Coffee Market Report

March 24 2014

The latest Commitment of Traders report from the washed arabica coffee New York market has seen the shorter term in nature Managed Money Fund sector of the market increase their net long position within this market by 14.87% in the week of trade leading up to Tuesday 18th. March; to register a net long position of 41,404 Lots on the day. Over the same period the longer term in nature and steadier Index Fund sector of this market decreased their net long position within the market by 3.55%, to register a net long on the day of 47,376 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 26.86%, to register a net long position of 30,461 Lots on the day. This speculative net long position within the New York market which is the equivalent of 8,635,559 bags has most likely been sharply reduced over the following days of negative trade, which has since followed and so too, the net long that was held by the Managed Money Fund sector of the market.

The Coffee Federation of Colombia have foreseen the possibility of a moderate El Nino phenomenon in the Pacific Ocean for later in this year to be a positive factor for their coffee crop, as they see the marginally drier weather that this shall bring, to be conducive to good growing conditions. Thus they have increased their forecast for coffee production for this calendar year to be 4.59% higher than last year, to total an impressive 11.4 million bags.

This impressive recovery in the Colombian production over the past couple of years and since dipping to below 8 million bags, does much to counter the negative effects upon fine washed arabica coffee supply from the Roya or Leaf Rust affected Mexican and Central American producer bloc. While with the recent weeks of relatively good value new crop sales from this region in hand, they can be expected to improve their levels of Roya controls and one might well foresee improved crop levels from these producers for their next October 2014 to March 2015 harvest. Thus contributing to an overall recovery in world coffee supply for the next October 2014 to September 2015 coffee year, which shall be under some pressure from the smaller than expected 2014 new Brazil crop.

Stepping in to add to the negative forecasts in terms of world coffee supply for the coming coffee year is the forecast from the prominent commodity bankers BNP Paribas on Saturday, who foresee that with the low rainfall problems being experienced by Brazil for the first quarter of this year, that world coffee supply shall decline to 150.1 million bags, which the foresee to be a deficit supply of 612,000 bags. This forecast does however still foresee a new Brazil coffee crop of 51.5 million bags which many might dispute, but nevertheless it does make the point that the forecasted deficit supply follows two years of surplus supply and with more than sufficient stocks to guarantee sufficient supply for the coming coffee year. Leaving the big question as to what are the prospects for the follow on 2015 Brazil crop, which shall be critical for safe coffee supply for the follow on October 2015 to September 2016 coffee year.

Meanwhile in terms of Brazil rainfall for the month, there have been widespread rain showers over all of the coffee districts, albeit that in term of average monthly rainfall levels, the rains are still well below the traditional levels. One might however presume that while the rainfall for the month so far has been relatively modest, that they would be sufficient to sustain the coffee trees, but there still has to be some concern over the much lower than is normal for this time of the year, ground water retention levels that are important for the support of the trees through the cold and dry winter harvest season. However with a new front coming in over this last weekend, one might well see some catch up rainfall coming into play for this week, to assist towards a recovery of these pre winter ground water retention levels and with the prospects of such rains to continue to dampen some of the bullish sprits that still prevail within the coffee markets.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged on Friday, to register these stocks at 2,587,188 bags. There was meanwhile a modest 884 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 1,900 bags.

The Certified Robusta coffee stocks held against the London market were seen to have decreased marginally by 2,000 bags or 0.50% during the two weeks of trade leading up to Monday 17th. March, to see these stocks were registered at a modest 397,333 bags. These stocks now that there is an increasing flow of new crop robusta coffee stocks coming forth from Vietnam have lost some of their attraction for the consumer market roasters and one might expect that in the coming months that they might be expected to register new coffees, which shall see them steadily start to increase.

The commodity markets were again mixed in trade on Friday, but with the overall macro commodity index tending softer for the day. The Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Gold and Palladium markets had a day of buoyancy, while the Sugar, Cocoa, New York arabica Coffee, Orange Juice, Wheat, Corn, Soybean, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.41% lower; to see this Index registered at 554.43. The day starts with a near to steady U.S. Dollar trading at 1.648 to Sterling and 1.380 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 106.80 per barrel.

The London coffee market started the day on Friday on a softer track and followed by similar stance being taken towards the New York market, but with both markets recovering into the afternoons trade and moving back into positive territory. The markets did however again come under pressure and slip back into negative territory, but with the London market posting a recovery while the New York market remained under pressure. The London market continued to end the day on a steady note but with only 3.6% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 53.1% of the earlier losses of the day intact. This close does little to inspire confidence and one might thus expect to see 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.

MAR 2099 + 2

MAY 2038 + 1 MAY 171.15 – 3.00

JUL 2036 unch JUL 173.05 – 2.90

SEP 2041 – 2 SEP 174.65 – 2.95

NOV 2045 – 3 DEC 176.05 – 3.15

JAN 2045 – 4 MAR 177.00 – 3.35

MAR 2042 – 5 MAY 178.00 – 3.55

MAY 2040 – 7 JUL 178.50 – 3.80

JUL 2040 – 7 SEP 178.85 – 4.15

SEP 2040 – 7 DEC 179.10 – 4.25

Coffee Market Report

March 21 2014

21st. March, 2014.

The Certified robusta coffee stocks held against the London exchange were seen to have decreased by 120 Lots during the two weeks of trade leading up to Monday 17th. March, with these stocks registered at 23,840 Lots on the day.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 1,075 bags yesterday, to register these stocks at 2,587,188 bags. The number of bags pending grading for the exchange was unchanged on the day at 2,784 bags pending grading for the exchange.

