232,181 bags or 8.38% higher than the same month last year, at a total of 3,002,701 bags.   While in terms of value of exports the exports in April were 26.4 million dollars or 5.34% higher than the same month last year, at 521 million U.S. dollars.

Perhaps not surprisingly with the 20th Edition of The Santos International Coffee Seminar, sponsored by The Santos Commerce Association, being held over Wednesday and Thursday this week, in Guarujá, São Paulo, Brazil, the volume of internal market and export business in Brazil has been relatively slow.   This has likewise reduced the volume of price fixation hedge selling on the part of Brazilian exporters against the New York market which should have been a positive factor for the market, which nevertheless followed the charts lower.

The negative nature of the coffee markets this week which one might have thought to gain support from low yield forecasts out of the meetings in Guarujá and from lower volumes of producer price fixation selling, may well have been influenced by talk of carry over arabica coffee stocks from the past crop into the lower new crop, which many say are as high as 12.5 million bags.   This with an export and domestic market demand for Brazil coffees, would indicate that unless the new crop proves to be lower than 42 million bags, there is in reality no risk of tightening Brazil coffee supply over the next fourteen months.    While with few actually talking the new Brazil crop falling below 45 million bags, there would seem to be some degree of exhaustion on the part of the bulls within the New York market.   

In terms of weather in Brazil the month of May which is traditionally a relatively dry month has so far been warm and dry, but with a cold front due to enter the main coffee districts during next week and to bring with it some rain showers.   These shall be welcome as they would add to the good and higher than the monthly averages for most districts rains over the main coffee districts in April, which shall assist to retain the pre dry winter season ground water retention levels.

Meanwhile following the good rains during the past month and with the prevailing warm weather, the vegetative growth prior to the dry winter is seen to have been relatively good and with trees having recovered from the early in the year hot and dry conditions within the main arabica coffee districts in the states of Minas Gerais and Sao Paulo.    This sees the majority of coffee farms now returning to stable conditions, to assist them to ride through the winter months and ahead of the post-harvest spring rains, which shall trigger the flowerings for the next 2015 crop in October.  

The Climate Prediction Centre of the U.S.A. National Weather Service who forecasted a 50% chance of an El Nino phenomenon developing in the Pacific Ocean during the second half of this year have now forecasted a 65% chance for an El Nino.   They have not however foreseen the severity of this potential El Nino which if severe would be damaging for the coffee crop potentials in Colombia, Indonesia and Peru but if only a mild El Nino, could even be seen to be positive for these countries crops.   Thus for the present the talk of El Nino remains neutral, for market sentiment.

The arbitrage between the markets narrowed yesterday to register this at 98.70 usc/Lb., while this equates to a still very attractive 50.49% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,766 bags yesterday, to register these stocks at 2,583,797 bags.   There was meanwhile a similar in volume 2,700 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 12,415 bags.

The commodity markets continued to shrug off the supportive nature of the weak U.S. dollar yesterday, with the macro commodity index having another softer day.  The Copper, Corn, Soybean and Gold markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Sugar, Coffee, Orange Juice, Wheat, 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 0.41% lower; to see this Index registered at 560.67.   The day starts with the soft U.S. Dollar showing a degree of buoyancy and trading at 1.693 to Sterling and 1.384 to the Euro, while Brent Crude is showing a degree of buoyancy in early trade and is selling at $ 108.85 per barrel.

The London and New York markets started the day yesterday tending softer, with both markets dipping lower into the afternoon’s trade.   The New York market continued on this downside track as the afternoon progressed, but the London market partially bucked the trend and with limited volumes of producer or speculative selling over the market, came back off its lows.  The London market continued to end the day on a soft note but having recovered 54.2% of its earlier losses of the day, while the New York market ended the day very soft and with 95.66% of the losses of the day intact.    This overall soft close and with the charts indicating a soft negative trend, would suggest 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.
                                                  
MAY     2136 – 12                                               MAY     192.95 – 5.45
JUL      2134 – 11                                                JUL     195.50 – 5.50
SEP      2149 – 8                                                 SEP     197.70 – 5.45
NOV     2161 – 6                                                 DEC     200.25 – 5.45
JAN      2167 – 6                                                 MAR    202.55 – 5.40
MAR     2173 – 6                                                 MAY    203.05 – 5.30
MAY     2180 – 6                                                  JUL    202.60 – 5.20
JUL      2187 – 6                                                  SEP    201.85 – 4.80
SEP      2295 – 6                                                 DEC    201.05 – 4.50
NOV     2204 – 6                                                  MAR   200.15 – 4.30

8th. May, 2014.
The Colombian Coffee Federation has announced that the country’s coffee production for the month of April was 138,000 bags or 14.23% lower than the same month last year, at a total of 832,000 bags.   This dip however is not significant and the country’s cumulative production for the first seven months of the present October 2013 to September 2014 coffee year is still 1,419,400 bags or 26.21% higher than the same period in the previous coffee year, at a total of 6,835,400 bags.

Supported by this growing production the Colombian coffee exports for the month of April are reported to have been 138,000 bags or 20.12% higher than the same month last year, at a total of 824,000 bags.   This higher figure has contributed to the country’s cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year to be 1,803,000 bags or 36.91% higher than the same period in the previous coffee year, at a total of 6,688,000 bags.

These latest figures and with the Colombian Coffee Federation forecasting that production for this calendar year shall be 500,000 bags or 4.59% higher than last year at a total of 11.4 million bags, do much to partially counter the dip in fine washed arabica coffee production and exports from Mexico and the Central American to their north.   This dip being further countered by the fact that with the sharp rise in the reference prices of the New York market over the past four months, there are many price sensitive consumer market industry players who are being pressured into reducing the percentages of fine washed arabica coffees in their main stream blends.   

Meanwhile with the high reference prices of the New York market coming just in time for the farmers in Mexico and Central America to sell the balance of their crops at good profits, it shall allow them to be able to more easily finance the chemical inputs and supportive fertilisers to counter the regional Roya or Leaf Rust infestation.  This should by nature and so long as there are no unforeseen climatic problems developing, result in at least a 10% recovery in production and export potential for their next October 2014 to March 2015 overall crop.

This potential increase in Mexico and Central American production is on top of steadily increasing Colombian production and a steady to slightly larger production in Peru, towards the overall fine washed arabica coffee supply for the coming October 2014 to September 2015 coffee year and against potentially so long as prices stay stable, flat and lacklustre consumer market demand.    Thus so long as there are no further shocks due from Brazil, one might foresee a softening in the New York market and the coffee markets in general, by the first quarter of next year.   But the question remains from what trading range might this softening start to come into play, as there is still a potential for the markets to post further gains, over the next four months of relatively dismal new crop reports and the frost season, in Brazil.

Predictably with the 20th Edition of The Santos International Coffee Seminar, sponsored by The Santos Commerce Association, will be held on May 7th and 8th 2014, in Guarujá, São Paulo, Brazil in play, the low new crop reports are starting to come to the market.   In this respect the non-profit research group Fundacao Procafe has forecast that following the damage done by the hot and dry conditions over the main arabica coffee districts in the first two months of this year, the new crop shall be a modest 40.1 to 43.3 million bags.  This dismal forecast is based on their estimates that the coffee farms in the dominant arabica coffee districts of South Minas Gerais shall experience losses of approximately 30%, from their original crop forecasts for the new crop.  Many do however see this report to be excessive, as this group is by nature historically conservative and one might at a guess, look to add approximately 4 to 5 million bags to their reported figures.

The arbitrage between the markets narrowed yesterday to register this at 103.70 usc/Lb., while this equates to a still very attractive 51.59% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,230 bags yesterday, to register these stocks at 2,586,563 bags.   There was meanwhile a larger in volume 4,400 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 9,715 bags.

The commodity markets had a mixed day yesterday, with the U.S. dollar tending to steady and shrugging off the reconfirmation from the U.S. Federal Reserve Bank that they foresaw no short term chance for firmer interest rates.   The Oil, Sugar and Orange Juice markets had a day of buoyancy and the London robusta Coffee market was steady, while the Natural Gas, Cocoa, New York arabica Coffee, Cotton, Copper, Wheat, Corn, Soybean, 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 0.43% lower; to see this Index registered at 562.97.   The day starts with the softer U.S. Dollar steady and trading at 1.696 to Sterling and 1.391 to the Euro, while Brent Crude is steady in early trade and is selling at $ 108.65 per barrel.

The London market started the day yesterday tending softer, while the New York market showed early buoyancy and with both markets attracting support and making gains during the early afternoon’s trade and with the New York market adding 5.25 usc/Lb. in value.  This recovery was not however sustained and the New York market came under pressure to see the market attract sell stops and shed it gains and move back into negative territory, with the lacklustre London market dropping back to par.  The London market continued to end the day on a near to steady sideways note, while the New York market ended the day on a soft note and with 55.6% of the late in the day losses of the day intact.    This lacklustre close does little to inspire and one might think to see little better than as cautiously steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2148 – 4                                                 MAY     198.40 – 1.15
JUL      2145 – 2                                                  JUL     201.00 – 1.25
SEP      2157 unch                                              SEP     203.15 – 1.30
NOV     2167 + 2                                                  DEC     205.70 – 1.25
JAN      2173 + 2                                                 MAR     207.95 – 1.25
MAR     2179 + 1                                                 MAY     208.35 – 1.40
MAY     2186 unch                                              JUL      207.80 – 1.55
JUL      2193 – 2                                                 SEP      206.65 – 1.80
SEP      2201 – 5                                                 DEC     205.55 – 1.95
NOV     2210 – 5                                                 MAR     204.45 – 1.80

7th. May, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 0.57% in the week of trade leading up to Tuesday 29th. April;  to register a net long position of 30,870 Lots on the day.  This speculative net long position within the London market which is the equivalent of 5,145,000 bags has most likely been little changed, over the following days of mixed trade which has since followed.

With the new main robusta coffee harvest started in Indonesia and with robusta coffees accounting for approximately 85% of the country’s coffee production, the Indonesian Coffee Exporters and Industry Association have countered many negative forecasts by forecasting that the new crop shall not be lower, but shall be similar to the last crop at 11,667,667 bags.   This is a sharply higher figure than some of the private industry forecasts, which had previously talked of a new crop dipping towards 10 million bags.

The Indonesian Coffee Exporters and Industry Association have however also forecast that Indonesian domestic coffee consumption shall this year increase by 15.38% to total 5 million bags and therefore even though the crop shall be steady in volume, the domestic consumption shall reduce export potential by 666,667 bags.    There is no question that domestic consumption in Indonesia has been steadily rising over the past ten years, but to believe in such a sharp rise and particularly so when prices are somewhat dramatically higher, is perhaps difficult to believe.  

No matter how questionable some of the figures might be, it is clear from all reports and forecasts so far out of Indonesia, that the country shall see some degree of dip in export potential for this year.  But even with a dip in export potential for this year, it is clear that in terms of robusta export potential, that the evidence of still large stocks due to be exported from Vietnam and despite some relative price related potential for increased consumer market demand for robusta coffees, that there shall be more than sufficient robusta coffee supply for the foreseeable future.

The leading West African robusta producer the Ivory Coast has reported that the country’s coffee exports for the first six months of the October 2013 to September coffee year were 110,350 bags or 28.59% higher than the same period in the previous coffee year, at a total of 496,317 bags.   This is however only approximately 30% of the forecasted coffee export potential for the Ivory Coast for this coffee year and therefore one might presume, that with the encouragement of the buoyant reference prices of the London market in play that the Ivory Coast shall remain an active exporter for the second half of the present coffee year.

With forecasts for weather damaged new Brazil crop varying between 40 million bags and 53 million bags, there shall be keen interest in the 20th Edition of The Santos International Coffee Seminar, sponsored by The Santos Commerce Association, will be held on May 7th and 8th 2014, in Guarujá, São Paulo, Brazil.   One might suspect though, that the new crop numbers emanating from this seminar shall tend to lean towards the lower end of the figures forecasted, as many forecasters can be expected to be conservative and market manipulative with their reports.   Albeit that until such time as the evidence from the outturns from the peak harvest over June to August are quantified, the numbers quoted are always going to be questionable.    

The arbitrage between the markets narrowed yesterday at 104.86 usc/Lb., while this equates to a still very attractive 51.85% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,395 bags yesterday, to register these stocks at 2,584,333 bags.   There was meanwhile a slightly larger in volume 4,870 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,115 bags.

The commodity markets had a mixed day yesterday, despite the potential support that comes with the prevailing soft U.S. dollar.   The U.S. Oil, Natural Gas, Copper, Wheat, Corn, Silver, Platinum and Palladium markets had a day of buoyancy, while the Brent Oil, Sugar, Cocoa, Coffee, Cotton, Orange Juice, 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 0.15% higher; to see this Index registered at 565.38.   The day starts with the softer U.S. Dollar steady and trading at 1.698 to Sterling and 1.392 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 108.25 per barrel.

The London market returned from the long weekend holiday yesterday to start on a steady to buoyant note, but with trade cautious and lacking significant producer input, while the New York market started the day with some profit taking coming into play.    Both markets had an erratic days trade and with the markets posting good gains that soon came under pressure, to force the markets back below par and with the New York market in particular coming under pressure for the late afternoons trade.   The London market continued to end the day on a marginally softer note and with 58.3% of its moderate losses of the day intact, while the New York market that had at one stage posted gains of 1.75 usc/Lb., ended the day on a very soft note and with 72.3% of the earlier losses of the day intact.   This soft close is not really supportive for sentiment, but perhaps with the softer U.S. dollar in play one might see reason for a cautious steady to perhaps even buoyant start for early trade today against the prices set yesterday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2152 + 3                                                 MAY     199.55 – 2.85
JUL      2147 – 7                                                  JUL      202.25 – 3.00
SEP      2157 – 4                                                 SEP      204.45 – 2.90
NOV     2165 – 3                                                 DEC      206.95 – 2.85
JAN      2171 – 1                                                 MAR     209.20 – 2.80
MAR     2178 + 1                                                 MAY     209.75 – 2.70
MAY     2186 + 4                                                  JUL     209.35 – 2.55
JUL      2195 + 7                                                  SEP     208.45 – 2.40
SEP      2206 + 8                                                 DEC     207.50 – 2.10
NOV     2215 + 8                                                  MAR    206.25 – 2.05

6th. May, 2014.
The National Coffee Institute of Honduras have reported that the countries coffee exports for the month of April were 9,063 bags or 1.54% lower than the same month last year, at a total of 580,284 bags.  This lower volume has contributed to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year having been 72,127 bags or 2.44% lower than the same period in the previous coffee year, at a total of 2,886,871 bags.

This total export figure of 2,886,871 bags is compiled from the month by month figures reported from October last year, but surprisingly the National Coffee Institute in Honduras now talk a figure of 2.56 million bags, which would be a much higher 398,998 bags or 13.48% dip in exports for the past seven months.   While they continue to forecast with five months to go, that the countries coffee exports for the present coffee year shall be 4.52 million bags, which shall be 179,981 bags or 4.15% higher than their coffee exports for the previous coffee year.

The National Coffee Organisation of Guatemala have reported that the countries coffee exports for the month of April were 36,949 bags or 8.48% lower than the same month last year, at a total of 398,638 bags.  This lower volume has contributed to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year having been 185,715 bags or 10.10% lower than the same period in the previous coffee year, at a total of 1,653,748 bags.

