We believe that the current trend in the coffee commodity
market will eventually spill over to the non-commercial market (where specialty grade coffee trades), and
with the new crops we should see a decrease in the prices of the non-commercial
coffees.
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Arabica commodity prices |
Following the positive export figures from neighbouring
Mexico, El Salvador, Guatemala, Honduras and Cost Rica, the authorities in
Nicaragua have announced that the countries November coffee exports were 40.14%
lower than the same month last year, at a total of 21,575 bags. They have likewise announced that their
cumulative coffee exports for the first two months of this new October 2011 to
September 2012 coffee year were 28.45% lower than the same period in the
previous coffee year, at a total of 59,019 bags. This is no reflection on the size of the new
crop that is presently in full harvest, as forecasts are that this new crop
shall be biennially bearing larger by approximately 16% and therefore, a new
crop of near to 1.46 million bags.
Ahead of the impact of the new coffee crops from Colombian,
Mexican and Central American crops, the port warehouse green coffee stocks in
the U.S.A. predictably declined during the month of November, with these stocks
having declined by 251,525 bags or 5.64%, to register end month stocks at
4,207,891 bags. These stocks do not
include transit coffees in bulk containers (like ours) or on site roaster
inventory stocks and one might suggest to add approximately 800,000 bags of
stock cover at the time, which would indicate that the coffee stocks within the
country at the end of the month would equate to approximately 11 weeks of
roasting activity. Thus ahead of the new
crop coffees that are now starting to flow in greater volume, a very safe
coverage at hand and the decline of coffee stocks last month cannot really be
seen to be a matter of any concern.
The Cameroun Cocoa and Coffee Board are actively working to
inspire their coffee farmers, following something of a disastrous year and with
what they estimate to have been a 43% lower crop. The Board are blaming the problem partly on
the distraction of the high cocoa prices that came with the problems of supply
from the Ivory Coast and this commodity having attracted more interest and
investment into their cocoa crops, by many farmers. They are nevertheless working on national
distribution of farm inputs to their coffee farmers and with the aid of
extension services and seminars, to inspire more care and concentration on
coffee farming.
With their new crop coming into its main harvest, the
National Coffee Association in Guatemala have reduced their forecast for this
new crop by 2.26%, to a figure of 3.45 million bags. This reduction they relate to the heavy rains
that occurred some weeks ago, but one might suggest that this report could in
terms of the lower value of the reference prices of the New York market, be
somewhat market manipulative in nature. While there are still some trade and industry
forecasts for this new crop, which talk in terms of a crop that shall be
approximately 3.7 million bags.
Burundi have reported a relatively good income from this year’s
crop, albeit that it was a near to 46% biennially bearing lower crop of a
relatively modest 217,000 bags. The next year’s crop can be expected to recover
to something in the region of 400,000 bags and perhaps even more, with farmers
gaining support to improve their farm husbandry and inputs. Authorities are targeting a production to
over 700,000 bags per annum, in the coming years.
The latest Commitment of Traders report from the New York
washed Arabica coffee market has
seen the shorter term in nature Managed Money funds within the market sharply
reduce their net long position by 49.11% in the week of trade leading up to
Tuesday 13th December, to register a net long of 6,726 Lots, on the day. The longer term in nature and steadier Index
Fund sector of the market meanwhile reduced their net long within the market by
a modest 1.07% over the same week, to register a net long of 35,911 Lots.
The speculative Non Commercial sector of this market had
meanwhile liquidated their modest net long of 1,461 Lots that was registered on
Tuesday 6th December and sold the market short over the following week of
trade, to register a net short sold position of 6,877 Lots, by last Tuesday. This net short sold position albeit within an
environment of very thin trade, has most likely been further extended by now,
with this speculative sell off having contributed to the market hitting new
lows for the year on Friday.
The Brazil dock workers in the country’s leading coffee port
of Santos have gained an acceptable pay day and therefore the threat of strike
is over, which eliminates any fears of disruption in terms of coffee shipments
into the New Year. This news also
impacts upon the Sugar, Soybean and Orange Juice markets, as the port is also
the main conduit for these important Brazilian export commodities.
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