The commodity markets experienced a reversal yesterday, with the influential Oil markets on a softer note and a firmer US Dollar applying some pressure during the course of the day. The energy markets were mostly softer as was agriculture with Sugar, Coffee, Cocoa, Wheat and Corn all lower on the day, with Soybean and Orange Juice finishing in positive territory. It was likewise a lower close on the day for Copper, Cotton, Gold, Silver and Platinum, although a mildly positive finish for Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 1.30% lower; to see this Index registered at 556.71. The day starts with a steady U.S. Dollar trading at 1.649 to Sterling and 1.378 to the Euro, while Brent Crude is steady in early trade and is selling at US$ 106.86 per barrel.

It was another soft day for the coffee markets yesterday, with both London and New York starting the day on a lower note and any attempts to the upside, lacking follow through support. The overall negativity across the board of commodities along with the strengthening in the US Dollar leant an influence to the downward day. However sentiment would point to the weather premium that is rapidly chiselled away, with weather forecasters consensus that widespread rains will return to the coffee growing areas in Brazil, over the coming weekend and to the end of March, news which is seen to be dampening speculative spirits. The session continued into the afternoon with speculative long liquidation and producer price fixation selling pressure, and limited underlying buyer support which finally saw the markets close after triggering stops along with way, on a softer note, with some recover seen toward the very end of the day in both markets and a negative close set yesterday, with a 2.53% lower market in London and a 6.18% decline in the New York May position, in a relatively heavy volume day, set the close yesterday, as follows:

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

MAR 2097 – 53 MAY 174.15 – 11.35
MAY 2037 – 53 JUL 175.95 – 11.40
JUL 2036 – 53 SEP 177.60 – 11.40
SEP 2043 – 51 DEC 179.20 – 11.80
NOV 2048 – 49 MAR 180.35 – 12.20
JAN 2048 – 47 MAY 181.55 – 12.35
MAR 2047 – 46 JUL 182.30 – 12.45
MAY 2047 – 46 SEP 183.00 – 12.40
JUL 2047 – 46 DEC 183.35 – 12.30
SEP 2047 – 46 MAR 183.10 – 12.30

Coffee Market Report

March 21 2014

20th. March, 2014.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by 894 bags yesterday, to register these stocks at 2,588,263 bags. The number of bags pending grading for the exchange registered a decline of 1,925 bags to a total 2,784 bags pending grading for the exchange.

It was a steady day on the commodity markets yesterday, the Oil markets showing some stability and a return to market investor confidence surrounding the latest round of U.S. Federal Reserve policy discussions. It was a positive day for Oil, Sugar, Copper, Wheat, Corn, Coffee, Soybean and a softer day for Orange Juice, Gold, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.09% higher; to see this Index registered at 564.05. The day starts with a steady U.S. Dollar trading at 1.6539 to Sterling and 1.383 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.20 per barrel.

The coffee markets started the day on a buoyant note, but with both markets registering thin and lacklustre trade. There was limited upward support and both markets struggled to maintain positive momentum, which brought speculative profit taking back to the floor, triggering stops along the way. The lack of follow through buoyancy continued to come under negative pressure with price fixation selling pressure entering the market and toward the afternoon higher volumes of trade coming into play. Both markets maintained the session in negative territory although a late in the day recovery in both markets was noted, the close was on a softer note and near to the day’s lows in both markets, to set the close yesterday as follows:

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

MAR 2150 - 51 MAR 185.10 – 5.85
MAY 2090 - 45 MAY 185.50 – 6.05
JUL 2089 - 42 JUL 187.35 – 6.05
SEP 2094 - 44 SEP 189.00 – 6.10
NOV 2097 - 42 DEC 191.00 – 6.05
JAN 2096 - 41 MAR 192.55 – 6.10
MAR 2093 - 39 MAY 193.90 – 6.10
MAY 2093 - 39 JUL 194.75 – 6.15
JUL 2093 - 39 SEP 195.40 – 6.15
SEP 2093 - 39 DEC 195.65 – 6.10

Coffee Market Report

March 19 2014

19th. March, 2014.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 3,988 bags yesterday, to register these stocks at 2,587,369 bags. The number of bags pending grading for the exchange steady at 4,709 bags pending grading for the exchange.

It was a buoyant day on the commodity markets yesterday, the advent of the U.S. Federal Reserve two day policy meetings seemed to provide some confidence in the continuity of current policies and the widely expected trimming back of bond-buying stimulus, the meetings continue today. In a mild reversal of fortunes, it was a more positive day for Sugar, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Platinum and Palladium. The Oil markets were steady to softer and a softer day for Gold, Silver, Platinum and Palladium. 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 563.53. The day starts with a steady U.S. Dollar trading at 1.6594 to Sterling and 1.392 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.40 per barrel.

The day started lower in the coffee markets, with London weighed down through an influx of origin sellers at the outset. New York opened on a similarly softer note but in thin trade and a recovery back to unchanged in the early session and fairly steady in a narrow range ahead of the American opening. London similarly registered a recovery toward midsession although the presence of additional selling was noted above the market, came in to cap the gains as the afternoon progressed. The spurt of buyer participation within New York was met with steady speculative profit taking, leaving this market vulnerable to further pressure as the day wore on although to remain within a positive range, by the end of the day. London did not fare quite as well and remained in negative territory throughout the session, with a push to the lows on the close of the day. It was an overall quieter day in the markets yesterday, the volume of trade was muted and relatively slow through the session, the total volumes for the day posted at close to half of that of the previous session. Lacking any other directional news and with the weather reports from Brazil predicting wide spread rains for the coffee producing areas to the end of March, a consolidation in the markets, to set the close on a softer note in London and a mildly positive note in New York yesterday, as follows:

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

MAR 2201 - 24 MAR 190.95 + 1.05
MAY 2135 - 24 MAY 191.55 + 0.15
JUL 2131 - 24 JUL 193.40 + 0.15
SEP 2138 - 21 SEP 195.10 + 0.15
NOV 2139 - 21 DEC 197.05 – 0.10
JAN 2137 - 22 MAR 198.65 – 0.40
MAR 2132 - 20 MAY 200.00 – 0.55
MAY 2132 - 9 JUL 200.85 – 0.55
JUL 2132 - 11 SEP 201.55 – 0.40
SEP 2132 - 11 DEC 201.75 – 0.40

Coffee Market Report

March 18 2014

18th. March, 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 114 Lots in the week of trade leading up to Tuesday 11th March; to register a net long position of 20,070 Lots, or the equivalent of 3,345,000 bags net long on the day. Following the news of a catch up surge in exports out of Vietnam as was reported for the month of February, robusta deliveries continue to flow from the interior to the main export port in Ho Chi Minh City. According to a recent poll compiled by Bloomberg trade however, producer sales from this current October 2013 to September 2014 crop is estimated by a median of private trade participants as 50% sold thus far, compared with an average at 60% sold at the same time over the past five years. This underscores the prevailing sentiment that producers are generally well financed within Vietnam and have the ability to selectively wait out the market in anticipation of better value to come. The surge reported in deliveries over these past few weeks should assist to bolster exports from Vietnam to consumer markets over the next few months, which for the first five months of the present coffee year registered 10,070,000 bags or 15% below that of the same period in the previous year.

There are meanwhile some whispers of concern surrounding a continuation of dry weather, emanating from Vietnam. This would seem to be slightly market manipulative in nature as it is not quite yet the rain season. There are by some accounts, evidence that the dry weather has been extended by a fortnight over the seasonal average. This in the age of global warming and with a prevailing weather market already in existence in Brazil, may serve to pique speculative interest with regard to the prospective development of the next coffee crop to come. There is however some time ahead for the October 2014 to September 2015 Vietnam new robusta crop to develop and the evidence of considerable stocks being held within the interior meanwhile, will dispel any fundamental concerns of supply to consumer markets at this point in time.

The National Exports Association in Nicaragua have reported that the countries coffee exports for the month of February were 29,249 bags or 24.80% higher than the same month last year, at a total of 147,312 bags. This improved performance follows the modest volumes of exports recorded thus far in the coffee year. The countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year is nevertheless 47.30% below that of the same period in the previous coffee year, at a total of 336,422 bags.

The Green Coffee Association in the U.S.A. has reported that the nations port warehouse stocks declined by a sizeable 203,234 bags or 4.04% during the month of February to register these stocks at the end of the month at 4,826,104 bags. The largest drawdown was noted in San Francisco, New Orleans and New York. These stocks however, 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. In addition, these stocks included 669,605 bags of mostly aged arabica certified coffee stocks held within the U.S.A., certified were houses at the end of February.

The Certified washed Arabica coffee stocks held against the New York exchange were unchanged yesterday, to register these stocks at 2,591,357 bags. The number of bags pending grading for the exchange remained at a 4,709 bags pending grading for the exchange. It was a mixed day on the commodity markets yesterday, the leading in influence Oil markets posted softer overall results as the tenuous political situation in Ukraine remains in focus following the referendum held on Sunday. It was a softer day for agricultural commodities generally, with Wheat, Corn, Coffee, and Sugar lower on the day, with Cocoa and Orange Juice bucking the trend to end on a positive note. Cotton and Copper finished lower on the day, as did Gold, Silver, Platinum and Palladium, ahead of the U.S. Federal Reserves’s two day policy review starting later today. The Reuters Equal Weight Continuous Commodity Index that is that is made up from 17 markets is 0.28% lower; to see this Index registered at 561.63. The day starts with a steady U.S. Dollar trading at 1.6639 to Sterling and 1.393 to the Euro, while Brent Crude is steady in early trade and is selling at $ 106.59 per barrel.

It was a softer start to the day for both markets yesterday, with London dipping lower from the opening bell. New York opened in a similar fashion and lower, although in light volume the losses were maintained and this market settled into a narrow range initially but met with speculative profit taking as the weather in Brazil remains very much an influence in the prevailing weather market. According to local forecasters, more widespread rains are expected to reach the coffee producing areas by the end of this week. The markets settled into a lower range by midsession but toward the latter half of the trading day both markets had registered a recovery, which in New York saw the market regain all of the losses incurred as the afternoon progressed. The upward momentum was however quickly met with a fresh bout of selling activity at the top of the market in New York, leading to a softer close on the day closer to the day’s lows, and a finish in negative territory for both markets, to set the close yesterday as follows:

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

MAR 2225 – 16 MAR 189.90 – 7.95
MAY 2159 – 16 MAY 191.40 – 7.00
JUL 2155 – 16 JUL 193.25 – 6.95
SEP 2159 – 16 SEP 194.95 – 7.00
NOV 2160 – 14 DEC 197.15 – 6.90
JAN 2159 – 11 MAR 199.05 – 6.80
MAR 2152 – 14 MAY 200.55 – 6.55
MAY 2155 – 14 JUL 201.40 – 6.40
JUL 2157 – 14 SEP 201.95 – 6.35
SEP 2157 – 14 DEC 202.15 – 6.35

Coffee Market Report

March 17 2014

17th. March, 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 1.22% in the week of trade leading up to Tuesday 11th. March and register a net long position of 36,045 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 1,815 Lots, to register a net long on the day of 49,118 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 1.14%, to register a net long position of 23,823 Lots on the day. This speculative net long position within the New York market which is the equivalent of 6,753,715 bags has most likely been buoyed over the following days of positive trade, albeit that this net long position may have been trimmed after the softer result on Friday.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 364 bags yesterday, to register these stocks at 2,591,357 bags. There was meanwhile a modest 1,432 bags decrease to the number of bags pending grading for the exchange; to register these pending grading stocks at 4,709 bags.