There is no doubt that the softer nature of exports from Central America and Mexico has been negatively affected over the past seven months by the Roya or Leaf Rust infestation, but they have also suffered from consumer market price resistance towards the relatively high export differentials being demanded by all but the farmers and exporters in Honduras, which has seen many industry players turn to the combination of now more affordable and higher in volume of supply Colombian coffees and price competitive natural arabica coffees from Brazil.   With both Colombia and Brazil reporting relatively high volumes of coffee exports over the past seven months, to indicate no real tightness in consumer market coffee supply.

The official coffee exports for the month of April from Vietnam have yet to come to the table, but the estimate is that these were in the order of 3.67 million bags.    While the private trade players within Vietnam are forecasting that the countries coffee exports of mostly robusta coffee for the month of May shall be between 2.5 million and 3.67 million bags.   The continued good volumes of exports being forecasted being related to the fact that at least 40% of the past crop coffees remain within the country and with only five months now to the start of the new harvest and so far there is no reason to question that it shall be another good crop, that farmers shall be ready sellers for the foreseeable future.

Especially so, as the buoyant nature of the reference prices of the London market, continue to forward good profitable value for sales of these remaining stocks and in terms of demand, the good discount against the arabica coffees, inspires consumer industry demand for robusta coffees.   While with the spring and summer rain season having started, the Vietnamese farmers shall be looking to cash in stocks to finance the farm inputs towards the next crop that shall start being harvested in October.   

The annual Brazil International Coffee Seminar in Guaruja shall take place over Wednesday and Thursday this week, which might well prove to be a distraction that shall temporarily slow selling activity out of this active market and by nature, the volumes of price fixation hedge selling into the New York market.   While with there being no doubt that many participants shall be talking damage to the new crop potential from the hot and dry first two months of this year, which shall most probably continue to buoy speculative spirits within the international market.

The arbitrage between the markets remained was near to steady on Friday at 105.50 usc/Lb., while this equates to a very attractive 51.92% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,815 bags yesterday, to register these stocks at 2,580,938 bags.   There was meanwhile a similar in volume 4,885 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 18,985 bags.

The commodity markets with the London markets closed yesterday for the May Bank Holiday had a generally quite day’s trade, but with the relatively soft U.S. dollar tended to see overall buoyancy.  The Natural Gas, New York arabica Coffee, Cotton, Orange Juice, Wheat, Gold, Platinum and Palladium markets showed buoyancy, while the Oil, Copper, Corn, Soybean and Silver markets tended softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.34% higher; to see this Index registered at 564.55.   The day starts with the softer U.S. Dollar steady and trading at 1.689 to Sterling and 1.387 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.35 per barrel.

The London market was closed yesterday and the New York market had a shortened day’s trade, to open during the afternoon on a softer note and in thin and lacklustre trade.   The market did however start to recover as the afternoon progressed and to attract some more volume, but nevertheless trade was cautious and relatively thin.   The New York market trading solo continued to end the day on a positive note and with 36.6% of the earlier in the day’s gains intact, following a day where the thin trade had allowed for a 10.60 usc/Lb. spread in value for the most active prompt July contract month.    This positive close might well inspire a steady to buoyant start for early trade today within both markets against the prices set on Friday in London and yesterday in New York, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2149 – 29                                               MAY     202.40 + 1.80
JUL      2154 – 19                                                JUL     205.25 + 2.05
SEP      2161 – 16                                               SEP     207.35 + 2.10
NOV     2168 – 14                                               DEC     209.80 + 2.10
JAN      2172 – 13                                               MAR    212.00 + 2.10
MAR     2177 – 13                                               MAY    212.45 + 2.00
MAY     2182 – 13                                                JUL    211.90 + 1.85
JUL      2188 – 13                                                SEP    210.85 + 1.75
SEP      2198 – 13                                                DEC   209.60 + 1.90
NOV     2207 – 13                                                MAR   208.30 + 1.90

5th. May, 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 8.08% in the week of trade leading up to Tuesday 29th. April;  to register a net long position of 44,469 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 0.02%, to register a net long on the day of 44,855 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 8.31%, to register a net long position of 30,342 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 8,601,823 bags has most likely been decreased over the following days of overall thin but softer trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The National Coffee Institute of Costa Rica have reported that the countries coffee exports for the month of April were 41,879 bags or 20.37% lower than the same month last year, at a total of 163,713 bags.  This lower volume has contributed to the countries cumulative exports for the first seven months of the present October 2013 to September 2014 coffee year having been 136,654 bags or 16.29% lower than the same period in the previous coffee year, at a total of 702,370 bags.

The preliminary coffee export figures from Brazil for the month of April have indicated that the countries green coffee exports for the month were 400,000 bags or 16.26% higher than the same month last year, at a total of 2.86 million bags.    This rise in volume having been very much expected, as the positive nature of the reference prices of the New York market and the resulting firm prices of the washed arabica coffees, has influenced rising demand for the more affordable natural arabica coffees from Brazil, where farmers have remained active sellers of their significant 2013 crop stocks.

We apologise for misleading information on the Indonesian crop forecast for this year in our market report on Friday, where we quoted the official figure for the past 2013 harvest.  The new 2014 harvest that in terms of robusta coffees is just starting is being forecasted to be from 8% to 15% lower than last year’s official crop of 11,667.00 bags, but we nevertheless do not with the prevailing positive prices of the reference prices of the London market, expect this to dramatically slow new crop sales for at least the short term.   While in terms of the probability of improved inputs over the past five months of good prices, one might suggest that the forecasted dip in the new crop might not eventually prove to be as dramatic as many suggest.

The International Coffee Organisation have reported that the world coffee exports for the month of March were 219,079 bags or 2.16% higher than the same month last year.   This growth in exports indicating that despite the rising value of the coffee markets, that it is having little impact upon coffee volumes, albeit that in many instances with forward contracts in hand, the March exports would not have been related to the higher prices that prevailed at the time.  But despite this increase in March, the report does show that the global coffee exports for the first six months of the present October 2013 to September 2014 coffee year, were 2,433,207 or 4.19% lower than the same period in the previous 2012/2013 coffee year, at a total of 55,593,498 bags.  This dip would however be more related to price resistance in the last quarter of 2013 than to any downturn in demand and for the present, there would appear to be little disruption to world coffee demand coming with the firmer nature of the market.

The arbitrage between the markets remained was near to steady on Friday at 105.50 usc/Lb., while this equates to a very attractive 51.92% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,890 bags on Friday, to register these stocks at 2,576,123 bags.   There was meanwhile a smaller in volume 775 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 23,870 bags.

The commodity markets were assisted on Friday by good jobs data from the U.S.A. and a softer U.S. dollar, which buoyed pre-weekend spirits within many markets.  The Oil, Copper, Orange Juice, Wheat, Soybean, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Cotton and Corn markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.24% higher; to see this Index registered at 562.63.   The day starts with the softer U.S. Dollar steady and trading at 1.687 to Sterling and 1.388 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 109.40 per barrel.

The London market started the day on Friday on a softer note, while the New York market showed early buoyancy, but turning softer into early afternoon’s trade, prior to a recovery as the afternoon progressed.   The London market maintained a quiet negative stance and the New York market again faltered in thin trade and dipped back into negative territory, with both markets seemingly suffering from the lack of players that came with the opportunist long weekend for many.   The London market continued to end the day on a soft note and with 95% of the losses of the day intact, while the erratic New York market that had during the day peaked with gains of close to 3 usc/Lb., ended the day soft but having recovered 70.8% of the earlier losses of the day.  The London market is close for the U.K. bank holiday today to leave the New York market to trade solo for a shortened day, where one might expect to see a steady start for this market against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2149 – 29                                               MAY     200.60 – 0.85
JUL      2154 – 19                                                JUL     203.20 – 0.95
SEP      2161 – 16                                               SEP     205.25 – 1.00
NOV     2168 – 14                                               DEC     207.70 – 1.00
JAN      2172 – 13                                               MAR    209.90 – 1.05
MAR     2177 – 13                                               MAY    210.45 – 1.05
MAY     2182 – 13                                                JUL    210.05 – 0.90
JUL      2188 – 13                                                SEP    209.10 – 0.75
SEP      2198 – 13                                               DEC    207.70 – 0.95
NOV     2207 – 13                                               MAR    206.40 – 1.05

2nd. May, 2014.
With the month of April passed the Government Trade data from Sumatra as the main coffee growing island of Indonesia has reported that the islands Robusta coffee exports for the month of April were 35,656 bags or 14.93% higher than the same month last year, at a total of 274,493 bags.   This improved performance does however follow some modest months of exports and therefore the cumulative robusta coffee exports from Sumatra for the first seven months of the present October 2013 to September 2014 coffee year are still 304,905 bags or 10.27% lower than the same period in the previous coffee year, at a total of 2,663,283 bags.

The new Sumatran robusta coffee crop is however not starting and while not forecasted to be a larger crop than last and with some talking the overall Indonesian crop to be 1,063,000 bags lower at 11,667,000 bags, might well with the improved price levels of the reference prices of the London market, start coming to the market a little more freely.    There might however still be some degree of internal market price resistance on the part of the speculative internal market traders, as they focus on the prospects of the new Brazil crop and its potential to further buoy overall coffee prices.   

Therefore, one might not expect to see too much selling aggression for the short term of new crop coffees from Indonesia, until there is more clarity on the situation in Brazil.   But one can expect nevertheless, that the monthly volumes of robusta coffee exports shall steadily increase over the figure reported for April, with these coffees coming to the market in competition to the continued high volumes of exports from Vietnam.

With yesterday’s Labour Day holiday that has caused a short week for Brazil as it has for so many other producers and consumers, there has been very little excitement within the internal market this week and it is likely that with many looking to take a bridging holiday and a long weekend, that it shall remain quiet for trade today.   Thus with price fixation volumes relatively low, one would expect that there shall only be muted selling pressure hanging over the New York market.

There have however following the good April rains over the main arabica coffee state of Minas Gerais and the second state of Sao Paulo, been some reports that the pre winter vegetative growth on many farms that had seen trees suffer from the partial drought over January and February, has been better than expected.   It is however early days but nevertheless it is some good news in terms of the prospects for the last quarter of this year’s spring and summer flowering potential, towards the next 2015 crop.

The quality of this flowering and so long as there are forecasts for good rains for the last quarter of 2014 and the first quarter of 2015, shall be pivotal for market direction and could potentially be a bearish factor for the New York market at the end of the year, but the question is against which trading range as the short term perspective of the market remains bullish.   The bulls within the market, to most likely to be further supported on the short term, by frequent market manipulative low new crop yield reports from Brazil.

The arbitrage between the markets narrowed yesterday to 105.58 usc/Lb., while this equates to a very attractive 51.72% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 90 bags yesterday, to register these stocks at 2,572,323 bags.   There was meanwhile a similar in volume 285 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 23,095 bags.

The Certified Robusta coffee stocks held against the London market are seen to have increased by 38,500 bags or 16.67% over the two weeks of trade leading up to Monday 28th. April, to see these stocks registered at a still relatively modest 269,500 bags.    This increase albeit modest in these much depleted certified stocks had been expected, since the market has returned to a normal price structure, after many months of inverted price structure.

The commodity markets somewhat surprisingly did not pick up support from the lower value of the U.S. dollar and the improved jobs data from the U.S.A., in yesterday’s trade but this might perhaps be due to the significant number of players that were off the field of play for the day.   The Sugar, London robusta Coffee and Copper markets showed some buoyancy for the day, while the Oil, Natural Gas, Cocoa, Cotton, Orange Juice, Wheat, Corn, Soybean, 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 0.92% lower; to see this Index registered at 561.26.   The day starts with the softer U.S. Dollar steady and trading at 1.688 to Sterling and 1.386 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 108.30 per barrel.

The London and New York markets started the day on a quietly softer note and in thin semi holiday trade, but with both markets posting a short spell of recovery in the afternoon and heading back into positive territory, before slipping back to below par.   The London market did however once again recover and proceeded to end the day on a positive note and with 50% of the gains of the day intact, while the New York market that had experienced a second recovery slipped back into negative territory and ended day on a softer track and with 59.6% of the earlier losses of the day intact.   This mixed close provides little in the way of direction for the markets which can be expected to remain thin in trade today, but one might expect to see a cautiously steady start for early trade against the prices set, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2178 + 11                                               MAY     201.45 – 1.60
JUL      2173 + 5                                                  JUL     204.15 – 1.70
SEP      2177 + 6                                                 SEP     206.25 – 1.50
NOV     2182 + 7                                                 DEC     210.70 – 1.40
JAN      2185 + 7                                                 MAR    210.95 – 1.05
MAR     2190 + 9                                                 MAY    211.50 – 0.90
MAY     2195 + 11                                                JUL    210.95 – 0.90
JUL      2201 + 9                                                 SEP     209.85 – 0.95
SEP      2211 + 16                                               DEC    208.65 – 1.15
NOV     2220 + 25                                               MAR    207.45 – 1.10

1st. May, 2014.
With coffee producers accounting for over 80% of world production taking today’s May Day or Labour Day Holiday and likewise, the majority of the main European market consumers, trade yesterday was dulled and would look to remain so for the rest of the week, as many market players take advantage of opportunity to bridge the holiday into a nice long weekend.   Thus aside from the prevailing holiday spirit, there is little in the way of news forthcoming from the producers.

Nevertheless the New York and London markets continue to trade for the rest of the week, but with the London market due to close on Monday, when the UK takes its May bank holiday.   Thus one would expect that the general inactivity within the consumer markets that shall be extended in terms of the London market through to Monday shall tend to dull trading activity out of Vietnam until Tuesday next week, albeit that there shall no doubt be continued interest in Vietnam robusta coffees and some trading activity tomorrow.

Meanwhile the focus remains mainly upon the prospects for the next Brazil arabica coffee crop, but it shall take at least three months for any clarity to start coming to the market and in the interim the prospects are for the more pessimistic forecasts to dominate sentiment and to maintain buoyancy for the New York market.   This is aside from forthcoming Brazil frost season, which shall no doubt raise its head with any forecasts for cold fronts heading into southern Brazil during June and July.  Thus one might suggest that the prevailing erratic and volatile nature of the New York market shall continue and more than likely with the funds holding on to their longs, to buoy the value of this market within the present trading range and with the prospects to rather break out to higher price levels, rather than to take a negative dip.

There are also in terms of weather more frequent references towards the prospects of an El Nino to come into play for the second half of this year, but in terms of coffee this phenomenon in the Pacific ocean so long as it is only a mild El Nino is overall not threatening.  In fact in terms of Brazil the longer range effects of the El Nino that should bring increased rains to south central Brazil, would be positive for the prospects of the next 2015 crop that shall need to be a crop of in excess of 55 million bags, if it is to counter the prospects of this year’s crop being a smaller crop and one that shall see most of the extensive carryover arabica coffee stocks being absorbed over the next twelve months.  

The arbitrage between the markets narrowed yesterday to 107.51 usc/Lb., while this equates to a very attractive 52.23% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 2,325 bags yesterday, to register these stocks at 2,572,323 bags.   There was meanwhile a larger in volume 5,907 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,810 bags.

