Green Coffee Report
Posted: 12/23/2009
Green Coffee Market Report
Market Review for week of:
Dec. 07, thru. Dec.18, 2009
Prepared by: S & D Coffee Inc. Commodities Dept.
F. Taylor, T. Fallar, C. Solomon, T. Grant & J. Doyle
"C" Mkt. Mar. 2010 = $1.4525
Change for the week= up .0265 ct./lb.
Change for the week= up .0265 ct./lb.
GENERAL NEWS
The tight situation in washed coffees continues unchanged, as there remains a large amount of demand going unsatisfied. Some larger importer/dealers were noted as backing away from making offers and exporters work from long positions careful to be mindful of replacement values in an escalating price market.
Brazil activity picks up, as a weaker currency triggers softer export diffs.
In the Robusta world, Vietnam sees a decent coffee flow; a few eager buyers mop up the supply and seem hungry for more. Indonesian crop appears to be developing very well.
In Colombia there remains a difficult situation, although weather conditions seen to be ideal for the mid-crop “mitaca” development. The relief this may provide seems a painfully long way off. With a resurgent dollar and a stubbornly high terminal market, coffee becomes notably more expensive for European industry.
Estimated spec/fund position on ice 32,000 lots long and index funds 55,500 lots long. Ice certified stocks at 3.17m bags
The big difference this time is the roasters are not well covered on their Colombian requirements, and with exporters closing up shop and traders licking their wounds, spot markets getting active and industry buyer’s sound increasingly concerned.
The New York terminal market, (ICE), appears stuck in a volatile range of 140 to 148, with wide intra-day moves, giving the day traders very moments of extreme discomfort. Brazil for the most part ignores it all and stays focus on their internal market support program.
Estimated spec/fund position: 22,000 lots long
Index funds: 55,000 lots long
ICE certified stocks at 3.17m bags
Comments below basis ICE March 2010, trading at $1.4660
ICE: Continued spec, industry and fund buying pushing N.Y. to the high of 149.50 for the week. The strength in the dollar brought good origin selling area of 145/148 in the latter part of the week.
Support grows as we approach lower 140’s and resistance seen 150/152 basis March.
Nearby switch structure trading in good quantity between, -1.65 and -1.55 with the back months coming in the area of .10/.20. points
Support: 141.25, 140.30, 138.50, 135.35
Resistance: 149.50, 150.00 152.25,155.00
BRAZIL
Local market: Local activity increased once again. Higher prices brought more producers selling to the market and decent volumes changed hands. Replacement prices softened by 1-2 cents, but prices being paid for next year shipment/ deliveries were very steady. A weaker Brazil currency helped to soften the differentials a bit.
Export market: Offering prices got a little weaker attracting some more attention from the trade in general.
Colombia
Local market: The internal coffee flow remains very poor. The weather conditions for the mitaca continue to look favorable.
Export market: The European industry was quite active covering their nearby needs, whereas buying interest from North America and Asia was a bit less pronounced.
Latin America:
Mexico:
Rains and cold weather have affected picking in the higher zones of Veracruz and Puebla. There is ongoing demand for the entire range of quality with focus on early shipments.
Guatemala:
The hard bean harvest is progressing well and arrivals at exporters’ warehousesare picking up. Sporadic roaster demand was noted from the U.S. market whereas Europeanand Asian buyers were sidelined.
Honduras:
The coffee is flowing quite well internally, but prices paid are astronomic. Industry shows ongoing appetite for first quarter 2010, but exporters prefer to cover shorts before offering further coffee.
El Salvador:
Exporters remain reluctant to commit further volume as they are well sold and harvesting of SHG’s, (the higher elevation harvest); will only start at the end of this month.
Costa Rica:
The crop is coming in strong now, but hard bean areas yields are down significantly. There is only a scattering of roaster demand for the early new crop shipments. Differentials are once again a touch higher.
AFRICA & PNG
Kenya:
A massive 32.000 bags auctioned this week, last auction of similar size seen back in March 09. The quality composition of auctioned coffees generally looks good with a few lots really showing off some of the best plus/top qualities we have seen for some while. Differentials continue to be very firm.
Tanzania:
This week was the last auction for this year and it produced very firm prices, differentials reaching levels not seen for many years. Industry demand cannot be satisfied. To fuel to the fire exporters downsizing previous crop estimates, down from 43.000 tons to 37.000 tons and below, depending on the specific source. The entire southern crop is sold and the northern mills are reported to be empty of parchment.
Ethiopia:
An active week in both washed and sundried qualities. Export activity limited too few active companies; many traditional small/medium players continue to stay sidelined. The flow of parchment coffee to Ethiopian Exchange remains below normal levels, for this time of the year.
Uganda:
Supply of Mbale coffee remains disappointing, fly crop from may onwards expected to be back to normal. Industry demand for cheap washed qualities continues, mostly from Europe.
PNG:
Little fresh business reported this week, due to lack of supplies. Industry nibbling at shipments July 2010 and onwards, depressed differential ideas limiting volume.
We have provided THREE charts below:
The first one:
Represents the report on differentials quoted this week. Once again, the stand out runaway is the Colombians. The general sense seem to be to in order to minimize paying up for these coffee it is best to book differentials out a minimum of the second quarter beyond the quarter we are about to go into. In other words, book qrt. #2 before we go into qtr. #1, as soon as offers become available. The first sign of any relief would appear to be Qtr. #3 2010. This view is based on expected improvement in yields of the mid-crop (Mitaca). Notice how the differentials are once again escalating on the other better quality milds, which is in direct correlation to the lack of supply out of Colombia.
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Origin Differentials for Dec./Jan. Shipment Ex Dock (ct/lb)
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This Week
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Last Week
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Brazil Santos 2/3 MTGBSS 08/09
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C -.0400
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C -.0400
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Colombia Excelso Jan/Feb
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C+.6700
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C+.5700
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Peru Hard Bean MC EP
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C+.2400
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C+.2100
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Honduras SHG 09/10 crop
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C+.1900
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C+.1700
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Costa Rican SHB 09/10 crop
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C+.3400
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C+.3200
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Guatemala SHB 09/10 crop
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C+.3500
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C+.3100
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Nicaragua SHG 09/10 crop
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C+.2600
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C+.2300
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Mexican Altura 09/10 crop
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C+.2000
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C+.1900
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El Salvador SHG 09/10 crop
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C+.2100
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C+.1900
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Kenya AB FAQ
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C+1.1000
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C+1.1000
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The second chart:
Represents 6 months “C” Mkt which has worked its way from the 1.20 level to a 13 month high this week to nearly 1.50 and today making another attempt to break higher to only fail settling down .95 at 1.4525.
6 month “C” Mkt.
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The third chart:
Represent the NYBOT CRB, a mix of commodities, one of which is coffee, (under softs), up 34% for the year. This is provided to illustrate the importance of a commodity index as a recognized investment vehicle, a must have for ones’ investment portfolio. An example of the non- commercial influences outside sources has on our business today.
One year chart of NYBOT CRB Index represent by the following commodities:
