The Brazilian analysts Safras and Mercados have estimated that approximately 30% of the new Brazil crop has been harvested, with approximately 17.5 million bags harvested. This made up from approximately 8.3 million bags of conilon robusta coffees and 9.2 million bags of arabica coffees, while with dry and warming weather forecast, the new harvest is expected to accelerate.

The progress with the harvesting of the new crop along with the carryover of mostly arabica coffees from last year’s bumper crop, allows for good volumes of Brazil coffees to be available to the country’s exporters and to the consumer markets. But with the Brazil Real having firmed over recent days, there remains some degree of internal market price resistance on the part of the farmers and farm cooperatives.

It is likewise the case in Vietnam, where despite some improvement in the value of the coffee terminal markets, there remains price resistance on the part of the farmers and the internal traders. Making it difficult for exporters to cover their short sales at price levels comparative to the value of their export commitments, which continues to inflate the value of the asking price differentials for new business.

The United States Department of Agriculture’s Foreign Agricultural Service USDA have forecast that the forthcoming new Mexican coffee crop shall be 500,000 bags or 12.34% higher than the last crop, at a total of 4,550,000 bags. This improved figure to be made up from the production of 4,350,000 bags of arabica coffee and 200,000 bags of robusta coffees.

This increase in Mexico they appropriate to the recent years of state and private industry investment in the countries coffee farming community, in terms of the replanting of aged trees with new disease resistant and higher yielding coffee varieties and along with funding for farm inputs and farm extension services.

While with the ability of Mexican coffee industries to import coffees to supplement local coffees for processing, they estimate that the total coffee supply for the next October 2019 to September 2020 coffee year, shall be approximately 6,158,000 bags. To allow for green coffee exports for the coming coffee year to be 5.39% higher at 2,150,000 bags and this, along with value added roast and ground exports of the equivalent of 190,000 bags and 1,020,000 bags of soluble coffee exports.

One might speculate though that despite the support that has been forthcoming for the coffee farmers in Mexico, that the negative impact of the soft reference prices of the New York terminal market must have some impact upon farm profitability and inputs towards this new crop. Which might make this improved local supply of coffee on the part of the USDA, somewhat ambitious. A factor that shall likewise have a negative impact upon coffee supply from the neighbouring Central American countries, for the coming coffee year.

The USDA have also forecast that coffee production in Ethiopia for the coming October 2019 to September 2020 shall increase by 100,000 bags or 1.38%, to total 7,350,000 bags. This they foresee and despite a high volume of domestic consumption, shall allow for coffee exports for the coming coffee year to increase by 20,000 bags, to total a record 4 million bags.

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 38.60 usc/Lb., while this equates to 36.9% price discount for the London Robusta coffee market.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 357 bags yesterday; to register these stocks at 2,388,658 bags. There was meanwhile a larger in number 960 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,908 bags.

The commodity markets were mixed in trade yesterday, but with many markets having a day of buoyancy, to see the overall macro commodity index taking a positive track for the day. The Oil, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets ended the day on a positive note, while the Natural Gas, Cotton and Soybean markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.92% higher, to see this index registered at 392.22. The day starts with the U.S. Dollar steady and trading at 1.269 to Sterling, at 1.126 to the Euro and with the US Dollar buying 3.880 Brazilian Real.

The London market started the day yesterday on a positive note and the New York market trading close to par and with the London market soon attracting support, to add to its gains, while the New York market remained close to par into the early afternoon trade. As the afternoon progressed the London market maintained its positive stance and with the New York market starting to pick up support and to join the London market in positive territory, with buy stops coming into play for the New York market, to accentuate the gains and setting this latter market for a relatively strong finish for the day.

The London market ended the day on a positive note and with 69.2% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 85.1% of the earlier gains of the day intact. This recovery for the markets following the previous days selloff might be seen to be constructive for sentiment, but lacking supportive fundamental news there is likely to be some degree of caution. To possibly set the market for only a hesitant steady start for early trade today, against the prices set yesterday, as follows:

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

JUL 1431 + 18                                              JUL 102.05 + 2.95
SEP 1455 + 18                                              SEP 104.60 + 2.85
NOV 1477 + 18                                            DEC 108.25 + 2.85
JAN 1498 + 18                                             MAR 111.75 + 2.80
MAR 1518 + 18                                           MAY 113.90 + 2.95
MAY 1537 + 18                                            JUL 115.65 + 3.00
JUL 1555 + 18                                              SEP 117.40 + 3.05
SEP 1575 + 18                                              DEC 120.10 + 3.10
NOV 1591 + 16                                             MAR 122.85 + 3.20
JAN 1606 + 14                                              MAY 124.60 + 3.35