The commodity markets are due for some support from the weaker nature of the U.S. dollar, in reaction to the news from the U.S. Federal Reserve bank that they do not foresee any chance to raise interest rates on the short term.  But this news was too late in the day yesterday and with many players already going on holiday, to influence a positive stance for the macro commodity index which was soft for the day.   The Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton and Wheat markets had a day of buoyancy and the Soybean and Gold markets were steady, while the Oil, New York arabica Coffee, Copper, Orange Juice, Corn, Silver, Platinum and Palladium markets were softer for 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 566.49  The day starts with the  U.S. Dollar tending softer and trading at 1.688 to Sterling and 1.387 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 108.85 per barrel.

The London market following the influence of the late in the day rally in New York on Tuesday opened the day yesterday with early buoyancy, but with the New York market coming under immediate pressure and attracting opportunist producer price fixation pressure.   The New York market continued to lose some additional weight into the afternoon’s trade and had some influence upon the London market that shed some but not all of its early gains, while the New York market recovered some of its losses later in the afternoon.   The London market continued to end the day on a positive note and with 58% of its gains of the day intact, while the New York market ended the day on a soft note and with 61.1% of the losses of the day intact.   The mixed nature of the markets yesterday might dampen some spirits within the London market but one might expect that albeit trade can be expected to be very thin today that the softer nature of the U.S. dollar shall prove to be somewhat supportive, for a steady to buoyant start for trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2167 + 37                                               MAY     203.05 – 5.85
JUL      2168 + 29                                                JUL     205.85 – 6.05
SEP      2171 + 28                                               SEP     207.75 – 6.10
NOV     2175 + 29                                               DEC     210.10 – 6.10
JAN      2178 + 28                                               MAR    212.00 – 6.45
MAR     2181 + 28                                               MAY    212.40 – 6.70
MAY     2184 + 28                                                JUL    211.85 – 6.80
JUL      2192 + 28                                                SEP    210.80 – 6.80
SEP      2195 + 28                                                DEC   209.80 – 6.65
NOV     2195 + 28                                                MAR   208.55 – 6.55

30th. April, 2014.
The month of April is coming to a close and with the rainfall reports for most of the main Brazil coffee districts having been well in excess of the five year averages for the month, with rainfall over the leading arabica state of Minas Gerais so far between 28% to 64% above average.  While the arabica coffee farmers in the state of Sao Paulo have reported rainfall that is 74% to 114% above their five year average.

Thus with mostly triple digit rainfall for most of the arabica coffee farms in Brazil which had suffered through a hot and dry first two months of the year, there has a been a good recovery in ground water retention levels, albeit too late to reverse any damage done to the prospects of the new crop, by the two dry months.   This rainfall does however assist to prepare the farms to live through the cold and dry winter harvest months, while the improved levels of ground water retention assist to make the trees more resistant to the negative effects of any modest frosts.  While so long as the follow on spring and summer rains that start at the end of September is normal, it shall assist to prepare the trees for a good flowering towards the follow on 2015 crop.

The new Brazil conilon robusta crop from the northern coffee districts of Brazil is well into its harvest and with new crop coffees already coming to the market, albeit slowly for the present, while this new conilon crop is now being forecasted to be in excess of 17 million bags and therefore, 3% higher than the past 2013 crop.   The new Brazil arabica crop is now starting with some early cherry being picked but is really only going to start coming in in volume in three to four weeks’ time and picking up towards a peak in July, but with uncertainty as to what damage has been done and therefore, the size of this crop and with forecasts that vary between 28 million and 34 million bags, but most certainly well below the 38 million bags of arabica coffee produced in the last 2013 crop.

The marginally softer nature of the reference prices of the London market has caused a degree of slowing of internal market sales of farm and internal trader stocks in Vietnam, which has dulled the recently active selling out of the country.  This is however with good stocks in hand a large new crop due to start in six months’ time likely to be a short term dip in activity and one would think that next week post the Labour Day long weekend for many market players, that selling activity within and out of Vietnam shall once again pick up steam.

Burundi who work on an April to March crop cycle had reported that their April 2013 to March 2014 coffee production and sales were 51,833 bags or 23.9% below their biennially bearing low year harvest forecast of 216,667 bags and totalled only 164,833 bags.  They do however with the new crop harvest starting and this being a biennially bearing up year, forecast a much improved new crop that shall be 185,167 bags or 112.34% higher, at a total of 350,000 bags.   This positive forecasts related to not only the biennial bearing recovery for the new crop, but also to the very good rains that have been experienced within the country that have been supportive for the development of this new crop.

One might expect to see a similar sized new crop from neighbouring Rwanda of around 300,000 bags and therefore a combined arabica coffee supply from these two small central African producers of in excess of 600,000 bags for the coming year.  While with the positive nature of the reference prices of the New York market that look to remain within a higher trading range for the coming months, both producers shall gain some relatively good value from their new crop sales.   

The arbitrage between the markets broadened yesterday to 114.88 usc/Lb., while this equates to a very attractive 54.21% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,247 bags yesterday, to register these stocks at 2,569,998 bags.   There was meanwhile a smaller in volume 2,665 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 16,903 bags.

The commodity markets had an overall positive days trade yesterday, but can be expected to start to slow today as many players from the European markets start to look towards an extended Labour Day long weekend.   The Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Wheat, Corn and Soybean markets showed buoyancy and particularly so, the New York arabica Coffee market, while the Copper, Orange Juice, 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 0.69% higher; to see this Index registered at 569.61  The day starts with the U.S. Dollar steady at 1.681 to Sterling and 1.381 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 108.70 per barrel.

The London and New York markets started the day yesterday showing early buoyancy but started to lose their way in relatively thin trade and move back into negative territory as they moved into the afternoon’s trade.   There was however a change in fortunes for the more volatile New York market later in the afternoon and with this market attracting improved volumes and with speculative short covering coming into play to trigger follow through buy stops and a sharp upside rally, with the London market following in a more modest fashion.  The London market continued to end the day on a positive note and with 81.2% 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 gains of the day intact.   This positive close is perhaps supportive for a steady start for early trade today, but one would think that with many leading producer and consumer market players looking towards tomorrows holiday and for many a long weekend, that later in the day trade shall be relatively quiet and perhaps close to the trading range indicated by yesterday’s prices, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2130 + 10                                               MAY     208.90 + 10.10
JUL      2139 + 13                                                JUL     211.90 + 10.75
SEP      2143 + 14                                               SEP     213.85 + 10.70
NOV     2146 + 15                                               DEC     216.20 + 10.60
JAN      2150 + 14                                               MAR    218.45 + 10.55
MAR     2153 + 12                                               MAY    219.10 + 10.60
MAY     2156 + 9                                                  JUL     218.65 + 10.70
JUL      2164 + 11                                                SEP     217.60 + 10.90
SEP      2167 + 11                                               DEC     216.45 + 11.00
NOV     2167 + 11                                               MAR     215.10 + 11.00

29th. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 0.76% in the week of trade leading up to Tuesday 22nd. April;  to register a net long position of 30,694 Lots on the day.  This speculative net long position within the London market which is the equivalent of 5,115,667 bags has most likely been marginally reduced, over the following days of mixed trade but finally softer trade, which has since followed.

The Colombian farming community enacted their scheduled protests yesterday, as the look to pressure their government to put into place their long promised agricultural reforms policy.  This protest did however only involve 15 out of 32 provinces and in terms of the coffee farmers, was a rather muted protest, as they are presently benefiting from the windfall of the recovery of the international coffee markets.   While with this only a short term protest, it has had no impact upon internal market coffee deliveries and therefore, no concern within international coffee market sentiment.

The well respected U.S. Department of Agriculture have forecasted that Ecuador’s coffee production that is a mix of robusta and arabica coffees for their coffee year from April 2014 to March 2015, shall be marginally 2.47% higher than the previous coffee year, at a total of 415,000 bags.   This once one looks to a domestic coffee consumption that is estimated at 267,000 bags, does not indicate much in the way of export potential and most of this is anyhow, related to the exports of value added soluble coffees.

What is perhaps interesting in this report is the reference to the fact that the negative influences of Roya or Leaf rust that had seen the countries production for their 2013 to 2014 coffee year fall by 28% are on the wane and would indicate that this is most probably the case for their more important southern neighbour Peru, who were estimated to have produced approximately 4.3 million bags of fine washed arabica coffees.   Likewise that the same report foresees no threat from a mild El Nino that is due to develop during the second half of the year, which would likewise indicate not threat for Ecuador’s neighbours, Colombia and Peru and thus, indicating rising supply of fine washed arabica coffee from these two important South American fine coffee producers.

The coffee markets meanwhile appear to be suffering from some degree of speculative exhaustion, with the past two days of trade experiencing thinning volumes and a marginal softening of prices, while with the forthcoming workers day holiday on Thursday that shall turn into a long weekend for many, a holiday spirit is already starting to come into play.   In this respect in terms of producers some dominant players such as Brazil, Vietnam, Colombia, Indonesia, Mexico and Peru are all taking this holiday, as shall be most of the leading consumers in the European markets.

Thus while the holiday shall not impact upon the two coffee futures markets in the U.S.A. and U.K., it shall with so many leading players within these markets heading off on holiday later in the week, potentially dull the trading activities for this week.   But there is of course no certainty what impact upon direction that this pending inactivity shall bring, as thinner trade does have an impact upon accentuating direction and the past two days of softer trade are still not foreseen to be seen to be a longer term negative trend.   Especially so as even though some might be somewhat market manipulative in nature, one can anticipate many low yield new crop outturn reports to start emanating from Brazil during the month of May.

The arbitrage between the markets narrowed yesterday to 104.72 usc/Lb., but nevertheless equates to a still very attractive 52.06% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 460 bags on Friday, to register these stocks at 2,574,245 bags.   There was meanwhile a larger in volume 2,825 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 19,568 bags.

The commodity markets had another mixed but overall dull day yesterday, with the U.S. Oil, Natural Gas, Corn and Soybean markets showing some degree of modest buoyancy, while the Brent Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Gold, Silver, Platinum and Palladium markets had a softer days trade.  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 565.73  The day starts with the U.S. Dollar near to steady at 1.681 to Sterling and 1.387 to the Euro, while Brent Crude is showing early buoyancy and is selling at $ 108.75 per barrel.

The London and New York markets started the day yesterday with follow through hesitant softness and a lack of consumer industry buying activity and set something of a negative trend for the day, with the more speculative and volatile New York market taking on further pressure from the negative influences of the softer macro commodity index.   The London market continued to end the day on a softer note and with 60% of the losses of the day intact, while the New York market lost its way in late trade and ended the day on a soft note and with 88.6% of the earlier losses of the day intact.   This follow through overall soft close is not constructive for sentiment and one might expect to see another hesitantly softer start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2120 – 16                                               MAY     198.80 – 5.95
JUL      2126 – 24                                                JUL     201.15 – 5.85
SEP      2129 – 28                                               SEP     203.15 – 5.90
NOV     2131 – 31                                               DEC     205.60 – 5.85
JAN      2136 – 31                                               MAR    207.90 – 5.90
MAR     2141 – 33                                               MAY    208.50 – 5.90
MAY     2147 – 34                                                JUL    207.95 – 6.05
JUL      2153 – 35                                                SEP    206.70 – 6.25
SEP      2156 – 35                                               DEC    205.45 – 6.35
NOV     2156 – 35                                                MAR   204.10 – 6.60

28th. April, 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 2.26% in the week of trade leading up to Tuesday 22nd. April;  to register a net long position of 41,144 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 1.85%, to register a net long on the day of 44,844 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 1.82%, to register a net long position of 28,014 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,941,845 bags has most likely been little changed to perhaps marginally decrease over the following days of mixed trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

It would seem in this respect that the speculative longs which are presently relatively extensive are taking something of a breather, as there is a great degree of uncertainty over the extent of the damage that has been caused to the new Brazil crop, over the dry and hot weather during the first two months of this year.   Particularly so as the follow on fair rains in March and relatively good rains in April over the main arabica coffee districts in Brazil, have seemingly dampened some speculative spirits.   Albeit that there remains no doubt, that there has been irreversible damage caused to the prospects of this new crop.

The National Export Association in Nicaragua have reported that the country’s coffee exports for the month of March were 13,270 bags or 7.36% higher than the same month last year, at a total of 193,447 bags.   This improved performance however, which follows likewise improved export volumes in February, follows a slow start over the first four months of the October 2013 to September 2014 coffee year and therefore, the cumulative exports for the first six months of the coffee year are still 288,695 bags or 35.27% lower than the same period in the previous coffee year, at a total of 530,501 bags.

One might comment however in terms of the much lower export performance from Nicaragua for the present coffee year so far, is that these figures are compared to the 2012 to 2013 coffee year which experienced over October and November 2012 an extremely high volume of exports that were related to carryover stocks from the prior 2011/2012 crop.   These stocks were held back for not only market resistance purposes, but in anticipation of premium supportive prices from the Venezuelan state controlled food commodities authorities, which were finally not forthcoming and therefore at a guess, the stocks accounted for approximately 80% of the Nicaraguan exports over the first two months of the previous 2012/2013 coffee year, which likewise accentuated the country’s export performance of 1,927,788 during this previous coffee year.

The annual Speciality Coffee Association of America which focused this year Peru as its fine washed arabica coffee origin, has not brought forth much in the way of news in terms of production forecasts from the Central Americans and Mexico, who always focus upon this annual event.  This would seemingly indicate that so far the fears of further damage to the regional coffee crops from the issues of Roya or Leaf Rust are on the wane and that the subject is presently, having little further influence upon market sentiment.

There was however quite some discussion upon the growth of certified coffees in terms of the traditional markets and likewise the main producer blocs, with Utz Certified, Rainforest Alliance and 4 C’s all reporting significant growth in the world production and therefore market share of supply, that now fly’s under one or the other of these certified banners.   These aside from the vintage Fairtrade coffee supply, which continues to attract some traditional support and combined these banners are becoming normal rather than unique, within the main North American and Western European markets.     

The arbitrage between the markets, but with the London market narrowed on Friday to 109.48 usc/Lb., but nevertheless equates to a still very attractive 52.89% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,400 bags on Friday, to register these stocks at 2,573,785 bags.   There was meanwhile a smaller in volume 3,025 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,393 bags.

The commodity markets had another mixed day but overall slow day on Friday, with the Sugar, Cotton, Copper, Wheat, Corn, Soybeans, Gold, Platinum and Palladium markets showing buoyancy and the Oil, Natural Gas, Cocoa, London robusta Coffee, Cocoa, Orange Juice and Silver markets having a softer day, while the New York arabica Coffee market ended off with relatively sharp profit taking losses. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.15% lower; to see this Index registered at 567.26.  The day starts with the U.S. Dollar near to steady at 1.685 to Sterling and 1.387 to the Euro, while Brent Crude is showing early buoyancy and is selling at $ 110.40 per barrel.

The London market started the day on Friday on a steady note and showing some degree of buoyancy, while the New York market started the day on a modestly softer note.   The London market started to falter in line with the softer stance in the New York market and while London did experience a short lived pip back up into positive territory, both markets maintained a softer stance for the afternoon’s trade.  The London market continued to end the day on a softer note but having recovered 50% of its earlier losses of the day by the close, while the New York market ended the day with a sharp speculative profit taking dip in the closing hour and on a soft note with 74.6% of the losses of the day intact.   This overall soft close is not constructive for market sentiment but one would think was more end of a short week speculative book squaring and that in this respect the markets are more likely due for a cautiously steady start for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2136 – 16                                               MAY     204.75 – 7.70
JUL      2150 – 16                                                JUL     207.00 – 7.80
SEP     2157 – 15                                                SEP     209.05 – 7.80
NOV     2162 – 15                                               DEC     211.45 – 7.80
JAN     2167 – 15                                               MAR     213.80 – 7.85
MAR    2174 – 16                                               MAY     214.40 – 7.85
MAY    2181 – 17                                                JUL     214.00 – 7.80
JUL     2288 – 17                                                SEP     212.95 – 7.90
SEP     2291 – 17                                               DEC     211.80 – 7.90
NOV    2291 – 17                                               MAR     210.70 – 7.80

25th. April, 2014.
With export registrations in hand the authorities in Vietnam have estimated that the country’s exports for the month of April shall be 98.6% higher than the same month last year, to total 3.67 million bags.  This figure would indicate that the cumulative exports for the first seven months of the October 2013 to September 2014 coffee year shall exceed by 6.1% the exports over the same period in the previous coffee year, to total in excess of 17.33 million bags.   

However with an export estimate for the present coffee year in excess of 25 million bags and only five months left in the year, there is no sign of let up in the significant volumes of mostly robusta coffees that shall be exported from Vietnam.  Especially so as the surging prices of arabica coffees over the past five months, has inspired many price competitive consumer market brands to look to increased usage of robusta coffee to maintain their market share.

Maintaining the bullish spirit in the arabica coffee market was a report from the futures specialist Sterling Smith who has estimated the new Brazil crop shall be 44.25 million bags and therefore, well below the usually conservative Brazil Industry estimate of 47 million bags.  This report further inspires investment by the speculative sector of the New York market, with the London market following this trend.   

Meanwhile and contrary to the prospects of a dismal crop and tightening Brazil arabica coffee supply, the internal market in Brazil remains active and with farmers ready sellers of their substantial stocks of past crop arabica coffees, which makes one question the extent of the damage that has been caused by the hot and dry conditions for the first two months of the year.    Thus while there is no doubt that these conditions did do some damage to the new crop potential, one would suggest that the farmers who know best how much damage, really do not believe in the severity of this damage that is being voiced by some market players.

The Speciality sector of the North American market is presently meeting for their annual SCAA event and with Peru the selected origin to be promoted, but with no doubt much discussion and debate over the issues of Roya for the Central American producer bloc.     Likewise one would expect much debate over the potential damage that shall be experienced for the potential of the new Brazil crop, but for the present the discussions are more speculative and inspirational for the bulls in the market than being related to severe tightening supply.

In reality there is presently no shortage of coffee and likewise no shortage for at least the next twelve months and really in terms of longer term consumer market supply, the pivotal point shall be the prospects for the next 2015 Brazil crop and this shall be related to the spring and summer rain season over October 2014 to March 2015 and still a long way off.    It is however in terms of the early forecasts for an El Nino phenomenon that would usually bring good rains to south central Brazil looking to be a good season and therefore if one is to hazard and early guess, one might foresee that the markets are due to lose some steam by the last quarter of the year.    However in the meantime and with the added value factor of the Brazil winter frost season to the fore, one has to believe in the present buoyancy for the coffee markets.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,100 bags yesterday, to register these stocks at 2,576,185 bags.   There was meanwhile a larger in volume 4,165 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 19,368 bags.

The commodity markets had another mixed day yesterday, with the Oil, Natural Gas, New York arabica Coffee, Copper, Orange Juice, Wheat, Soybean, Gold, Silver, platinum and Palladium markets experiencing buoyancy, while the London robusta Coffee market was close to steady and the Cocoa, Sugar, Cotton and Corn markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.02% lower; to see this Index registered at 568.08.  The day starts with the U.S. Dollar steady at 1.680 to Sterling and 1.383 to the Euro, while Brent Crude is near to steay in early trade and is selling at $ 109.80 per barrel.

The London market started the day yesterday on a steady to soft note, but with negative pressure impacting upon the markets. Both the markets did however show some stability as the day progressed and traded erratically either side of par, to take something of a sideways track through the day and with the prevailing positive trend being maintained.   The London market continued to end the day near to steady and having recovered 87.9% of the earlier losses of the day, while the New York market ended the day on a positive note but with only 34% of the gains of the day intact.   While the arbitrage between the markets yesterday broadened to 116.55 usc/Lb. and therefore, equates to a very attractive 54.26% price discount for the London robusta coffee market.  This positive but overall steady close might suggest some degree of confidence in the markets and one might expect to see a steady start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2152 unch                                              MAY     212.45 + 0.10
JUL      2166 – 4                                                   JUL     214.80 + 0.85
SEP      2172 – 4                                                  SEP     216.85 + 0.90
NOV     2177 – 2                                                  DEC     219.25 + 1.10
JAN     2182 – 2                                                   MAR    221.65 + 1.35
MAR    2190 unch                                               MAY     222.25 + 1.40
MAY    2198 unch                                                JUL     221.80 + 1.35
JUL     2205 unch                                                SEP     220.85 + 1.30
SEP     2208 unch                                               DEC     219.70 + 1.20
NOV    2208 unch                                               MAR     218.50 + 1.15

24th. April, 2014.
There was a very positive and confident report from the Vietnam Coffee and Cocoa Association yesterday, who forecast that the country shall export 25 million bags of mostly robusta coffee during this year, at a value of approximately 3 billion U.S. dollars.   While the association talked in terms of the issues of the drought earlier in the year in Brazil of longer term tightness in world coffee supply, which would buoy prices and the fortunes of their coffee industry.

Meanwhile drought is no longer an issue for Brazil, with overall good April rains for most of the coffee districts and with the possibility of a mild El Nino coming into play for the second half of the year in the Pacific ocean and its resulting influence for increased rains for south and central Brazil, it would indicate a good spring and summer rain season for the main coffee districts.   This one would expect shall assist to trigger a good flowering towards the follow on 2015 crop, which one would think shall be a relatively good crop.   One that shall be further supported by the now more affordable in terms of coffee prices and farm profits, by good levels of farm inputs.

The spring and early summer rain season is starting in Central America and the flowerings towards the next October 2014 to March 2015 crop, which shall likewise be supported by profitable sales from the recently completed harvest and good levels of farm inputs.   Thus so far the forthcoming new crop is looking to much improved over the 2013/2014 crop that suffered from both the devastating effects of Roya or Leaf Rust and the lower levels of farm inputs, which came with the dismal prices and lack of profits during last year.

It is still early days in terms of Mexican and Central American coffee production to forecast the next crop, but potentially following the recently completed combined crop of approximately 16 million bags, one would think that it could once again be close to 17.5 million bags.   This added to the potential for the coming year of a Colombian crop of close to 12 million bags, should see regional fine washed arabica coffee production rise towards the 29.5 million bags level and thus, exceed the levels of coffee from the region of the past two years.

Making note that with the recent rally in prices that has been influenced by the weather problems encountered in Brazil and the inability of many main stream roasters to absorb the resulting higher fine washed arabica prices in their blends, that there has been a softening in demand for these coffees.   This would therefore suggest that on the longer term, there shall be something of an oversupply of mild coffees coming into play, which shall by the coming year have an effect upon the premiums that these coffees presently attract, relative the natural arabica coffee prices.

The struggling Cameroun coffee industry has reported that robusta coffee exports for the month of March were 12,667 bags or 43.8% lower than the same month last year, at a total of 16,250 bags.   This contributed to the cumulative robusta coffee exports for the first four months of their December 2013 to November 2014 robusta coffee year being 16,800 bags or 36.35% lower than the same period in the previous coffee year, at a total of 29,417 bags.

Meanwhile the Cameroun’s arabica coffee exports for the month of March were registered at 1,400 bags, which with the arabica coffee year related to the more conventional October 2013 to September 2014 coffee year, sees the countries arabica coffee exports for the first six months of the present coffee year being 10,367 bags or 77.46% lower than the same period in the previous coffee year, at a total of 3,017 bags.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,600 bags yesterday, to register these stocks at 2,577,285 bags.   There was meanwhile a similar in volume 1,905 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 15,203 bags.

The commodity markets are seemingly shrugging off the negative influences of slowing manufacturing activity in China, as they gain confidence from the steady growth in North America and were overall steady in trade yesterday.  The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets showed buoyancy, while the Oil, Soybeans, 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 0.48% higher; to see this Index registered at 568.19.  The day starts with the U.S. Dollar steady at 1.678 to Sterling and 1.381 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 109.00 per barrel.

The London market started the day yesterday on a steady note, while the New York market attracted some negative pressure in early trade, but soon recovered and both markets showed good buoyancy into the afternoon’s trade.   This remained the track for the day but with markets losing some of their muscle as the day progressed and with the London market ending the day on a positive note and with only 34.1% of the gains of the day intact, while the New York market ended the day on a likewise positive note, but again with only 9.8% of the gains of the day intact.  While the arbitrage between the markets yesterday remained steady at 115.52 usc/Lb. and therefore, equates to a very attractive 53.99% price discount for the London robusta coffee market.  This positive but overall rather flat close might not be inspirational for sentiment and one might thus expect to see a steady to softer start for early trade today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2152 + 6                                                 MAY     212.35 + 0.55
JUL      2170 + 14                                                JUL     213.95 + 0.55
SEP     2176 + 16                                                SEP     215.95 + 0.55
NOV    2179 + 16                                                DEC     218.15 + 0.65
JAN     2184 + 16                                                MAR    220.30 + 0.90
MAR    2190 + 16                                                MAY     220.85 + 0.80
MAY    2198 + 17                                                 JUL     220.45 + 0.70
JUL     2205 + 19                                                 SEP     219.55 + 0.65
SEP     2208 + 22                                                 DEC    218.50 + 0.70
NOV    2208 + 26                                                 MAR    217.35 + 0.60

23rd. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 26.79% in the week of trade leading up to Tuesday 15th. April;  to register a net long position of 30,461 Lots on the day.  This speculative net long position within the London market which is the equivalent of 5,076,833 bags has most likely been further buoyed, over the following days of mixed trade but finally positive trade, which has since followed.

With the buoyancy of the reference prices of the London market in play, the post Easter holiday trading activity for Vietnam coffees is expected to become relatively active.   Especially so as with still significant stocks of unsold coffees lying with farm and internal traders hands within the country, there is encouragement to look to cash in these coffees.

Meanwhile to further assist in the uptake and buying interest in Vietnam coffee stocks is the fact that the London market against which trade stocks are hedged, has turned back into a normal price structure following many months of inverted structure.  This will assist the consumer market traders to buy in and look to the longer term premium priced contracts, to assist in the finance of their carry of their stocks.

Whether this potential for increased selling volumes out of Vietnam shall have a short to medium term impact upon the now very much depleted certified robusta coffee stocks held against the London market that are now down to an insignificant 231,000 bags is however questionable, as the sharp rise in the arabica coffee prices that cannot be easily followed by price sensitive consumer brands, shall encourage an increase in robusta coffee percentages within many blends.   Thus while one can expect that the certified robusta coffee stocks shall soon start to recover, one would think that this shall be a very slow recovery for the coming months.

While with the potential for the consumer market industry players to perhaps replace overall between 2 million to 4 million bags of arabica coffees with robusta coffees over the coming year, it does reduce some of the negative effects for the potential of a deficit new Brazil arabica coffee crop this year.   A deficit that is in reality not yet seen to be one to cause any shortage in supply, as this deficit is still foreseen to be adequately covered by the substantial carry over arabica coffee stocks in Brazil.

Yesterday was all about Brazil and what one has to see to have been an overreaction to the forecast by Volcafe for the new Brazil crop to be 45.5 million bags, which is a 10% cut from their previous downgraded forecast.  This latest forecast having triggered speculative buying, which in turn triggered buy stops and a surging rally for the New York market.    One that was not followed with the same aggression, by the less volatile and more fundamental in nature London market.   This rather emotive trade forecast one has to note is even 1.5 million bags lower than the traditionally conservative Brazil Coffee Industry Association forecast from two weeks ago and in this respect, one might question such a low crop figure.

In terms of weather and with the majority of the main coffee districts in Brazil having already exceeded their five year average rainfall for the month of April, there is a new cold front entering from the south of Brazil, which is likely to bring more rain to the coffee districts during the course of this week.   This will further assist to build up the ground water retention levels ahead of the forthcoming dry and cold winter season, which shall take some of the stress away from the trees over the harvest period.

The arbitrage between the markets, but with the London market closed for the day broadened yesterday to 115.61 usc/Lb. and therefore, equates to a very attractive 54.17% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,265 bags yesterday, to register these stocks at 2,578,885 bags.   There was meanwhile a smaller in volume 2,775 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 13,298 bags.

The commodity markets were mixed in trade yesterday, but overall steady in nature.  The Cocoa, Sugar, London robusta Coffee, Cotton, Copper, Gold and Silver markets were positive and the New York arabica Coffee market showed remarkable muscle for the day, while the Oil markets were steady and the Natural Gas, Corn, Wheat, Soybean, Platinum and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.64% higher; to see this Index registered at 565.48.  The day starts with the U.S. Dollar steady at 1.682 to Sterling and 1.383 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.90 per barrel.

The London market started the day yesterday on a steady note, while the New York market showed modest buoyancy from the start.   The New York market started to attract further speculative support and to build on its gains into the afternoon trade and with the London market following suit in a more modest manner.  The New York market triggered buy stops to accelerate the gains and to hit new two year highs, but did come under a profit taking and price fixation pressure to shed a good percentage of the gains, before bouncing back by the close.   The London market came under pressure later in the day and while it ended the day on a positive note, it was only with 39.4% of the gains of the day intact, while the New York market ended the day on a very positive note and with 86.1% of the gains of the day intact.    This strong close is supportive for sentiment, but with the fundamentals behind the rally yesterday somewhat questionable, one might expect to see some degree of profit taking coming into play for early trade today in New York, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2146 + 28                                               MAY     211.80 + 15.10
JUL      2156 + 20                                                JUL     213.40 + 14.20
SEP     2160 + 23                                                SEP     215.40 + 14.15
NOV     2163 + 23                                               DEC     217.50 + 13.70
JAN     2168 + 24                                                MAR    219.40 + 13.45
MAR    2174 + 23                                                MAY     220.05 + 13.25
MAY    2181 + 22                                                 JUL     219.75 + 13.05
JUL     2186 + 23                                                 SEP     218.90 + 12.95
SEP     2186 + 23                                                 DEC    217.80 + 12.65
NOV    2182 + 19                                                 MAR    216.75 + 12.40

22nd. April, 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 1.73% in the week of trade leading up to Tuesday 15th. April;  to register a net long position of 40,233 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 0.91%, to register a net long on the day of 45,689 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 4.44%, to register a net long position of 27,514 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,800,097 bags has most likely been marginally increased over the following days of overall positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

With most of the dominant Latin American producer bloc and so too the dominant European consumer market on holiday yesterday, there has been little in the way of coffee market news coming to the markets, which remain focused upon the issue of the probable dismal new crop from Brazil this year.   With this factor presently the only directional news for the markets, as it would appear that for the rest of the producers it is business as usual and with nothing dramatic to report, in terms of medium to longer term production and supply.

Meanwhile in terms of the Brazil new crop news, there are some arabica coffee districts reporting losses from the original crop forecasts of 15% to 20% of their late last year estimates, while others talk losses as high as 35% of original potential.    One might comment that with the Brazil arabica crop initially having been forecasted at approximately 40 million bags and therefore 71% of the overall new crop, these early reports that indicate an approximate 25% loss factor.