The commodity markets were generally positive on Friday, with the Oil markets following a positive track. It was similarly a positive day for Cotton, Copper, Wheat, Gold, Silver and Platinum. It was a softer day however for Sugar, Cocoa, Corn, Soybean, Coffee, Orange Juice and Palladium. 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 563.24. The day starts with a steady U.S. Dollar trading at 1.6632 to Sterling and 1.389 to the Euro, while Brent Crude is steady in early trade and is selling at $ 107.56 per barrel.

It was a softer day in the coffee markets on Friday, London started the day on a negative note but after the initial dip registered a recovery by mid-morning, before being met with heavy selling pressure waiting just above the market. The New York market opened the day with a degree of buoyancy in relatively thin volume. Both markets continued to come under pressure in the afternoon and with producer fixation hedge selling in combination with speculative profit taking coming into play. There was evidence of underlying support coming in at the lows to reduce the losses; however both markets struggled to regain lost ground toward the latter half of the day. Although London managed to close within the middle of the trading range on the day and with some late in the session recovery as sellers left the floor, it was a softer close on the New York market which registered another bout of selling toward the end of the day, and a close near to the day lows, in moderate volume of trade for the day in this market. To register a softer close for the coffee markets on Friday, as follows;

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

MAR 2241 – 4 MAR 197.85 – 7.20
MAY 2175 – 14 MAY 198.40 – 7.55
JUL 2171 – 14 JUL 200.20 – 7.60
SEP 2175 – 13 SEP 201.95 – 7.60
NOV 2174 – 12 DEC 204.05 – 7.55
JAN 2170 – 12 MAR 207.10 – 7.50
MAR 2166 – 16 MAY 207.80 – 7.45
MAY 2155 – 27 JUL 208.30 – 7.25
JUL 2157 – 27 SEP 208.30 – 7.15
SEP 2157 – 27 DEC 208.50 – 7.15

Coffee Market Report

March 14 2014

The Coffee Development Authority of Uganda have reported that the countries coffee exports for the month of February were 10,077 bags or 2.92% higher than the same month last year, to total 354,837 bags. This figure assisting to confirm that the countries expectations for exports for the present coffee year shall once again 3 million bags.

The Vietnam Customs Authorities have increased their figure for coffee exports during the month of February, which they now report to have been 83.4% higher than the same month last year, at a total of 3,068,333 bags and thus well above the earlier private trade forecasts for exports of between 1.67 million and 2 million bags. This surge in exports for the month is very much catch up in nature as despite this higher figure, the countries cumulative exports for the first five months of the present October 2013 to September 2014 coffee year are 15% lower than the same period in the previous coffee year, at a total of 10,070,000 bags.

The International Coffee Organisation and with the new Mexican and Central American crops coming to completion, have reported that the damage to these new crops caused by Roya or Leaf Rust might not be as severe as had earlier been forecasted, but that the damage was nevertheless still quite severe. This ICO report that was based on input from the regional coffee body Promecafe has indicated that coffee production for this important producer bloc has declined by 24.1% for the new crop, from the levels of the 2011/2012 harvest.

One might however question the accuracy of the new crop reports from Mexico and Central America as while there is no doubt that the overall production from the region is lower, there has been very active price resistance on the part of many farmers within these countries, in their bid to hold back stocks for higher value in anticipation of further drought fuelled rallies for the reference prices of the New York market. These price resistant activities that has tightened supply and by nature buoyed the asking differentials by the exporters for new business might as soon as the New York market is seen to steady or perhaps even lose a little weight, start bringing larger volumes of unsold coffees out of the interior to the mills and exporters.

Thus one would suggest that it shall only be by well into the second quarter of the year and perhaps only early in the third quarter, that one shall be in a position to truly asses what has been the size of the overall crops from Mexico and Central America. Perhaps in the end and it is still quite probable, that they shall be only 16% lower than the 19.7 million bags of the 2011/2012 harvest, rather than the more dramatic percentages that are being reported by Promecafe and the International Coffee Organisation. In the meantime however and albeit partially manipulated by internal market price resistance, the overall supply from Central America remains tight and the differentials for new business firming, which has likewise assisted to firm up the asking differentials for new business from neighbouring Colombia.

With Brazil having been an active seller over the past months the respected domestic analysts Safras e Mercado have estimated that by the end of February approximately 77% of the 2013 crop of 52.9 million bags had been sold. This figure they say is well ahead of the 71% factor at the same time last year, of sales of the previous 2012 crop coffees. There are many questions however in terms of these figures as the evidence of internal market coffee supply in Brazil is that both the last 2013 and the prior 2012 and 2011 crops might have been much larger than many have assessed and that the sales within Brazil are including good volumes of past crop stocks, which might be clouding the assessment of how much of the 2013 crop coffees have actually been sold.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a 2,455 bags yesterday, to register these stocks at 2,590,993 bags. There was meanwhile a modest 2,200 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 6,141 bags.

The commodity markets were again mixed in trade yesterday, but with the overall macro commodity index tending to stake a softer track for the day. The U.S. Oil, Sugar, Cocoa, New York arabica Coffee, Corn, Soybean and Gold markets showed buoyancy, while the Brent Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Orange Juice, Wheat, 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 0.12% lower; to see this Index registered at 563.37. The day starts with a steady U.S. Dollar trading at 1.662 to Sterling and 1.386 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.15 per barrel.

The London coffee market started the day yesterday taking a softer track and followed by a similar start for the New York market, but with both markets recovering and moving back into positive territory for the afternoon’s trade. The markets were however experiencing thin and often lacklustre trade, comparative to the exciting days over the past couple of months, which would seemingly indicate that many players are taking a bit of a breather while they await further fundamental weather and crop news out of Brazil. The London market continued on its positive track for most of the afternoon, but lost its way on the close and dipped back into negative territory and ended the day on a softer note and with 64.7% of the earlier losses of the day intact, while the New York market also started to lose its way in the closing stages of trade, but nevertheless ended the day on a positive setting and with 30.2% of the earlier gains of the day intact. This mixed close and with both markets taking a late in the day dip does not however provide much in the way of confidence and one might expect to see 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.

MAR 2245 – 6 MAR 205.05 + 0.25

MAY 2189 – 11 MAY 205.95 + 0.65

JUL 2185 – 14 JUL 207.80 + 0.65

SEP 2188 – 13 SEP 209.55 + 0.70

NOV 2186 – 18 DEC 211.60 + 1.05

JAN 2182 – 20 MAR 213.35 + 1.20

MAR 2182 – 17 MAY 214.55 + 1.20

MAY 2182 – 16 JUL 215.05 + 1.00

JUL 2184 – 16 SEP 215.45 + 1.00

SEP 2184 – 16 DEC 215.65 + 1.10

Coffee Market Report

March 13 2014

The coffee markets with much improved value on the table for farmers for their coffee stocks, are presently devoid of striking news, which is presumably related to there no longer a need for bouts of market manipulative scare stories designed to assist to buoy speculative confidence. There is of course no doubt that the issues of Roya or Leaf Rust in Mexico and Central America remain a factor, as has the partial drought in the main central coffee districts of Brazil done damage to the new crop potential, but with the reporting of this problems having already been factored into the market, there is a degree of exhaustion on the matter.

The London is finally starting to move back towards a traditional price structure, with the inverted nature of the market now moving back towards a structure that can assist the trade to finance the carry of stocks with the use of the forward month premiums. It is not quite there yet, but there is no doubt that anticipating the return to normal that the trade is already buying into the substantial robusta coffee stocks that are on offer from Vietnam. This should on the medium term, start to see some volume of robusta coffees starting to come to the certified stocks of the London market, which are presently very low.

The mixed results for the markets yesterday has seen the arbitrage set at 105.51 usc/Lb., which equates to a slightly narrower but still very attractive to the consumer roasters 51.39% price discount for the London robusta coffee market, relative to the New York arabica coffee market. This discount in terms of the fine washed arabica coffees that are selling at premium differentials to the New York market is in terms of actual physical sales, providing an even more impressive percentage discount for the robusta coffees. Albeit that the trend is not so much directly related to replacement of washed arabica coffees within the blends, but more so the step down from washed to the less expensive natural arabica coffees and from thereon, the step down from natural arabica coffees to robusta coffees.

With the markets seemingly taking a bit of a breather this week and tending to move more sideways after the weeks of a steady upside track, it should be encouraging for the consumer market industries who have recently taken on catch up cover, to address further new business. Few expect that the markets shall suffer a strong reversal in fortunes, as with the Brazil problem seen to be a reality, one would expect that the funds shall feel secure with their long positions within the markets for the longer term. Thus one might expect to see more active selling activity coming forth from the new crop stocks in Central America, as farmers and mills start to reconsider the merit of holding back stocks and showing price resistance, in anticipation of much improved value to come from the volatile New York market.

The question is now within the very competitive consumer markets, when the dramatic rise in coffee prices shall start to impact significantly upon the wholesale prices of coffee within these markets. It has to come, but with concerns over market share, there shall be many main stream roasters who shall be obliged to accept thinner profit margins, as they fight off the raw material cost pressure to raise their prices. Thus the producers looking to increase volumes of sales into the consumer industries shall most certainly encounter some strong resistance, to make physical coffee trading for the short term, rather erratic in nature. But so long as the washed arabica differential premiums remain in place, there shall be little interest in using the alternative market of tendering to the New York certified stocks and option to move larger volumes of new crop stocks.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 320 bags yesterday, to register these stocks at 2,593,448 bags. There was meanwhile a relatively sharp 6,510 bags decline to the already modest number of bags pending grading for the exchange; to register these pending grading stocks at 3,941 bags.

The commodity markets were again mixed in trade yesterday, with the funds tending to step back from support within many markets in line with the increased concerns over the prospects for longer term growth within the Chinese economy, albeit that it is the level of growth and not the lack of it, which is a concern. The London robusta Coffee, Cotton, Copper, Wheat, Corn, Gold, Silver and Palladium markets showed buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Orange Juice, Soybean 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 0.11% lower; to see this Index registered at 564.02. The day starts with a softer U.S. Dollar trading at 1.666 to Sterling and 1.394 to the Euro, while Brent Crude is showing some degree of buoyancy in early trade and is selling at $ 108.15 per barrel.

The London coffee market started the day yesterday near to steady and followed by a dip in value and in line with a dip in the fortunes for the New York market, but with the London market recovering in the afternoon, as did the New York market likewise return back into positive territory. The London market continued for the rest of the day within positive territory but losing some weight late in the day and to end the day with 52.63% of the gains of the day intact, while the New York market ended the day on a marginally softer note, but having recovered 93.4% of the earlier losses of the day by the close. This mixed close does not bring much to the markets but one might expect that with the weaker U.S. dollar in play and despite the probability of some producer price fixation selling pressure over the markets, that the downside risk for the markets shall be modest for early trade today against the prices set yesterday, as follows:

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

MAR 2251 + 6 MAR 204.80 – 0.25

MAY 2200 + 20 MAY 205.30 – 0.35

JUL 2199 + 23 JUL 207.15 – 0.35

SEP 2201 + 26 SEP 208.85 – 0.40

NOV 2204 + 30 DEC 210.55 – 0.35

JAN 2202 + 37 MAR 212.15 – 0.10

MAR 2199 + 43 MAY 213.35 + 0.45

MAY 2198 + 35 JUL 214.05 + 0.90

JUL 2200 + 45 SEP 214.45 + 1.05

SEP 2200 + 45 DEC 214.55 + 1.15

Coffee Market Report

March 12 2014

All the main coffee districts in Brazil have apparently been in receipt of supportive rains so far this month and with still some light rain showers to come, but with forecasts for drier weather to come into play by the end of the week. Thus unless there are more substantial rains experienced closer to the end of the month and following what is presumably due to be a relatively dry week next week, one can expect that the talk of partial drought shall continue to support bullish sentiment within the markets for the foreseeable future.

