Coffee market fundamental outlook october 30 2015 : Despite many earlier private industry forecasts for flat coffee production for the forthcoming new crop in El Salvador, the countries agricultural ministry and coffee authorities are forecasting an 8% increase for the countries new November 2015 to February 2016 harvest. They foresee however that it shall remain a relatively modest crop in terms of regional Mexican and Central American production, at their forecasted level of 765,133 bags.
In this report they make mention that following active and state sponsored steps that have been taken to counter the negative effects of Roya or Leaf Rust, that only 6% of the approximate 133,836 hectares of coffee farm land in El Salvador are still fighting this infestation. Thus it would seem that the country has the problems of Roya firmly under control, while many farms have since replanted their fields with new Roya resistant coffee varieties.
Good rains are expected in the coming days for the main arabica coffee districts in South Eastern Brazil, but so far there is not much forecasted for the conilon robusta districts in the East of the country. Many of these farms are however irrigated and for the present, the dry weather has been countered by most of the farms. Thus we enter the weekend and a long weekend for Brazil where they celebrate the All Souls Day National Holiday on Monday, with Brazil weather issues remaining side lined from coffee market sentiment.
New crop coffee trade has meanwhile remained quiet within the internal market in Brazil this week, with a degree of price resistance prevailing on the part of the farmers. But with exporter forward sales to cover the prospects are that once reported that the month of October shall prove to be a relatively high volume coffee export month, with estimates that coffee exports for the month shall be approximately 3.4 million bags.
Meanwhile trade in Asian robusta coffees remains slow with many of the main consumer market buyers tending to take a hand to mouth buying policy while they await the potential negative impact upon prices that might come with the release by the farmers and internal traders in Vietnam of the record high carryover stocks of past crop robusta coffees. The view being that by December and by when there shall be large volumes of new crop coffee stocks building up from the potentially larger new crop, that it shall start to pressure many of the farmers and internal traders to start to liquidate stocks.
The second month arbitrage between the markets narrowed yesterday, to register this at 50.85 usc/Lb., while this equates to a 41.12% price discount for the London robusta coffee market. This arbitrage remaining 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 in more volume upon the fortunes of the London market.
Meanwhile it would seem that the world’s largest speciality coffee company Starbucks are relatively confident that the international coffee markets have bottomed out, as the company’s Chief Financial officer announced yesterday that the company has already locked in approximately 90% of its coffee prices for the coming year. It is of course for this company with its strong brand identity and one that can demand value for its coffee offerings, much easier to confidently lock in long term prices than it is for the majority of coffee roasters who fight for market share with competitive shelf prices.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,749 bags yesterday; to register these stocks at 1,900,242 bags. There was meanwhile a smaller in volume 983 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 54,658 bags.
The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 8,667 bags on Wednesday 28th. October; to register these stocks at 3,348,167 bags on the day.
In this report they make mention that following active and state sponsored steps that have been taken to counter the negative effects of Roya or Leaf Rust, that only 6% of the approximate 133,836 hectares of coffee farm land in El Salvador are still fighting this infestation. Thus it would seem that the country has the problems of Roya firmly under control, while many farms have since replanted their fields with new Roya resistant coffee varieties.
Good rains are expected in the coming days for the main arabica coffee districts in South Eastern Brazil, but so far there is not much forecasted for the conilon robusta districts in the East of the country. Many of these farms are however irrigated and for the present, the dry weather has been countered by most of the farms. Thus we enter the weekend and a long weekend for Brazil where they celebrate the All Souls Day National Holiday on Monday, with Brazil weather issues remaining side lined from coffee market sentiment.
New crop coffee trade has meanwhile remained quiet within the internal market in Brazil this week, with a degree of price resistance prevailing on the part of the farmers. But with exporter forward sales to cover the prospects are that once reported that the month of October shall prove to be a relatively high volume coffee export month, with estimates that coffee exports for the month shall be approximately 3.4 million bags.
Meanwhile trade in Asian robusta coffees remains slow with many of the main consumer market buyers tending to take a hand to mouth buying policy while they await the potential negative impact upon prices that might come with the release by the farmers and internal traders in Vietnam of the record high carryover stocks of past crop robusta coffees. The view being that by December and by when there shall be large volumes of new crop coffee stocks building up from the potentially larger new crop, that it shall start to pressure many of the farmers and internal traders to start to liquidate stocks.
The second month arbitrage between the markets narrowed yesterday, to register this at 50.85 usc/Lb., while this equates to a 41.12% price discount for the London robusta coffee market. This arbitrage remaining 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 in more volume upon the fortunes of the London market.
Meanwhile it would seem that the world’s largest speciality coffee company Starbucks are relatively confident that the international coffee markets have bottomed out, as the company’s Chief Financial officer announced yesterday that the company has already locked in approximately 90% of its coffee prices for the coming year. It is of course for this company with its strong brand identity and one that can demand value for its coffee offerings, much easier to confidently lock in long term prices than it is for the majority of coffee roasters who fight for market share with competitive shelf prices.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,749 bags yesterday; to register these stocks at 1,900,242 bags. There was meanwhile a smaller in volume 983 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 54,658 bags.
The Certified Robusta coffee stocks held against the London exchange were seen to decrease by 8,667 bags on Wednesday 28th. October; to register these stocks at 3,348,167 bags on the day.
The London and New York markets started the day with some buoyancy yesterday, to see both markets take a positive track into the afternoon trade. However as the afternoon progressed and while the London market maintained its buoyancy, the New York market came under pressure to see the market dip back to below par and bounce back to trade for a while around par. This was however a relatively short term softness as the New York market did finally recover and once again join the London market in positive territory and with both markets taking a positive track through to the close. The London market ended the day on a positive note and with 87.5% of the gains of the day intact, while the New York market ended the day on a likewise positive note and with 85.7% of the earlier gains of the day intact. This overall positive close is likely to inspire a degree of confidence 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.
NOV 1566 + 26 DEC 120.30 + 1.20
JAN 1605 + 28 MAR 123.65 + 1.20
MAR 1616 + 26 MAY 125.70 + 1.20
MAY 1635 + 26 JUL 127.65 + 1.20
JUL 1655 + 26 SEP 129.55 + 1.20
SEP 1675 + 26 DEC 132.25 + 1.15
NOV 1694 + 26 MAR 134.90 + 1.15
JAN 1712 + 26 MAY 136.60 + 1.15
MAR 1732 + 26 JUL 138.05 + 1.15
MAY 1757 + 26 SEP 139.45 + 1.15
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