This 25% loss factor would extrapolate to a potential loss factor of 10 million bags, which would reduce the overall crop to around 46.5 million bags.    Thus with an overall domestic market and export market demand of approximately 54 million bags per annum, a deficit crop of 7.5 million bags which shall absorb 70% of the carryover stocks into this new crop, over the second half of this year and the first half of next year.   A factor that shall really only become a problem, should climatic conditions cause any concerns for the follow on 2015 crop, which presuming a frost free winter over the Brazil coffee districts, shall turn focus towards the spring and summer rainfall reports during the last quarter of this year.

The arbitrage between the markets, but with the London market closed for the day narrowed yesterday to 102.31 usc/Lb. and therefore, equated to a very attractive 51.36% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,130 bags yesterday, to register these stocks at 2,585,150 bags.   There was meanwhile a larger in volume 4,793 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 16,073 bags.

The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 74,500 bags or 24.39% over the two weeks of trade leading up to Monday 14th. April: to see these stocks were registered at a minimal 231,000 bags.   The decline in these stocks has to be seen to be supportive for sentiment for the London market, which retains it’s well discounted to the New York market buoyancy and makes robusta coffees an attractive buy to the consumer market industries.

The commodity markets were with the impact of the holidays keeping trade thin, mixed but tending softer yesterday.   The Natural Gas and Sugar markets showed buoyancy and the Oil, Coffee, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold, Silver, Platinum and Palladium markets were softer for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.84% lower; to see this Index registered at 561.85.  The day starts with the U.S. Dollar steady at 1.679 to Sterling and 1.379 to the Euro, while Brent Crude is near to steady and is selling at $ 109.50 per barrel.

The London market remained on holiday yesterday to leave the day for a late start for solo trade for the New York market, which opened with follow through buoyancy from the rather dramatic rally that ended off the previous week on Thursday and adding 1.80 usc/Lb. in value.    This buoyancy was however soon under threat and the market dipped back into negative territory and despite a short bounce back into positive territory, drifted lower and set a sideways track in relatively thin trade for the rest of the day.   The New York market thus carried on to end the day on a soft note and with 83% of the losses of the day intact, but nevertheless showing good value for the producers.   It is difficult to foresee following this close the direction for the markets, which might with the news of the falling London stocks reduce the negative pressure upon sentiment for the London market that would be expected from yesterday’s softer close in New York and thus might suggest a cautiously steady start for early trade today against the prices set in London on Thursday and New York yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2118 + 54                                               MAY     196.70 – 4.50
JUL      2136 + 54                                                JUL     199.20 – 4.90
SEP      2137 + 50                                               SEP     201.25 – 4.95
NOV     2140 + 50                                               DEC     203.80 – 4.90
JAN     2144 + 53                                                MAR    205.95 – 4.90
MAR    2151 + 60                                                MAY    206.80 – 4.90
MAY    2159 + 66                                                 JUL     206.70 – 4.80
JUL     2163 + 66                                                 SEP     205.95 – 4.75
SEP     2163 + 66                                                 DEC    205.15 – 4.25
NOV    2163 + 66                                                 MAR    204.35 – 4.30

18th. April, 2014.
The cold front that has been in play over the main coffee districts in Brazil is reported to be losing its intensity, but has in the meantime brought much relief to farmers in the main arabica coffee districts of Minas Gerais and so too, to neighbouring Sao Paulo state.   With farmers mostly having already received their five year average rainfall for the month and some even reporting rainfall that has exceeded their five year averages, by 8% to 35% of these averages.

While these rains are of course too late to reverse any damage done by the hot and dry conditions during the first two months of this year and at a time when the new crop cherries were in their development stage, they shall do much to assist in the recovery of the depleted ground water retention levels.   Thus to assist to carry the coffee trees through the cold and dry winter harvest season, while providing moist conditions for the trees, which shall make them more resistant to the negative effects of any mild frosts.

Meanwhile with the hot and dry weather having accelerated growth in some districts and already some early harvesting of arabica coffees having taken place, there are reports of dismal green bean returns from these coffees.  These reports are somewhat supportive for market sentiment, but one must caution that they are related to extremely low volumes and are not guarantee of similar losses in yield potential from the immature cherries still to ripen and having had the support of reasonable rains over March and again during this month.

There is nevertheless no doubt that the potential for a much smaller than forecasted last year new Brazil arabica coffee crop for this year, that it shall continue to buoy sentiment and prices within the New York market for at least the next three months.   Following this it shall be difficult to predict, as there is no certainty as to what new crop yields shall be reported by the tail end of the harvest in August and in this respect, how accurate might these reports be, as there shall always be the temptation to forward price supportive market manipulative low yield reports.  Therefore, one must presume that the markets shall maintain a positive stance for the medium to long term.

There is in the meantime very little news coming forth from Mexico and Central America, where farmers are riding the positive nature of the reference prices of the New York market, to take good profits out of their new crop coffee stocks.    These profits to do much to assist the farmers to invest in both fertilisers and Roya or Leaf Rust fighting chemical controls, towards the development of what can be expected to be larger new crops from their next October 2014 to March 2015 harvest.

These improved crops in terms of the losses due for the new Brazil arabica crop, to assist to fill the overall world demand for arabica coffees.    Especially so as even with the predicable losses for the Brazil new arabica crop, the country has more than sufficient stocks to cover for this deficit through to their next 2015 crop.   This factor and should there be good spring and summer rains coming in later in the year for Brazil to improve the prospects for the next 2015 Brazil crop, may have a negative influence upon the fortunes for the market for the last quarter of the year, but the question is where shall the market be by the third quarter of the year and one might suggest that even with improved crop prospects, the market shall retain good value for coffee farmers for the foreseeable future.

The arbitrage between the markets broadened yesterday to 107.21 usc/Lb. and therefore, equated to a very attractive 52.53% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 6,476 bags yesterday, to register these stocks at 2,584,020 bags.   There was meanwhile a smaller in volume 1,991 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 20,866 bags.

The commodity markets were mixed but overall steady in pre long weekend trade yesterday with the Oil, Natural Gas, Cocoa, Copper, Wheat and Silver markets having a day of buoyancy and the Coffee markets ending the week on a very strong note, while the Sugar, Cotton, Orange Juice, Corn, Wheat, Soybeans, Gold, Platinum and Palladium markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.57% higher; to see this Index registered at 566.61.  The U.S. Dollar is steady at 1.678 to Sterling and 1.382 to the Euro, while Brent Crude is offered at $ 109.30 per barrel.

The London market started the day yesterday on a softer note and with producer price fixation selling putting some pressure upon the market, while the New York market stated the day with cautious buoyancy.  The New York market started to attract support into the afternoon’s trade and with limited volumes of producer price fixation selling coming into play over the market, started to extend its gains and finally to have some influence upon a recovery for the London market.   The New York market started to trigger buy stops which triggered a strong rally and with the London market following suit, to see both markets recover from their recent dip in value.    The London market and with the prices quoted reflecting the last trades rather than the sett levels, ended the day on a strong note and with 93.1% of the gains of the day intact, while the New York market ended the day on a very strong note and with 97.4% of the gains of the day intact.    The London market shall be closed on Monday while the New York market shall have a shortened day’s trade and we would expect that this latter market trading solo and with very few players about, shall register a slow and steady day against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2119 + 55                                               MAY      201.20 + 15.25
JUL      2136 + 54                                                JUL      204.10 + 15.25
SEP      2138 + 51                                               SEP      206.20 + 15.25
NOV     2139 + 49                                               DEC      208.70 + 15.20
JAN      2146 + 55                                               MAR     210.85 + 15.25
MAR     2152 + 61                                               MAY     211.70 + 15.20
MAY     2160 + 67                                                JUL      211.50 + 15.05
JUL      2164 + 67                                                SEP      210.70 + 14.95
SEP      2164 + 67                                                DEC     209.40 + 14.50
NOV     2164 + 67                                                MAR     208.65 + 14.40

17th. April, 2014.
The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks increased by a sizeable 132,307 bags or 2.74% during the month of March to register these stocks at the end of the month at 4,958,411 bags.  These stocks that fuel green coffee demand in not only the U.S.A., but the entire North American market would at face value and with an approximate coffee demand of approximately 480,000 bags per month, equate to approximately 10.3 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 March stocks would have safely exceeded 12.5 weeks of roasting activity, which is a relatively safe volume of nearby coffee supply.

Albeit that the end March stocks included 667,518 bags of mostly aged arabica coffee certified stocks that were held within the U.S.A. based approved warehouses of the New York exchange, which would mostly not participate in North American roaster off take.   Thus the reality was that the North American coffee stocks at the end of the month still were the equivalent of in excess of 11 weeks of roasting activity, which is a very safe number in terms of the flow of new crop South American and Asian coffees that are now coming to the market.

Brazil’s largest coffee cooperative Cooxupe have reported that the early harvested cherries are indicating losses from the forecasted crop that exceed 30%, but this is based on very small volumes and does not reflect any reality in terms of the main harvest.  One might comment that it is particularly so as it was the cherries related to early flowering that were most vulnerable to the hot and dry weather in January and August, which were more filled out at the time of this problem and therefore, more likely to suffer damage.

In the meantime the latest rainfall reports have confirmed that some districts within the main arabica coffee state of Minas Gerais and after only two weeks, have already received 20% in excess of their five year average rainfall for this month, while most other districts in Minas Gerais are close to matching their five year monthly averages.   These good reports are somewhat in the shade in terms of the coffee farms in South East Sao Paulo state, where rainfall levels are already 47% above the five year average for the month.

These figures are tending to dampen some speculative spirits, but the reality remains that the damage has been done and really the only positive factor about good April rains is that they shall assist to relieve stress on the trees and furthermore, make them less vulnerable to any light winter time frosts.  But it does in terms of these factors, limit the potential follow through negative effects of the hot and dry weather and the potential low ground water retention levels, in terms of the follow on 2015 Brazil crop.  

The Colombian coffee farmers and despite much improved financial returns for their coffees, are still determined to join the general farmer protests that are planned for the 28th. April.   These protests demanding more state support for the countries agricultural sector, but with the short term nature of these protests having no impact upon speculative sentiment in terms of security of Colombian coffee supply.    

The arbitrage between the markets narrowed yesterday to 94.41 usc/Lb. and therefore, equated to a still very attractive 49.99% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 483 bags yesterday, to register these stocks at 2,577,544 bags.   There was meanwhile a marginally larger in volume 899 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,857 bags.

The commodity markets were steady in trade yesterday with the Oil, Natural Gas, Sugar, Cotton, Copper, Orange Juice, Corn, Wheat, Soybean, Gold, Silver and Palladium markets showing some buoyancy and the Cocoa and Platinum markets tending easier, while the Coffee markets had another very soft day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% higher; to see this Index registered at 563.39.  The day starts with a relatively steady U.S. Dollar trading at 1.683 to Sterling and 1.384 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 109.65 per barrel.

The London market started the day yesterday with immediate losses against speculative and producer price fixation hedge selling following the previous days collapse in the New York market, but with the New York market attracting good support and posting a positive stance.   The London market continued on its negative track into the afternoon and despite the positive nature of the volatile New York market, which had posted gains of 7.45 usc/Lb. and was looking to show some muscle.    These gains in New York were however short lived and the market faltered in early afternoon trade and with speculative profit taking and producer price fixation selling coming into play to trigger a sharp reversal that was accentuated by triggering sell stops, to accelerate the losses.   The London market continued on its soft track and ended the day on a soft note and with 80.3% of the losses of the day intact, while the New York market likewise ended the day on a soft note and with 94.7% of the losses of the day intact.    This soft close and with both markets closed tomorrow and the London market closed again on Monday while the New York market shall have a shortened solo day on Monday, is hardly likely to inspire players, but one might expect to see some restraint ahead of the holidays and a relatively steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY    2064 – 57                                                MAY     185.95 – 6.20
JUL     2082 – 46                                                 JUL     188.85 – 6.20
SEP     2087 – 41                                                SEP     190.95 – 6.15
NOV    2090 – 38                                                DEC     193.50 – 6.15
JAN     2091 – 35                                                MAR    195.60 – 6.30
MAR    2091 – 34                                                MAY    196.50 – 6.25
MAY    2093 – 36                                                 JUL    196.45 – 6.20
JUL     2097 – 39                                                 SEP    195.75 – 5.95
SEP     2097 – 38                                                DEC    194.90 – 5.75
NOV    2097 – 38                                                MAR    194.25 – 5.55

16th. April, 2014.
The Vietnam Customs have reported that the countries coffee exports for the month of March was in fact far in excess of forecasts and was 51.4% higher than the same month last year, at a very impressive total of 4,638,333 bags.   This total would therefore indicate that the countries coffee exports for the first six month of the present October 2013 to September 2014 coffee now total 11,963,333 bags, which in terms of the expectations of the Vietnam Coffee and Cocoa Association for exports of 25 million bags during this coffee year, would indicate the potential for a further 13 million bags to be exported during the last six months of this coffee year.

One might however note that Vietnam was estimated to have brought in a new crop of approximately 28 million bags and added to this, was an approximate 2.5 million bags of carryover stocks and thus indicating a coffee supply of approximately 30.5 million bags of mostly robusta coffees.   Therefore if one is to go with an export figure of only 25 million bags for the present coffee year and deduct an additional 1.8 million bags for domestic consumption, one would still be left with carryover stocks into the new crop of a significant 3.7 million bags.

There is however a possibility that with the price structure moving out of its past few months of inverted profile and now assisting the international trade to finance the carry of medium term stocks, that it shall inspire increased trade house buying interest in robusta coffee stocks.  Thus one might see exports from Vietnam over the last six months of this coffee year increase and thus reduce the levels of carryover stocks into the next harvest that weather conditions permitting, is due to start in during October.

The New York market registered a sharp negative technical correction yesterday and one might expect that unless there is a very swift positive correction coming into play, that this might inspire some increase in selling activity of coffee stocks out of Mexico, Central America and Brazil, which would contribute to an increase in price fixation hedge selling pressure over this market.   This selling activity to be accompanied by new crop selling activity from Peru and from the new mid-year Mitaca crop from Colombia, which are starting to come into play.   

The issue of the Brazil weather effected new crop does however remain and no matter how much more active producer price fixation hedge selling into the New York market might be, one would expect that the underlying fund and speculative support shall come forth to absorb such activity and for the present, one has to believe that the market shall manage to maintain its 185 usc/Lb. to 205 usc/Lb. trading range.   With perhaps some dismal early crop outturn reports due to start coming from Brazil’s arabica coffee districts over May and June, to further inspire some degree of positive speculative sentiment and therefore, maintaining the prevailing volatility of this market that is more likely to see 220 usc/Lb. in the medium term, than to fall back to levels around 160 usc/Lb.

The arbitrage between the markets narrowed yesterday to 98.53 usc/Lb. and therefore, equated to a still very attractive 50.52% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 9,113 bags yesterday, to register these stocks at 2,578,027 bags.   There was meanwhile a smaller in volume 2,520 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 23,756 bags.

