The agricultural statistics agency in Brazil CONAB have with the new conilon robusta coffee crop already being harvested and with the new arabica coffee crop on a nearby horizon, forecast that the new crop shall be at the higher end of their earlier forecast, to total 58.04 million bags. This made up from 44.33 million bags of arabica coffees and 13.71 million bags of conilon robusta coffees, which are numbers that one would see to be relatively conservative, when compared to many other well qualified forecasts.

This forecast and coming from what is seen to be a traditionally conservative body and on that is more often than not proved to be approximately 10% below reality, would tend to underpin the many other forecasts for a new Brazil coffee crop of more than 60 million bags. The CONAB report in terms of their forecast for the new conilon robusta coffee crop is particularly modest, with many other forecasts talking figures that are approximately 23% higher than the 13.71 million bags above.

In the meantime, there are reports of ever increasing investment into irrigation systems on farms in the north of Espirito Santo state, which is and largest conilon robusta coffee producing region of Brazil. This to both limit the risk of drought damage to future crops, but to also assist towards higher yields for the future years. These investments into irrigation well illustrated by the Espirito Santo’s agricultural secretary who noted that the state only had approximately 1,000 farm dams in 2014 and now, there are over 10,000 farm dams. A factor that shall contribute towards longer term security for conilon robusta coffee supply for both the Brazil domestic markets and for the traditional export markets for these coffee, in north America.

Weather wise in Brazil and following many weeks of seasonally dry autumn and early winter weather, there are now for forecasts for a cold front to enter the main coffee areas over the weekend and to bring with it storms and rainfall for most of the coffee farms. This would be welcome rainfall for the farmers as it assists to build up ground water retention levels, ahead of the mostly dry and stressful for the trees winter harvest season.

The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 38.52 usc/Lb., while this equates to 32.67% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 19,517 bags yesterday; to register these stocks at 2,010,410 bags. There was meanwhile a larger in number 27,000 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,147 bags.

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day. The Coffee and Copper markets ended the day on a positive note and the Oil and Gold markets ended on a steady note, while the Cocoa and Sugar markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.05% higher; to see this index registered at 433.44. The day starts with the U.S. Dollar steady and trading at 1.352 to Sterling, at 1.181 to the Euro and with the dollar buying 3.696 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 79.10 per barrel.

The London market started the day yesterday with early buoyancy and the New York market started trading to the positive side of par and soon joining the London market in more positive territory, to take a positive track into the early afternoon trade. As the afternoon progressed and with the London market retaining as a relatively steady positive stance, the New York market added value and triggered buy stops to accentuate the gains, but to soon attract selling pressure and to slip back into a more modest positive stance through to the close of the day.

The London market ended the day on a positive note and with 68.4% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note but with only 33.3% of the earlier modest gains of the day intact. This modestly positive overall close might assist to inspire a degree of confidence, albeit accompanied by the bearish factors of the large new Brazil crop and the conducive to selling softer value of the Brazil Real. Thus, to possibly set the markets for a hesitantly steady start for early trade today, against the prices set yesterday, as follows:

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

MAY 1740 + 13                                            MAY 113.85 + 0.50
JUL 1750 + 13                                              JUL 117.90 + 0.60
SEP 1737 + 10                                              SEP 120.10 + 0.60
NOV 1742 + 11                                             DEC 123.65 + 0.65
JAN 1745 + 12                                              MAR 127.10 + 0.60
MAR 1755 + 12                                            MAY 129.40 + 0.60
MAY 1767 + 11                                             JUL 131.60 + 0.60
JUL 1780 + 11                                               SEP 133.55 + 0.60
SEP 1792 + 11                                               DEC 136.25 + 0.65
NOV 1804 + 11                                             MAR 138.90 + 0.70