What remains a question in respect of the forecasts for dramatically lower than expected new crop from the main arabica coffee growing districts in Brazil is the continued selling aggression within the internal markets in Brazil, which is related to the very good carryover stocks that remain with the farmers from the previous crop, as there is no doubt that the new crop shall be smaller. These stocks which have been widely seen to afford an 8 to 10 million bags of carryover stocks into the new harvest that is due to soon start, might even by the evidence of the sales, be larger than expectations and therefore, well able to secure good Brazil arabica coffee supply through to the 2015 crop.

Supporting this view would be the report from Brazil’s Export Association Cecafe yesterday, which has forecasted that coffee exports from Brazil for 2014 shall be approximately 6% higher than last year, at a total of 33 million bags. This figure if one is to apply domestic consumption at 21.5 million bags, would indicate an overall demand for Brazil coffees of 54.5 million bags and therefore indicating an approximate 5 million to 8 million bags deficit new crop on the horizon, depending upon which new crop forecasts one is to work with.

One would think that such figures which would indicate complete elimination of stocks by the start of the still questionable in potential 2015 crop would be encouraging for Brazil’s farmers to be showing some degree of price resistance, even against the much improved international market prices. Thus the lack of such resistance for the present, would seemingly indicate that either the farmers who are best placed to evaluate the potential of the new crop do not believe that the damage is as severe as many indicate, or they are actually holding larger past crop arabica coffee stocks than most have assessed. Most probably, when looking at the evidence of the rains so far this year, that it is more the latter than the former that is causing this relatively easy selling scenario.

Meanwhile with the much improved value of the reference prices of the London market, there has been good internal market selling activity within the internal market in Vietnam over the past week and with traders in the country talking in terms of farmers having so far sold approximately 50% of what is widely seen to have been an approximately 28 million bags new crop. This would indicate that there is still quite some volume of internal market selling to come in the seven month ahead of the start of the delivery of the next crop, during the latter half of the last quarter of the year.

The evidence of good medium to longer term coffee supply from Vietnam is supported by the fact that added to a new crop of 28 million bags, were approximately 2.5 million bags in carryover stocks, as against less than 10 million bags having been exported over the first five months of the October 2013 to September 2014 coffee year. Thus with a domestic consumption of approximately 2 million bags per annum aside, a potential coffee supply of mostly robusta coffees of 18.5 million bags for the last seven months of the present coffee year and with prospects for a carryover stock to be taken into the next harvest of up to 3 million bags, a still significant 15.5 million bags due to be shipped up to the end of September. This would indicate not reason to fear medium to longer robusta coffee supply, albeit that the farmers in Vietnam have managed so far to be controlled about their selling activity, which has assisted to maintain buoyancy in the value of their sales.

Meanwhile and mirroring the situation in Vietnam two to three decades ago and in terms of longer term Asian coffee supply and with political stability returning to Myanmar, there are international investors starting to plant out commercial coffee farms within the country. This with the rural communities actively looking for good value crops to grow is likely to encourage the smaller scale farmers to also start planting coffee and learning their skills from the neighbouring commercial farmers, which is likely to see Myanmar becoming a more important player within the Asian coffee industry over the coming years and adding a cup of Burma to the international coffee supply mix.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have increased by 4,120 bags yesterday, to register these stocks at 2,593,768 bags. There was meanwhile no change to the relatively modest number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The commodity markets were mixed in trade yesterday with the Brent Oil, Cocoa, Coffee, Orange Juice, Wheat, Corn and Gold markets showing buoyancy, while the U.S. Oil, Natural Gas, Sugar, Cotton, Copper, Soybean, 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 0.05% higher; to see this Index registered at 564.61. The day starts with a steady U.S. Dollar trading at 1.663 to Sterling and 1.386 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 107.95 per barrel.

The London coffee market started the day yesterday with some buoyancy and followed by a similar start for the New York market, and with both markets managing to maintain a positive stance throughout the day’s trade, but with some pressure coming into play to dull the positive track of the day. The London market continued to end the day on a positive note and with 68.7% of the earlier gains of the day intact, while the New York market also ended the day on a positive note but with only 40.9% of the earlier gains of the day intact. It was while relatively quiet still a positive close 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.

MAR 2245 + 49 MAR 205.05 + 2.55

MAY 2180 + 33 MAY 205.65 + 2.25

JUL 2176 + 34 JUL 207.50 + 2.30

SEP 2175 + 37 SEP 209.25 + 2.40

NOV 2174 + 39 DEC 210.90 + 2.45

JAN 2165 + 37 MAR 212.25 + 2.65

MAR 2156 + 33 MAY 212.90 + 3.25

MAY 2163 + 27 JUL 213.15 + 3.65

JUL 2155 + 27 SEP 213.40 + 4.00

SEP 2155 + 27 DEC 213.40 + 4.25

Coffee Market Report

March 11 2014

Firstly it is with apologies for the error in yesterday’s market report that we have to correct the reported London robusta coffee Certified Stocks, which were rather dramatically inflated in volume. The Certified robusta coffee stocks held against the London exchange were seen to have decreased by a modest 3,667 bags or 0.91% during the two weeks of trade leading up to Monday 3rd. March, to register these stocks at a relatively modest 399,333 bags, which are unlikely to register any growth until such time as the inverted nature of value in the London market returns to normal, so as to allow for the trade to finance the carry of stocks.