The commodity markets tended softer yesterday, despite the good economic figures coming through from the U.S.A. and the better than expected latest growth figures from China, as focus remains on the fact that while the GNP figures from China were better than expected, they remain well below the target.  The Orange Juice, Wheat, Corn and Soybean markets had a positive days trade and the Sugar market was steady, while the Oil, Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Gold, Silver, Platinum and Palladium markets had a softer day’s trade and the New York arabica Coffee market suffered from a sharp reversal in fortune.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.71% lower; to see this Index registered at 562.87.  The day starts with a relatively steady U.S. Dollar trading at 1.672 to Sterling and 1.382 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 109.30 per barrel.

The London and New York markets both started the day on a positive note yesterday, with both markets retaining their buoyancy into the afternoon’s trade.    The New York market and with the negative influences of the macro commodity index coming into play start to falter later in the afternoon and fell back below par, to trigger speculative profit taking and producer price fixation sell stops, which accelerated the losses and having some degree of influence upon the London market that fell back into modest negative territory.   The London market continued to end the day on a softer note and with 42.9% of the losses of the day intact, while the New York market ended the day on a very soft note and with 95.7% of the losses of the day intact.   This somewhat unexpected soft close is unlikely to inspire confidence and one might expect to see some follow through producer price fixation selling activity coming into play, to contribute to a steady to soft start for the markets today, against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2121 – 11                                               MAY     192.15 – 12.70
JUL      2128 – 6                                                  JUL     195.05 – 12.35
SEP      2128 – 4                                                 SEP     197.10 – 12.40
NOV     2128 – 4                                                 DEC     199.65 – 12.40
JAN      2126 – 4                                                 MAR    201.90 – 12.30
MAR     2125 – 5                                                 MAY    202.75 – 12.00
MAY     2129 – 8                                                  JUL     202.65 – 11.65
JUL      2136 – 9                                                  SEP     201.70 – 11.40
SEP      2137 – 9                                                 DEC     200.65 – 11.35
NOV     2137 – 9                                                 MAR     199.80 – 11.15

15th. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market decrease their net long position within this market by 11.75% in the week of trade leading up to Tuesday 8TH. April;  to register a net long position of 24,025 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,004,167 bags has most likely been little changed over the following days of mixed trade, which has since followed.

In terms of activity within the robusta coffee market and with the good discounts that these coffees offer against the buoyant and volatile arabica coffee market, the Vietnam Coffee and Cocoa Association have forecasted that the country shall export approximately 5.63% more coffee during the present October 2013 to September 2014 coffee year, with exports targeted at approximately 25 million bags.   This would in terms of the country’s exports of approximately 11 million bags over the first six months of the present coffee year, indicate that there is a probability for very active export selling due for the last six months of this coffee year.   

Such selling activity out of Vietnam would result in steady price fixation hedge selling for the London market, which might well once these sales are joined by new crop selling activity out of Indonesia assist to create something of a ceiling for the market.  But with the discount for robusta coffees relative to the arabica coffee market having widened and with consumer roasters fighting to maintain market share within the competitive retail markets, the increasing demand for robusta coffees shall most certainly assist to absorb the increasing robusta coffee supply and dull the negative effects of rising volumes coming to the market.

This is aside from the very volatile New York market in play and one that is influenced by the weather issues in Brazil, which is adding value the coffee market in general and is likely to retain buoyancy for the markets for the coming months.   At least until the new Brazil harvest is completed, the frost season is over and there is some perspective of the quality of the new rain season that shall dictate the prospects for the next 2015 Brazil crop, which shall have to be a large one if the coffee industry is to feel secure with the longer term supply.

The news of fair rains in Brazil for the weekend and the start of this week and with many farms within the main arabica coffee state of Minas Gerais having already been in receipt of close to their five year average rainfall for the month of April, tended to dampen some speculative spirits and impact negatively upon the New York market for early trade yesterday.   This was however short lived as the reality is that it is rather like closing the stable door after the horse has bolted, in that the damage caused by the hot and dry weather during the important cherry development period in the first two months of the year is irreversible.

The autumn rains are however positive in terms of assisting in the recovery of ground water retention levels ahead of the dry and cold winter harvest season, which shall in turn assist in the maintenance of the trees ahead of the post-harvest spring and summer rainfall season at the end of the year and the related flowering for the next crop.   Making note that the size of this next Brazil crop being a far more critical factor for the market, which anticipates the liquidation of most of the coffee stocks in Brazil over the next ten to twelve months.

The arbitrage between the markets widened yesterday to 110.60 usc/Lb. and therefore, equated to a very attractive 53.33% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,195 bags yesterday, to register these stocks at 2,587,140 bags.   There was meanwhile a smaller in volume 1,371 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 26,276 bags.

The commodity markets tended to steady in trade yesterday, with many markets showing buoyancy as the day progressed.  The Oil, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Soybean, Gold, Silver and Palladium markets had a day of buoyancy and the Copper market was steady, while the Natural Gas, London robusta Coffee, Sugar, Orange Juice and Platinum markets tended easier for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.57% higher; to see this Index registered at 566.90.  The day starts with a marginally stronger U.S. Dollar trading at 1.671 to Sterling and 1.381 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 108.15 per barrel.

The London and New York markets both started the day tending softer yesterday, with the London market attracting producer price fixation selling pressure to maintain downside pressure upon the markets, but with both markets gaining underlying support on the dips, from roaster buying.  The markets entered the afternoon on a negative sideways track, but with the New York market gaining support from the positive nature of the macro commodity index and from speculative and fund buying as the afternoon progressed to trigger buy stops and move swiftly back into positive territory and followed briefly, but a recovery for the London market.   This latter London market however could not sustain its recovery and slid back through par at the end of the day to end on a softer note, but nevertheless having recovered 75.8% of the earlier losses of the day by the close, while the New York market ended the day on a positive note and with 86.5% of the gains of the day intact.    The positive nature of the close in the more volatile New York market is perhaps supportive for sentiment and one might expect to see a steady to buoyant start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2132 – 9                                                 MAY     204.85 + 3.65
JUL      2134 – 8                                                  JUL     207.40 + 3.85
SEP      2132 – 6                                                 SEP     209.50 + 3.90
NOV     2132 – 4                                                 DEC     212.05 + 3.95
JAN      2130 – 3                                                 MAR    214.20 + 3.95
MAR     2130 – 2                                                 MAY    214.75 + 4.00
MAY     2137 unch                                              JUL     214.30 + 4.00
JUL      2145 – 3                                                  SEP    213.10 + 4.10
SEP      2146 + 1                                                 DEC    212.00 + 4.20
NOV     2146 + 1                                                 MAR    210.95 + 4.00

14th. April, 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 4.58% in the week of trade leading up to Tuesday 8th. April;  to register a net long position of 39,548 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 0.37%, to register a net long on the day of 46,109 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 6.24%, to register a net long position of 26,344 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,468,407 bags has most likely been marginally increased over the following days of overall positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The Uganda Coffee Development Authority has reported that the countries coffee exports for the month of March was 37,133 bags or 11.93% higher than the same month last year, to total 348,423 bags.   What was noticeable though in terms of these numbers is that despite the higher value of the market over the past four months, that the value of these exports was only 2.37% higher than the same month last year, at a total of 38.9 million U.S. dollars.  The very modest increase in the value of these exports and despite the more impressive rise in volume, does seeming indicate that a good percentage of these exports were related to price fixed forward contracts that had been concluded earlier in the previous year.

With the prevailing buoyancy of the reference prices of the New York market and the uncertainty as to the extent of the damage that has been done by the hot and dry weather over the first two months of the year, the Brazilian farmers are suggesting to their government that they should take this opportunity to liquidate the state retention coffee stocks of approximately 1.6 million bags of arabica coffees.  Such an action in terms of the potential losses to the size of the new crop would not really be seen to be a strong negative factor of the market, but would assist to stabilise internal market prices for the countries domestic roasting industry.

The Brazilian meteorologists Somar reported on Friday afternoon that they forecast fair rains for this week in the most semi drought affected and main arabica coffee state of Minas Gerais for early this week, which might with the earlier rains this month get the state up to close its five year monthly average rainfall for this month.  But making the point that these good tail end rain season rains shall not in any way reverse any damage that has been done by the hot and dry conditions in January and February, but the report did immediately seem to dampen some speculative spirits in the New York market that settled back from its near to par trading levels.

The internal market in Vietnam remained active but not aggressive in its selling activity last week and with traders still forecasting exports of mostly robusta coffees for this month to be between 2.5 million and 3 million bags.   While the relatively controlled internal market selling activity is assisting to limit the negative effects of price fixation hedge selling into the London robusta coffee market, to assist the market to maintain a degree of stability.

The arbitrage between the markets ended the on Friday at 106.39 usc/Lb. and therefore, equated to a very attractive 52.27% price discount for the London robusta coffee market.   This arbitrage continuing to inspire consumer market roaster interest in robusta coffees, to assist to take some of the bite out of the rise in arabica coffee prices.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 6,589 bags on Friday, to register these stocks at 2,589,335 bags.   There was meanwhile a smaller in volume 2,911 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,901 bags.

The commodity markets showed mixed fortunes on Friday, but with a cautious view seemingly being taken towards the markets in terms of the prospects for moves due to be taken within the Euro zone to soften the prevailing muscle of the Euro.   The Oil, Natural Gas, Cocoa and Orange Juice markets had a day of buoyancy, while the Sugar, Coffee, Cotton, Copper, Wheat, 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 0.32% lower; to see this Index registered at 563.71.  The day starts with a marginally stronger U.S. Dollar trading at 1.674 to Sterling and 1.385 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 107.60 per barrel.

The London and New York markets both started the day tending softer on Friday, but with both markets recovering into the afternoon’s trade and showing follow through muscle from the previous day’s strong close for the day.  There was however steady producer price fixation selling pressure to limit the gains for the London market while with the news of rain due for Brazil along with the negative influences of the macro commodity index coming into play, the New York market likewise came under some speculative profit taking and producer price fixation pressure, to see both markets fall below par and take a negative track for the rest of the day.   The London market continued to end the day marginally softer and with 66.7% of the earlier losses of the day intact, while the New York market ended the day on a relatively soft note and with 78.2% of the earlier losses of the day intact.    This softer end for the week does not however detract from the overall positive nature for the markets last week and likewise, the positive speculative sentiment that comes with the problems in Brazil, but the soft close might well result in a hesitantly steady to softer start for early trade today against the prices set on Friday, as follows:  

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2141 – 21                                               MAY     201.20 – 4.90
JUL      2142 – 16                                                JUL     203.55 – 4.85
SEP      2138 – 15                                               SEP     205.60 – 4.80
NOV     2136 – 12                                               DEC     208.10 – 4.70
JAN      2133 – 12                                               MAR    210.25 – 4.75
MAR     2132 – 11                                               MAY    210.75 – 4.75
MAY     2137 unch                                              JUL     210.30 – 5.00
JUL      2148 + 10                                               SEP     209.00 – 5.25
SEP      2145 + 15                                              DEC     207.80 – 5.60
NOV     2145 + 15                                              MAR     206.95 – 5.55

11th. April, 2014.
The Brazilian Coffee Industry Association have countered the official new crop forecasts yesterday, with their forecast that the drought affected new crop shall most likely only fall to 47 million bags.   This latest number is on the conservative side of many other private trade and industry forecasts, which are still a couple of million bags higher.  But even while this forecast would indicate a deficit of 6 to 7 million bags, once one adds in the 10 to 11 million bags of carry over past crop stocks, it would indicate more than sufficient Brazil coffee supply for the rest of the year and into the coming year.

The big question is in this respect, is what are the prospects for the follow on 2015 crop that would need to be at least 50 million bags, so as not to tighten up Brazil coffee supply from the middle of next year onwards.   This really is a question that cannot really be addressed until the end of the year, by when there shall have been the evidence of the quality of the rainfall over the last four months of the year, and the size and setting of the flowering for the next crop.   Albeit that the government agencies prefer for the present to look to the worst scenario and are already talking of a 10 to 13 million bags deficit crop for next year.

Internal market coffee sales in Brazil have tended to slow during the past week, with forward selling activity of the new crop being retarded by the uncertainty of the levels of damage that have been caused by the first two months of dry and hot weather within the main arabica coffee districts.   Not on damage in terms of overall volume of the new crop, but also the in terms of the percentages of this new crop that shall be made up from the bolder bean coffees.   It is a factor that nevertheless is not slowing short term Brazil coffee supply to the consumer markets, as with good past crop stocks in hand the farmers are able to continue to fuel the forward sales commitments of the countries exporters.

The new crop robusta coffee harvest in the main Indonesian producer island of Sumatra is expected to be slightly delayed by the erratic cooler and wet weather that has been experienced this year, with the harvest expected to start to pick up only at the end of this month.  This delay is allowing for Vietnam to continue dominating world robusta coffee supply for the coming weeks, without competition from the new Indonesian new crop.  While with delay in the new crop and with a perspective of rising prices, is retarding new crop forward selling activity of robusta coffees out of Indonesia.

Meanwhile there are conflicting forecasts on coffee production in Indonesia for the present October 2013 to September 2014 coffee year, with figures that vary from between 10 million and 13 million bags being voiced by trade and industry players.   While the International Coffee Organisation who by nature of their official status have to likewise calculate their statistics on the basis of the individual members official figures, are forecasting that this coffee years Indonesian crop shall be 11,667,000 bags.  The countries crop made up from an approximate 85 to 15 ratio of robusta to arabica coffees.  

The arbitrage between the markets ended the day yesterday at 110.51 usc/Lb. and therefore, equated to a very attractive 53.03% price discount for the London robusta coffee market.   This is assisting to inspire keen interest in robusta coffees and with the Vietnam exporters active sellers, to contribute to steady price fixation hedge selling into the related London market and by nature, to this market not being able to completely follow the positive track that has been set within the New York arabica coffee market.  

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 2,595,924 bags.   There was meanwhile a much larger in volume 7,316 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 21,990 bags.

The commodity markets showed mixed fortunes yesterday, but with the soft nature of the U.S. dollar tending to buoy many of the markets.   While with the U.S.A. reporting their unemployment rate had fallen back to the levels of May 2007 and well before the worldwide economic collapse and accompanied by a successful bond auction in Greece to buoy sprits within the Euro zone, there is an overall positive feel developing towards the world economy and towards projected commodity demand.  This is however countered by continued concerns over economic growth in China, but related to less impressive figures rather than a lack of growth.   The Sugar, Coffee, Copper, Orange Juice, Gold, Silver, Platinum and Palladium markets had a day of buoyancy, while the Oil, Natural Gas, Cocoa, Cotton, Wheat, Corn and Soybean markets tended softer for the day.  The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.33% higher; to see this Index registered at 565.50.  The day starts with a relatively steady but nevertheless soft U.S. Dollar trading at 1.678 to Sterling and 1.389 to the Euro, while Brent Crude is tending marginally softer in early trade and is selling at $ 106.85 per barrel.

