The El Nino weather phenomenon that is currently in play within the Pacific Ocean, is meanwhile anticipated to be a positive factor for the next 2016 Brazil crop, as it removes the prospects of overly dry weather for south east Brazil to set the flowering for the next crop and the ability of the trees to carry the crop to fruition. This new crop is already being forecast by trade and industry players, to have a potential to reach 60 million bags and one that would assist Brazil to bolster their residual stocks from these past two years of lower crop intake ahead of the 2016/2017 coffee year.

The new washed arabica coffee year for the coming October 2015 to September 2016 season is due to start in a week’s time for the large new Colombia main crop, the Indian crop. This is to be followed on before the end of the year, with a potentially larger new overall Mexico and Central American crop. This is still tending to fuel bearish sentiment. Whereas with the coffee already maturing on the trees, there is little threat of the prevailing mild El Nino having an effect upon the final stages of development ahead of harvest. The strength of this El Nino is meanwhile mostly forecast to remain mild and some relief for producers around the Pacific Rim, although may still be some concern for East, Central and Southern Africa that traditionally experiences the effects of an El Nino at the onset of their rain season. The strength of this weather phenomenon is related to the effect of rainfall surplus and deficit, that has in the past brought overly dry weather to Central America, wet weather to Colombia and Peru and dry weather to Indonesia, Central and Southern Africa.

The arbitrage between the markets widened yesterday, to register this at 47.26 USc/Lb., while this equates to a 39.95% price discount for the London robusta coffee market. This arbitrage remains relatively attractive to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 15,345 bags yesterday; to register these stocks at 2,023,605 bags. There was a further 5,692 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,489 bags.

It was a more buoyant day in the commodity markets yesterday, ahead of the US Federal Reserve Bank Chair speech due to take place later today, with investors searching for clues as to a prospective interest rate hike to come. The Oil markets were softer on the day but edged up toward the end of the session, while the U. S. Dollar shed a few points on the day. It was a positive day for Gold, Silver, Platinum and Palladium, and lower for Copper weighed by the gloomy economic growth data for leading consumer China. It was a positive day for Sugar, Coffee, Soybean and Cotton, and a softer day for Wheat, Corn and Orange Juice. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.71% higher to see this Index registered at 390.45. The day starts with the U.S. Dollar trading at 1.523 to Sterling and 1.113 to the Euro, the Brazil Real is trading at 3.93, while North Sea Oil is steady in early trade and is selling at 47.22 per barrel.

The London market started the day yesterday, on a marginally positive note, followed by a softer opening in New York, although in thin volume both markets held fairly steady within the range set in the morning, with London oscillating around unchanged but positive and New York below opening levels, in a narrow range. The fortunes of the Brazil Real continued to play a part in direction as this currency dropped through the lows set yesterday and slid on to touch a new historic low against the US Dollar at 4,2482, to encourage additional selling of US Dollar denominated commodities. The Real clawed back toward 4,00 to the Dollar toward the latter half of the day, to see a withdrawal of sellers from the floor in the New York, and this market steadily moved towards a more positive track to build momentum in the latter half of the session but lose some of the gains toward the end of the day. It was a similar pattern for the London Robusta market which later in the day found underlying support to prop up the day and build on the gains toward the end of the session. This market finished near to the day highs. It was a buoyant finish to both markets yesterday which increased in volume of trade in the session, with a degree of short covering throughout the day, to set the close yesterday, in positive territory as follows:

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

NOV   1566 + 26                         DEC    118.30 + 2.10
JAN    1567 + 19                         MAR   121.50 + 2.05
MAR  1579 + 18                         MAY   123.65 + 2.00
MAY  1598 + 18                         JUL     125.45 + 1.90
JUL    1617 + 18                         SEP     127.15 + 1.75
SEP    1637 + 20                         DEC    129.85 + 1.65
NOV  1656 + 20                         MAR   132.45 + 1.50
JAN   1675 + 20                         MAY   134.30 + 1.50
MAR 1695 + 20                         JUL      136.25 + 1.50