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 17.59% in the week of trade leading up to Tuesday 4th. March; to register a net long position of 20,184 Lots on the day. This net long which is the equivalent of 3,364,000 bags has most likely been further extended during the overall positive trade, which has since followed.

One would think that there might be some caution on the part of the speculators and the funds to invest too long into the London market, as they look to the large volume of unsold robusta coffee stocks within Vietnam, which are soon to be joined in April by the new robusta crop starting to come onto the field of play from Indonesia. However with the arbitrage as of yesterday’s close sitting at 106.01 usc/Lb., which equates to a very attractive to the roasters 52.12% price discount for the London robusta coffee market relative to the New York arabica coffee market, one has to believe in a rising demand for robusta coffees from the roasters of the main stream price sensitive consumer market blends. Thus to potentially reduce the prevailing surplus robusta coffee supply factor, which should by nature buoy the spirits of the bulls within the London market.

The more detailed coffee export figures from Brazil for the month of February were forthcoming yesterday, with the exports of green coffee reported to be 27.54% higher than the same month last year, at a total of 2,515,000 bags. Added to these green coffee exports are the exports of value added soluble coffees that are calculated in terms of their green coffee equivalent, which were seen to have been 3.35% lower than the same month last year, at a total of 228,876 bags. Thus the total coffee exports for the relatively short month of February were 24.22% higher than the same month last year, at a total of 2,743,876 bags.

Interesting to see however and illustrative of the percentage of the exports in February that were related to forward fixed prices, is the fact that despite a 24.22% increase in the volume of exports for the month, that the revenue from these exports was 9.66% lower than the same month last year, at a total of 386.45 million U.S. dollars. One has to expect however that following the sharp rise in the value of the reference prices of the international against which the Brazil coffees are being sold that this relatively low value of exports factor shall soon change and by as early as this month, one shall see the value of Brazil’s coffee exports starting to rise above the value of exports for the same months in the previous year.

Meanwhile the focus of the market remains very much upon the rainfall reports from the main Brazil arabica coffee districts in Minas Gerais and the north of Sao Paulo states, where there have been some rains but so far not in sufficient volume so as to significantly buoy the relatively low ground water retention levels. These reports having been joined by the Vietnamese Coffee and Cocoa Association who are repeating their reports at the same time last year, that they are experiencing dry weather and fear drought damage to the prospects of their next October 2014 to January 2015 harvest.

These reports from Vietnam do however, have to be seen as market manipulative in nature as this is the historic dry season for the country and with the rain season only due to start in the second half of April, to carry on through to October and ahead of the start of the new harvest. But with the word drought already very much a factor within most coffee conversations of late, there are some who do not stop to think when it is linked to Vietnam and such reports, can contribute towards the overall bullish sentiment that prevails within the market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by a modest 600 bags yesterday, to register these stocks at 2,589,648 bags. There was meanwhile no change to the relatively modest number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The commodity markets selectively reacted to the concerns over the evidence of a relatively sharp drop in exports from China in February, which bring with them fears of a tapering off in longer term demand. The Natural Gas, Sugar, Coffee, Gold and Platinum markets showed buoyancy and the Cocoa and Cotton markets were steady, while the Oil, Copper, Orange Juice, Wheat, Corn, Soybean, Silver 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 0.17% lower; to see this Index registered at 564.35. The day starts with a steady U.S. Dollar trading at 1.664 to Sterling and 1.386 to the Euro, while Brent Crude is showing some buoyancy in early trade and is selling at $ 108.30 per barrel.

The London coffee market started the day yesterday with some buoyancy and followed by a similar start for the New York market, but with the New York market in particular maintaining its positive stance within and environment of thin trade. Thus indicating a lack of producer selling pressure, with contributed to the ability of the market to maintain buoyancy upon steady speculative and roaster fixation under the market. The London market maintained its upside track for the day and ended the day on a firm note and with 70.6% of the gains of the day intact, to be followed by a strong close for the New York market that ended the day with 65.5% of the earlier gains of the day intact. This overall strong close of the markets is unlikely to attract early sellers and might suggest another steady start for early trade today against the prices set yesterday, as follows:

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

MAR 2196 + 39 MAR 202.50 + 6.45

MAY 2147 + 48 MAY 203.40 + 6.55

JUL 2142 + 47 JUL 205.20 + 6.50

SEP 2138 + 49 SEP 206.85 + 6.45

NOV 2135 + 51 DEC 208.45 + 6.20

JAN 2128 + 50 MAR 209.60 + 5.90

MAR 2123 + 47 MAY 209.65 + 5.70

MAY 2136 + 48 JUL 209.50 + 5.45

JUL 2128 + 48 SEP 209.40 + 5.30

SEP 2128 + 48 DEC 209.15 + 5.00

Coffee Market Report

March 10 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 1.69% in the week of trade leading up to Tuesday 4th. March; to register a net long position of 29,468 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 4.42%, to register a net long on the day of 50,933 Lots.

During this same week of trade the Non Commercial Speculative sector of the market increased their net long position within the market by 2.79%, to register a net long position of 20,801 Lots on the day. This speculative net long position within the New York market which is the equivalent of 5,896,991 bags has most likely been further buoyed over the following days of positive trade, which has since followed.