The London and New York markets both started the day with buoyancy yesterday, which added value to both the markets and set a both markets for a positive sideways track for the rest of the day and with the New York market hitting new two year highs.   There was steady producer price fixation coming into play for the markets through the day and tending to cap the buoyancy within the markets, but nevertheless not sufficient in volume to cool them down from their Brazil weather inspired bullish trend.   The London market continued to end the day on a positive note and with 61% of the gains of the day intact as did the New York market end the day on a positive note, with 79.7% of the gains of the day intact.  This overall positive close is constructive for sentiment and one might expect to see 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.
                                                  
MAY     2162 + 21                                               MAY     206.10 + 6.25
JUL      2158 + 25                                                JUL     208.40 + 6.30
SEP      2153 + 27                                               SEP     210.40 + 6.35
NOV     2148 + 27                                               DEC     212.80 + 6.50
JAN      2145 + 28                                               MAR    215.00 + 6.60
MAR     2143 + 27                                               MAY    215.50 + 6.45
MAY     2137 + 24                                                JUL    215.30 + 6.10
JUL      2138 + 22                                                SEP    214.25 + 5.35
SEP      2130 + 22                                               DEC    213.40 + 4.55
NOV     2130 + 22                                               MAR    212.50 + 3.55

10th. April, 2014.
The well respected Brazilian meteorologists Somar came forth later in the afternoon yesterday with their latest rainfall report and with the report stressing the fact that while this month’s rainfall was mostly at normal levels, it is too late to reverse the damage already done to the main arabica coffee districts during the hot and dry months of January and February.    This very public comment and in terms of its timing, seemingly assisting to trigger a reversal of the modest downside track that the New York market had been taking so far during the earlier in the day’s trade.

The report did however while noting that it shall be mostly dry for the rest of this week, that there is another cold front and more rains due to for the main coffee districts during next week and if would seem that the tail end of the rain season in Brazil shall be normal and at least assist to build up some degree of ground water retention ahead of the cold and dry winter harvest season.  Albeit that these retention levels have to be lower than the five year average and shall add stress to the trees as the winter progresses, unless there are some additional rain showers coming forth during the winter.

Adding to the forecasts from the Meteorologists in the U.S.A. and Australia in terms of the potential for an El Nino developing during the year within the Pacific Ocean, the Japan Meteorological Agency have followed suit and have also forecasted a good chance for a new El Nino phenomenon developing for the second half of this year.   But alike all the other forecasts so far, this does not indicate the potential for a severe El Nino but rather indicates that it is likely to be modest in nature and in this respect, it might be seen to be positive rather than negative for the coffee producers who would be under is influence.

Much debated Brazil and Pacific Rim weather issues aside the industry focus has to be upon the wholesale prices for the leading coffee brands within the mainstream coffee markets in North America and Europe, where in most cases there has yet to be catch up price increases and with roasters tending to look to defend market share, rather than profit margins.   This resistance has to impact ultimately upon the blend components of these brands, as it is only by tweaking the blends and taking advantage of the relatively lower priced coffees so as to maintain some degree of profitability that the roasters can continue to take this stance, albeit that finally there has to be some significant price increases coming into play.

Yesterday’s markets well illustrate the attractiveness of the option to find ways to make more use of the lower priced coffee alternatives, with the arbitrage between the markets having widened to a very significant 105.35 usc/Lb.    This arbitrage equating to an extremely attractive 52.13% price discount for the London robusta coffee market relative to the New York arabica coffee market, which is a factor that has to attract the focus of the financial managers of the main coffee industry players.

Thus one might expect that with options to take advantage of steam treatments to soften the taste profile of robusta coffees, that despite some cost to these treatments, the significant price discounts for these coffees shall encourage increasing demand for robusta coffees that might well end the year with a close to 45% share of the overall consumer markets demand.  Fortunately in this respect, there is presently more than sufficient robusta coffee supply from the producers.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,687 bags yesterday, to register these stocks at 2,596,174 bags.   There was meanwhile a slightly smaller in volume 1,560 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 14,674 bags.

The commodity markets showed mixed fortunes yesterday and with some uncertainties following less than impressive Chinese trade data for the last month, having some impact within selected markets.   While with a steadier U.S. dollar in play, it took the currency factor out of influences upon market sentiment.  The Oil, Natural Gas, Cocoa, New York arabica Coffee, Orange Juice, Soybean and Palladium markets had a day of buoyancy, while the Sugar, London robusta Coffee, Cotton, Copper, Wheat, Corn, 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% higher; to see this Index registered at 563.66.  The day starts with a softer U.S. Dollar trading at 1.678 to Sterling and 1.384 to the Euro, while Brent Crude is near to steady in early trade and is selling at $ 107.30 per barrel.

The London market started the day yesterday on a softer note and with producer price fixation selling adding to the downside pressure, while the New York market started the day on a near to steady track in thin trade.   The London market remained on a sideways track from its early losses and with the New York market attracting speculative profit taking and producer price fixation selling pressure to start shedding some modest weight and entering the afternoon on a softer track.    There was however in mid-afternoon trade a reversal in the fortunes of the New York market and with speculative buying returning to the market to trigger buoyancy and with buy stops coming into play while producer price fixation selling slowed, the market swiftly recovered the day’s losses and moved up into positive territory.    The London market however shrugged off the positive influences of the more volatile New York market and ended the day on a soft note and with 68.7% of the earlier losses of the day intact, while the New York market held on to its late in the day recovery and ended the day on a positive note and with 90.7% of the earlier gains of the day intact.    This mixed close but with the positive nature of the New York markets close in mind, might well retard producer selling activity and one might expect to see a steady to buoyant stance being taken within the London market and a sideways stance within a thinly traded New York market for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2141 – 33                                               MAY     199.85 + 3.35
JUL      2133 – 33                                                JUL     202.10 + 3.40
SEP      2126 – 35                                               SEP     204.05 + 3.25
NOV     2121 – 35                                               DEC     206.30 + 3.20
JAN      2117 – 35                                               MAR    208.40 + 3.15
MAR     2116 – 35                                               MAY    209.05 + 3.05
MAY     2113 – 36                                                JUL     209.20 + 2.80
JUL      2116 – 42                                                SEP     208.90 + 2.60
SEP      2108 – 42                                               DEC     208.85 + 2.55
NOV     2108 – 42                                               MAR     208.95 + 2.65

9th. April, 2014.
The final and more detailed coffee export figures from Brazil for the month of March were reported yesterday by the countries Council of Green Coffee Exporters, to confirm that the green coffee exports for the month were 200,000 bags or 8.85% higher than the same month last year, at a total of 2.46 million bags.    Added to these were the exports of value added soluble coffees calculated in terms of their green coffee equivalent, which were seen to have been 79,749 bags or 34.44% higher than the same month last year, at a total of 304,790 bags.

Thus the combined coffee exports for the month of March from Brazil were 279,749 bags or 11.26% higher than the same month last year, at a total of 2,764,790 bags.   However despite this increase and with a good percentage of these exports related to price fixed contracts from last year, the value of the Brazilian coffee exports in March were nevertheless 47 million U.S. dollars or 9.87% lower than the value of the country’s coffee exports during the same month last year, at a total of 429.3 million U.S. dollars.

There is nevertheless and despite the many forecasts for a significantly lower new crop, still relatively active selling of the substantial stocks of arabica coffees within the internal market in Brazil, with the negative effects of the firmer Brazil Real that is now trading at 2.2 to the U.S. dollar countered by the firmer nature of the reference prices of the New York market.   Thus one might think that within the next two months that the value of exports from Brazil shall soon be more weighted to these higher value sales, which shall see the value of overall coffee exports starting to surge ahead of the corresponding months last year.

The Australian Bureau of Meteorology have supported earlier forecasts from leading meteorological offices in the U.S.A., with their latest prediction that there is a 70% chance of a new El Nino phenomenon to develop within the Pacific Ocean during the second half of this year.   An El Nino is however so long as it is a mild one, overall positive for coffee, as the drier weather would assist to limit the potential for Roya or Leaf Rust within Colombia and Peru, while it would traditionally bring increased spring and early summer rainfall for the main coffee districts in central and south Brazil.   Thus for the present and with the forecasts presently indicating a mild rather than severe El Nino, the forecasts do not add to fears of tightening longer term coffee supply.

Meanwhile the spring and summer rain season is starting to come into play in Vietnam, to trigger flowerings for the countries next new crop, which shall start being harvested in October.   With the short to medium term weather forecasts so far not threatening any problems for the prospects of this new crop, but there might following the last harvest that many have assessed to have been in excess of 28 million bags of mostly robusta coffee, be some degree of biennial bearing coming into play.   Thus as an early guess, one might be safer to forecast the new crop at closer to 26 million, rather than matching the past crops levels.

There remain substantial robusta coffee stocks within the internal market in Vietnam, following the recently completed larger new crop and this coming in over above an approximate carryover stock in excess of 2.5 million bags and thus with the assistance of the higher reference prices of the London market, there is steady step up selling activity in Vietnam and with farmers now gaining good profits from these new crop sales.  Albeit that despite the higher value of the market, the farmers are still showing some degree of restraint and are not flooding the market with aggressive selling and therefore, are assisting to maintain relatively good value for new sales.   While the value of the sales so far this year is a factor that is positive for the prospects for the new crop as now that the rains are starting, the farmers can easily afford the finance of farm inputs to assist in the development of the next October to January crop.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,975 bags yesterday, to register these stocks at 2,592,487 bags.   There was meanwhile a slightly larger in volume 5,823 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 16,234 bags.

The commodity markets gained some degree of buoyancy yesterday from the softer nature of the U.S. dollar, which provided for overall support.   The Oil, Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Corn and Soybean markets posted good gains, while the Cocoa, Copper, Wheat, Gold, Silver, Platinum and Palladium markets had a positive day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.86% higher; to see this Index registered at 562.69.  The day starts with a near to steady U.S. Dollar trading at 1.675 to Sterling and 1.379 to the Euro, while Brent Crude is tending easier in early trade and is selling at $ 106.80 per barrel.

The London and New York markets predictably started the day yesterday with follow through buoyancy, in line with the continuation of the Friday rally on Monday and the persistent talk of a much lower Brazil crop.   Both markets started to attract opportunist producer price fixation hedge selling but not in sufficient volume to buck the upside trend and with the markets showing muscle and adding to their impressive gains, into the afternoons trade.   The New York market did however hit something of a ceiling later on in the afternoon and with a reversal from its impressive highs, attracted profit taking and producer price fixation sell stops to shed most of the earlier gains and with the less volatile London market likewise faltering, but not to the same degree.   The London market continued to end the day on a positive note and with 79.4% of the earlier in the day’s gains intact, while the New York market ended the day on a positive note but with only 33.3% of the earlier in the day’s gains intact.  While the arbitrage between the markets ended the day at 100.45 usc/Lb., which is a factor that equates to a very attractive 50.55% price discount for the London robusta coffee market.   This overall positive close is supportive for market sentiment but with the late in the day reversal yesterday, it might well attract some degree of producer price fixation selling pressure in early trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2174 + 50                                               MAY      196.50 + 3.15
JUL      2166 + 54                                                JUL      198.70 + 3.15
SEP      2161 + 56                                               SEP      200.80 + 3.15
NOV     2156 + 54                                               DEC      203.10 + 3.00
JAN      2152 + 53                                               MAR     205.25 + 2.95
MAR     2151 + 53                                               MAY     206.00 + 2.65
MAY     2149 + 58                                                JUL     206.40 + 2.35
JUL      2158 + 64                                                SEP     206.30 + 2.25
SEP      2150 + 64                                               DEC     206.30 + 2.10
NOV     2150 + 64                                               MAR     206.30 + 1.85

8th. April, 2014.
The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market increase their net long position within this market by 4.31% in the week of trade leading up to Tuesday 1ST. April; to register a net long position of 27,223 Lots on the day.  This speculative net long position within the London market which is the equivalent of 4,537,167 bags has most likely been increased over the following days of positive trade, which has since followed.

April rains over the main Brazil coffee districts are more in line with the traditional levels for the month, but with this a lower rainfall month and at the end of the main rain season, it has not dampened the bullish spirits within the coffee markets that have been fuelled by the hot and dry conditions that prevailed in January and February this year.   These prior conditions having inspired the rather dramatic lower crop forecasts from the Brazilian National Coffee Council late in the day on Friday, which were supported by the research offices in Minas Gerais of the Procafe Foundation.

These latest reports have not only indicated that as a result of the dry conditions that occurred within the main arabica coffee districts of country that the green been outturns from the cherries shall be lower, but that the dry weather has overly stressed many of the younger coffee trees and that their chances of recovery in time for the follow on crop are minimal.  Thus indicating that the problem is very much longer term in nature and shall impact negatively upon the follow on 2015 crop and perhaps, which shall not be supported by carryover stocks from this year’s crop.  While with these reports fresh within the market press, it has fuelled the speculative rally within the markets and been something of a windfall for the coffee producers in general, who have been able to add some value to their stocks, albeit that there is some degree of disbelief and price resistance from the consumer markets.

There do remain questions however in terms of these rather dramatic market manipulative forecasts from Brazil, as the continued selling activity within the internal market in Brazil does not so far indicate that the farmers truly believe that the losses are as severe as the reports indicate.   This does tend to make many consumer market buyers question the threat to longer term Brazil coffee supply and with no certainty on the matter due for at least another three to four months, the majority of the main consumer market blends have yet to completely factor in the new price levels for green coffee supply and with many looking to tweak their blend percentages, rather than risk losing market share by following the market with their traditional recipes.  

Meanwhile the surge in prices of the reference prices of the New York market has proven to be something of a windfall for the Mexicans and Central Americans whose new crop have just been completed, as they have assisted to bring relatively good prices for these coffees and just in time, so as to assist with the finance of their controls to defend their farms against Roya or Leaf Rust.   This scenario most likely to ensure improved levels of production for the regions new crops, which shall start to come into play during the last quarter of the year and to ensure along with the rising production levels from Colombia, a good longer term supply of fine washed arabica coffees.

But with premium differentials still being paid up for these coffees, it is most likely going to take a longer time before there shall be any significant recovery for the certified stocks held against the New York market, which remain relatively low.    The modest nature of these stocks is tending to assist to buoy the speculative market spirits, which are already well supported by the news from Brazil.  

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2,715 bags on yesterday, to register these stocks at 2,588,512 bags.   There was meanwhile a very similar in volume 2,870 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 22,057 bags.

The commodity markets with the exception of the Coffee markets, tended to consolidate yesterday.   The Natural Gas, Copper, Orange Juice and Wheat markets showed some buoyancy and the Coffee markets continued on their rally from Friday, while the Oil, Sugar, Cocoa, Cotton, Corn, Soybean, 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 0.09% lower; to see this Index registered at 557.88.  The day starts with a near to steady U.S. Dollar trading at 1.661 to Sterling and 1.374 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 105.70 per barrel.

The London and New York markets predictably started the day yesterday with follow through buoyancy, after the strong rally that was experienced at the end of last week and with both markets triggering early buy stops, to step up to a positive price level which the markets maintained during relatively high volume trade for the rest of the day.   There is however producer price fixation hedge selling over both the markets and with the improved value starting to attract some volume, despite the firmer nature of the Brazil real having taken a little of the positive effects of the gains in terms of internal market values.   The London market continued to end the day on a positive note and with 72.2% of the earlier in the day’s gains intact, while the New York market ended the day on a likewise firm note and with 70.8% of the earlier in the day’s gains intact.   While the arbitrage between the markets ended the day at 99.75 usc/Lb., which is a factor that equates to a very attractive 51.01% price discount for the London robusta coffee market.   This overall positive close is supportive for market sentiment but might attract some degree of producer price fixation selling pressure in early trade against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2124 + 39                                               MAY     193.35 + 8.35
JUL      2112 + 40                                                JUL     195.55 + 8.45
SEP      2105 + 38                                               SEP     197.65 + 8.55
NOV     2102 + 37                                               DEC     200.10 + 8.70
JAN      2099 + 38                                               MAR    202.30 + 8.65
MAR     2098 + 39                                               MAY    203.35 + 8.35
MAY     2091 + 41                                               JUL     204.05 + 8.05
JUL      2094 + 44                                               SEP     204.05 + 7.75
SEP      2086 + 41                                               DEC    204.20 + 7.65
NOV     2086 + 41                                               MAR    204.45 + 7.75

7th. April, 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 6.84% in the week of trade leading up to Tuesday 1ST. April; to register a net long position of 41,445 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 0.05%, to register a net long on the day of 46,280 Lots.

During this same week of trade the Non Commercial Speculative sector of the market decreased their net long position within the market by 9.32%, to register a net long position of 28,097 Lots on the day.   This speculative net long position within the New York market which is the equivalent of 7,965,375 bags has most likely been increased over the following days of positive trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The National Coffee Council in Brazil have announced on Friday that due to the devastating partial drought conditions that were experienced over the main arabica coffee growing districts in January and February this year, that the countries new crop that is soon to start shall only register between 40.1 million and 43.3 million bags.    This dismal deficit new crop they said shall be followed by a further dismal deficit crop that shall only be between 38.7 million and 43.6 million bags, which would be caused by the longer term damage that has been done to the coffee trees by the drought.   

These figures are all rather dramatic and would indicate that even with a carryover stock of 11.5 million bags of mostly arabica coffee stocks into the new 2014 crop, that Brazil’s coffee supply shall struggle to fuel the approximate 52 million to 54 million bags per annum combination of domestic market and export market demand for Brazil coffees.    While the further negative forecast for the follow on 2015 crop would indicate no carryover stocks and therefore a 10 million to 14 million bags shortage of Brazil coffees for the 2015 to 2016 coffee year.

The figures that emanate from the Coffee Council are traditionally overly conservative and somewhat market manipulative in nature and are well below the numbers that are foreseen by the majority of the private trade and industry players, but they shall nevertheless have a degree of impact upon market sentiment.   Albeit that serious industry players all agree that there is still no certainty as to how much damage has actually been caused to the overall crop by the dry and hot conditions, which can only truly be assessed post the actual harvest and the resulting bean outturns from the mills.

The Indonesian Coffee Exporters Association have forecasted that with the reasonable weather conditions that have prevailed during the second half of last year and so far this year, that the country can expect to bring in likewise fair crops.   In this respect they have forecasted that with the prevailing much improve price trading range for coffee that the country shall see exports rise by approximately 8% and total this year, between 9,166,667 bags and 9,583,333 bags.

This latest figure from the Indonesian Exporters Association is significantly higher than some of the earlier trade forecasts, but would if it proves to be true and with an approximate 83 to 17 ratio of robusta to arabica coffees, assist to contribute to reasonable world coffee supply for the year.   This already secured by the good unsold coffee stocks that are still lying in Vietnam and Brazil and the rising production levels in Colombia, which despite the possibility for some longer term problems with the forthcoming new Brazil crop, shall assist to maintain good overall supply for the rest of the year and into the first half of next year.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,958 bags on Friday, to register these stocks at 2,591,227 bags.   There was meanwhile a much larger 8,915 bags decrease in the number of bags pending grading for the exchange; to register these pending grading stocks at 19,187 bags.

The commodity markets take some heart from the confirmation of steady improvement of the U.S. economy, where employment figures have not caught up with their pre-recession levels and with the economy now heading up on its positive track.   The Oil, Natural Gas, Sugar, Cocoa, Cotton, Orange Juice, Gold, Silver and Palladium markets had a day of buoyancy on Friday and the Coffee markets surged higher, while the Copper, Wheat, Corn, Soybean and Platinum markets tended easier for the day.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.46% higher; to see this Index registered at 558.39.  The day starts with a near to steady U.S. Dollar trading at 1.658 to Sterling and 1.371 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.10 per barrel.

The London and New York markets started the day on Friday with hesitant buoyancy and with the London market gaining sentimental support from the news of the sharply lower certified robusta coffee stocks, while the New York market gained support from the firming Brazil real that was expected to dull internal market selling aggression in Brazil and to thus reduce the volumes of price fixation hedge selling into the New York market.    Both markets continued to attract follow through support as the day progressed and with buy stops being triggered on the way up, to add traction to the day’s rather dramatic buoyancy.   The London market continued to end the day on a firm note and with 90.8% of the gains of the day intact and likewise the New York market ended the day on a firm note and with 96.3% of the gains of the day intact. This firm close  and with speculative sentiment further supported by the dramatic lower crop forecast from Brazil, is likely to fuel follow through buoyancy for early trade today against the prices set on Friday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2085 + 69                                               MAY     185.00 + 10.40
JUL      2072 + 58                                                JUL     187.10 + 10.40
SEP      2067 + 56                                               SEP     189.10 + 10.45
NOV     2065 + 53                                               DEC     191.40 + 10.45
JAN      2061 + 51                                               MAR    193.65 + 10.45
MAR     2059 + 53                                               MAY    195.00 + 10.40
MAY     2050 + 54                                                JUL     196.00 + 10.40
JUL      2050 + 54                                                SEP     196.30 + 10.40
SEP      2045 + 54                                                DEC    196.55 + 10.45
NOV     2045 + 54                                                MAR    196.70 + 10.00

4th. April, 2014.
The month of April has started with the leading coffee state of Brazil Minas Gerais being in receipt of fair rains, which is something of a further relief for this the most parched of all the coffee states over the first two months of this year.   There have also been some very light rain showers experienced in the Cerrado, but with the forecasts indicating only modest scattered showers are due in the coming couple of weeks.  This is however traditionally a drier month ahead of the dry May to September winter harvest season for the Brazilian coffee districts and so far it would appear, that Brazil has returned to overall more normal weather conditions.

It is early days but Brazil is now heading towards the June to August frost season and with the most vulnerable month being July and with relatively low ground water retention levels for the main arabica coffee districts, which would make the coffee trees more susceptible to damage from even light frosts.  It is normally the case that moist trees are better able to fight off the negative effects of frost and therefore with the potential for dry and brittle coffee trees during the coming winter, there shall be keen interest shown by the trade at times of cold fronts entering the coffee districts and the potential for above average market volatility, through to August this year.

Meanwhile with the reference prices of the New York market having softened and with the Brazil Real having firmed against the dollar over the past couple of weeks, the internal market for arabica coffees in Brazil is showing some degree of price resistance and has slowed trading activity.   But it would seem that there is nevertheless more than sufficient Brazil arabica coffees still coming to the market, which is being fuelled by the more than adequate stocks at hand.

Brazil’s Conilon robusta coffee farmers are starting to work on their new crop harvest and the Arabica coffee farmers are now starting to anticipate next month’s early start to their new crop harvest, which will bring with it further speculation on the levels of damage that have been caused by the partial drought for the first two months of this year.    This issue most likely due to bring with it some dramatic market manipulative scare stories, to add to the international coffee market volatility for the next five months.

There has been little further striking news from the main fine washed arabica producer bloc of Mexico and Central America that has just completed their new crop, which is somewhat surprising.   But with the reference prices of the New York market having been kind to this prominent producer bloc, there has been little need for further market manipulative reports on the negative effects of Roya or Leaf Rust upon regional coffee supply and to a degree this subject has been exhausted.   While with evidence of rising export volumes from the region, the speculative sector of the market would appear to be neutral towards coffee supply from the region.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,630 bags yesterday, to register these stocks at 2,589,269 bags.   There was meanwhile a modestly smaller 3,104 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 28,102 bags.

The Certified robusta coffee stocks held against the London market were seen to have decreased by 91,833 bags or 23.11% during the two weeks of trade leading up to Monday 31st. March, when these stocks were registered at a very modest 305,500 bags.   The declining size of these stock however not in any way related to any tightness in supply of robusta coffees, but to the relatively premium prices that the coffees presently attract from the industry and to the inverted price structure of this market, which does not attract trade interest in taking on tenderable robusta coffee stocks.   

The commodity markets had another generally lacklustre mixed day yesterday, with the Oil, Natural Gas, Sugar, New York arabica Coffee, Orange Juice, Wheat, Corn and Soybean markets showing buoyancy and the London robusta Coffee and Cocoa markets steady, while the Cotton, Copper, 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 0.38% higher; to see this Index registered at 555.85.  The day starts with a steady U.S. Dollar trading at 1.658 to Sterling and 1.370 to the Euro, while Brent Crude is showing buoyancy in early trade and is selling at $ 106.05 per barrel.

The London market started the day yesterday on a softer note, while the New York market registered a hesitantly steady start, but with the London market recovering some of its early losses and moving back closer to par.   The New York market came under pressure as the day progressed but managed to fight its way back to move back into positive territory, while the London market tended to take a sideways track for the day.  The London market continued to end the day with the prompt month near to steady and with the forward months steady and with the prompt May contract having recovered 63.6% of the earlier losses of the day, while the New York market ended the day on a positive note and with 82.6% of the earlier gains of the day intact.    The arbitrage between the markets as per the close, increased to 83.16 usc/Lb.  This equates to a more attractive 47.63% price discount for the London robusta coffee market, which assist to maintain the keen buying interest for robusta coffees.   The steady to buoyant nature of the markets yesterday might well assist for a steady start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2016 – 4                                                 MAY     174.60 + 1.90
JUL      2014 + 1                                                  JUL     176.70 + 1.90
SEP      2011 + 3                                                 SEP     178.65 + 1.85
NOV     2012 + 3                                                 DEC     180.95 + 1.65
JAN      2010 + 2                                                 MAR    183.20 + 1.55
MAR     2006 – 1                                                 MAY    184.60 + 1.45
MAY     1996 – 2                                                  JUL     185.60 + 1.50
JUL      1996 – 2                                                  SEP     185.90 + 1.60
SEP      1991 – 2                                                 DEC     186.10 + 1.60
NOV     1991 – 2                                                  MAR    186.30 + 1.70

3rd. April, 2014.
The National Coffee Organisation of Guatemala has reported that the countries coffee exports for the month of March were 27,473 bags or 7.16% higher than the same month last year, to total 410,915 bags.  This higher performance follows some lower volume months and contributes to the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year being now only 148,766 bags or 10.6% lower than the same period in the previous coffee year, at a total of 1,255,110 bags.   

The Coffee Federation in Colombia have reported that in line with the countries recovering coffee production, that the countries coffee production in March was 211,000 bags or 34.2% higher than the same month last year, at a total of 828,000 bags.     This rise in production that follows five months of positive figures has seen the cumulative coffee production for the first six months of the present October 2013 to September 2014 coffee year registered at 1,553,000 bags or 34.93% higher than the same period in the previous coffee year, at a total of 5,999,000 bags.    This much improved performance and with the new Mitaca crop from April to July starting, almost guarantees that the forecasted production for this present coffee year of approximately 11.4 million bags is very much on the cards and could well be exceeded.

Meanwhile with production in Colombia surging the country has reported coffee exports for the month of March to have been 250,000 bags or 36.87% higher than the same month last year, at a total of 928,000 bags.   This improved performance has seen the countries cumulative exports for the first six months of the present October 2013 to September 2014 coffee year to be 1,665,000 bags or 39.65% higher than the same period in the previous coffee year, at a total of 5,864,000 bags.

The rising volumes of exports from Central America with Honduras, Guatemala and Costa Rica all having reported improved export performances in March and followed by the sharply higher figures that are emanating from Colombia, confirm that there is indeed still a fair supply of the top end fine washed arabica coffees coming to the consumer markets.  With the improved value this year of the reference prices of the New York market seemingly bringing more coffees out of the internal markets in Mexico and Central America where all but Honduras have been forecasting lower Roya or Leaf Rust affected new crops, while Colombia is very much filling the gap in supply from Central America.  These figures are tending for the present, to dull the bullish trend that has been set over the past few months, by the speculative and fund sectors of this market.

Comexim who are one of the leading coffee exporters in Brazil have come forth yesterday with their latest semi drought affected new crop forecast, which they now forecast at a 5 million to 7 million bags deficit crop of between 47 to 49 million bags.    The same report did however concede that they expect that Brazil shall be holding carryover coffee stocks of approximately 11.5 million bags by the end of June, which would in fact based on such a crop forecast, result in a 4.5 million to 6.5 million bags surplus Brazil coffee supply through to the next 2015 crop and is therefore a report, that does tend to dampen some speculative spirits.

These latest reports from Central America, Colombia and Brazil that tends to take the edge out to the bullish sentiment within the markets does not detract from the fact that no one really knows until the new Brazil crop is harvested and milled, just how much damage has been done to the potential of this new crop.  Thus while presently there is a degree of complacency and consolidation within the coffee markets, one can expect that once the main arabica coffee harvest starts to be milled in June that there shall be some further dramatic dismal crop reports coming to the market and thus for the medium term, the speculative sentiment within the markets is likely to retain its bullish stance.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 3,469 bags yesterday, to register these stocks at 2,592,899 bags.   There was meanwhile a modestly larger 4,194 bags increase in the number of bags pending grading for the exchange; to register these pending grading stocks at 24,998 bags.

The commodity markets continued to consolidate yesterday, despite the positive news of the improved economic figures from the U.S.A. and the news that the Chinese government is looking to stimulate the internal economy so as to maintain good growth.   The Oil, Natural Gas, Cocoa, Sugar, Coffee, Cotton, Corn and Wheat markets tended softer for the day, while the Copper, Orange Juice, Soybean, Gold, Silver, Platinum and Palladium markets had a day of buoyancy.   The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.24% lower; to see this Index registered at 553.76.  The day starts with a steady U.S. Dollar trading at 1.664 to Sterling and 1.376 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 103.90 per barrel.

Both the London and New York markets started the day on a hesitantly softer note yesterday and within an environment of thin and lacklustre trade, but with the New York market lacking strong producer selling over the market recovering in the afternoon and triggering high volume buy stops, to aggressively move back into positive territory.   This positive trend did seemingly have its influence within the London market that likewise moved back into positive territory and set a sideways track, but with the New York markets gains having brought price fixation hedge selling back into play and once again heading south.   The London market continued to end the day on a marginally softer note and having recovered 90.2% of the earlier losses of the day by the close, while the New York market ended the day on a soft note and with 38.9% of the losses of the day intact and with the arbitrage between the markets having narrowed to 81.07 usc/Lb., which equates to a still attractive 46.94% price discount for the London robusta coffee market.   The inability of the markets to recover yesterday and with little in the way of supportive fundamental news coming into play shall more than likely set the markets for a steady to soft start for early trade today against the prices set yesterday, as follows:

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb.
                                                  
MAY     2020 – 4                                                 MAY     172.70 – 3.05
JUL      2013 – 8                                                  JUL     174.80 – 2.55
SEP      2008 – 12                                               SEP     176.80 – 2.55
NOV     2009 – 13                                               DEC     179.30 – 2.75
JAN      2008 – 11                                               MAR    181.65 – 2.85
MAR     2007 – 10                                               MAY    183.15 – 2.85
MAY     1998 – 10                                                JUL     184.10 – 2.75
JUL      1998 – 10                                                SEP     184.30 – 2.60
SEP      1993 – 10                                               DEC     184.50 – 2.50
NOV     1993 – 10                                               MAR     184.60 – 2.45