It was all Brazil weather and speculation over its effects upon the forthcoming new crop that dominated the coffee press on Friday, with a Reuters Poll over a wide range of 20 industry players having resulted in an over 10% dip in their new crop forecast from the last poll in January, to come forth with an average figure of 48.9 million bags for this new crop. What does make this poll rather questionable in its accuracy is the fact that the predictions from these twenty contributions varied from as low as 39 million bags to as high as 56 million bags, which is clear evidence of the uncertainty of the industry towards what the effects of a partial drought over he central arabica districts might actually be.

In the meantime and quoting the drought conditions in Brazil, the International Coffee Organisation and with the forthcoming new Brazil crop to be related to the next October 2014 to September 2015 coffee year, have announced on Friday that they foresee that global coffee supply for this next coffee year shall prove to be at least a 2 million bags deficit coffee supply year. This ICO report is at face value bullish news, but with Brazil more than likely to enter the new crop with between 8 to 9 million bags of coffee stocks and a stock level that shall dwarf the expected by the ICO dip in world coffee supply, it would indicate that the short to medium term world coffee supply is actually not under threat.

The report did mention that this projected deficit crop year for the 2014/2015 coffee year would be the first deficit crop year in five years, which would confirm that as it has followed a string of surplus coffee supply years, that there are good supportive stocks to counter the problem. Thus in reality and while there is no doubt that the Brazil weather is a problem, the real question is what shall be the Brazil crop in 2015 and how it shall impact upon coffee supply for the follow on 2015/2016 coffee year. For the present one might suggest that due to some aggressive pruning and excessive stress due for many farmers in Brazil, that the next 2015 crop is unlikely to be a bumper crop and if one is to presume this to be the case, one might foresee a follow on deficit crop year as against steadily rising global consumption and therefore, good reason to believe in a firmer trading range for the markets into at least the second quarter of 2016.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to have decreased by 2,310 bags on Friday, to register these stocks at 2,590,248 bags. There was meanwhile a more modest 640 bags increase to the number of bags pending grading for the exchange; to register these pending grading stocks at 10,451 bags.

The Certified robusta coffee stocks held against the London exchange were seen to have decreased by 220 Lots or 0.91% during the two weeks of trade leading up to Monday 3rd. March, to register these stocks at 23,960 Lots. This figure which equates to 3,993,333 bags is unlikely to register any growth until such time as the inverted nature of value in the London market returns to normal, so as to allow for the trade to finance the carry of stocks.

Logically and with the short to medium term surplus in robusta coffee supply from the origins overall this return to a conventional price structure for this London market should prove to be the case; it is seemingly just a matter of time. But is of course very much related to the dominant supplier Vietnam, where the past six months of price resistance within the internal market has slowed the flow of the significant robusta coffee stocks that are being held within this market.

The commodity markets were in receipt of supportive U.S.A. jobs data on Friday, but countered by some concerns over mixed economic indicators from China. The Oil, Natural Gas, Cocoa, Coffee, Cotton, Wheat and Soybeans markets had a day of buoyancy, while the Sugar, Copper, Orange Juice, Corn, 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 0.36% lower; to see this Index registered at 565.33. The day starts with the soft U.S. Dollar neat to steady and trading at 1.673 to Sterling and 1.388 to the Euro, while Brent Crude is tending softer in early trade and is selling at $ 108.55 per barrel.

The London coffee market started the day on Friday on a softer note and followed by a modestly softer start for the New York market, but with the New York market soon recovering and starting to attract renewed buoyancy that was followed by a recovery for the London market. Trade within both markets was however relatively thin through the day and with both markets attracting relatively modest origin selling activity that assisted with sufficient underlying roaster and speculative support, for the buoyancy remain in play throughout the rest of the day’s trade. The London market continued to end the day on a positive note and with 57.1% of the earlier gains of the day intact, while the New York market likewise ended the day on a positive note but with only 22.8% of the earlier in the day’s gains intact. This close while positive might with the unconvincing modest nature of the close for the more volatile New York market attract some producer selling activity for early trade today, to influence as 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.

MAR 2157 + 23 MAR 196.05 + 1.25

MAY 2099 + 16 MAY 196.85 + 1.30

JUL 2095 + 14 JUL 198.70 + 1.20

SEP 2089 + 16 SEP 200.40 + 1.10

NOV 2084 + 17 DEC 202.25 + 1.05

JAN 2078 + 18 MAR 203.70 + 1.00

MAR 2076 + 21 MAY 203.95 + 0.90

MAY 2088 + 20 JUL 204.05 + 0.85

JUL 2080 + 20 SEP 204.10 + 0.75

SEP 2080 + 20 DEC 204.15 + 0.70

Coffee Market Report

March 07 2014

The latest weather forecasts from Brazil indicate good rains are due over the coming two weeks for the main coffee growing districts, which shall assist to build up ground water retention levels and reduce the stress on the coffee trees, following the hot and dry first two months of this year. This shall not reverse the damage already done to the potential of this new crop, but shall dampen some speculative spirits within the market at present.

Countering to a degree the potentially devastating effects of the near drought conditions over the main arabica coffee growing districts of Brazil has been the news that the steadily growing domestic coffee consumption within Brazil suffered a reversal last year, with domestic consumption that was generally expected to exceed 21 million bags, was in fact only close to 20 million bags. This factor in terms of overall demand for Brazil coffee would reduce the demand to approximately 53 million bags, which partially reduces the negative effects of the potential for a lower crop for this year.

The complete and official Brazil coffee export figures for the month of February have been delayed by the long weekend carnival holiday, but the Trade Ministry have so far indicated that Brazil exported approximately 2.6 million bags of coffee during this relatively short month. This figure is marginally higher than the previous month and reflects the rising demand for the relatively cheaper Brazil arabica coffee option, within the consumer markets that are struggling to f