Green Coffee Report
Posted: 8/9/2010
S&D Coffee Inc.
Coffee Market Report
For week of: August 02 through 06, 2010
Contributors: F. Taylor & T. Fallar
"C" Mkt. Sept, 2010 = $1.6740
Weekly change: down $0.0890 cents/lb
GENERAL
Despite this month of the year having the reputation of dullness, Arabica closed at 12 year highs on last Friday, quite a stunning performance for the month of August.
Both markets, London and ICE NY, traded up further on Monday to test long term retracement levels, but failed to close above their upper levels. The markets then traded down, then sideways, on lower to lower volumes. Agricultural commodities still made it to front page stories, after coffee comes, cocoa then wheat ---up 68% for the month. Once again we are reminded how the agricultural sectors are at the mercy of weather events, especially when inventories are low.
Retail price hikes were confirmed in the U.S. and parts of Europe. In the market are reports of moderate coffee flow in Brazil every day. At this point the Arabica crop is around 66% harvested, while the Conillon has been completed.
However in the higher regions the Arabica maturation is a bit delayed.
The dollar index steadied out this week, after two months of weakness. Commodity indices are still moving higher, despite this show of the dollar strengthing.
It is estimated the spec/fund position on ICE are long 35,000 lots and index funds 54,000 lots long. ICE certified stocks stand at 2.08 million bags
Comment on the ICE Market
ICE:
The market posted a new high on Monday with renewed fresh fund buying entering after the break of the $1.80 level. Once the spec buying dried up, the wave of selling pushed back hard on the market and erased all the gains. A key reversal figure brought selling to the next session as short-term specs tried to push prices lower and trigger stops. After touching briefly the1.65 support area, the market rallied back towards the 1.70 area. The main volume remains on Sep. / Dec. spreads and some proactive switching out of Sept. into Dec., which is losing 5 to 10 pts everyday as index funds keep rolling. The market’s trend remains up, but expect intra-day volatility to continue to be very high.
Support: 165.15, 163.20, 160.00, 155.80
Resistance: 174.45, 181.50, 187.25.
Brazil
Local market: Moderate volume traded every day throughout the week. Outright price level sales remain the most attractive for the producers. Replacement differentials continue to be steady.
Logistics: The port of Santos is very congested and not getting any better, with about 100 ships waiting in the bay, the bulk being for sugar, soybeans, soybean meal and corn.
Weather: Conditions continued favorable in the coffee belt, while in the south reports of an historical 20 – 30 centimeters of snow.
The real traded unchanged the entire week, with a record of small trading ranges.
Export activities: The export market has been very quiet for another week. The exporters' asking differentials were about unchanged and most buyers remained on the sideline.
Exchange rate: 1.755 (revalued 0.3%)
Colombia
Local market: The coffee flow has come to a complete stand still. Differential are still very firm since the longs have no pressure to sell below their desired outright levels.
Export market: There appears to be no real interest from buyers, which seem to be just monitoring the behavior of the differential range.
Exchange rate: The Colombian Peso (cop) continued its impressive strength vs. U.S. $.
LATIN AMERICAN MILDS
Mexico:
All is very quiet at this origin. The weather conditions are still having a positive impact on most of the coffee producing regions.
Guatemala:
The exports have slowed down substantially this month, compared to last year. Buying /
Selling ideas still very far apart, little to no business taking place presently.
Honduras:
Atypically strong rains too early for the season are causing floods, As yet there has been no damage reported to the new crop. The local market is once again very quiet.
El Salvador:
The forecast for new crop production is around 1.45 million bags, of which a
considerable part is already sold.
Costa Rica:
The heavy rains continued throughout the whole country. New crop development is
being seen as normal. There is some interest for new crop coffees, but there is little business taking place.
Peru:
The roads in the southern coffee production areas had been close due to a 5 day strike. An estimated 70% of the total crop has been already harvested.
AFRICA and Papua New Guinea
Kenya:
Next week’s auction offering is for 29.000 bags. Qualities are very good for this time of the year. Industry is nibbling at Oct/Dec. shipments, price is finding it extremely difficult to find buyers.
Tanzania:
The first auction was held after the long summer break. Volumes were small, prices firm. The next auction is a re-schedule for august 12th, offering some 10.000 bags of mostly southern qualities.
Ethiopia:
A very modest amount of registrations of the sundried coffees were seen during this week. There was very little coffee offered at Ethiopia Coffee Exchange, especially the djimmah coffees. Many of the exporters are reported to be short. The ministry of agriculture is warning exporters to fulfill their contractual obligations, insisting that there is enough coffee in the interior and supply should improve shortly. There was a fair amount of industry business done in the washed qualities and the supply of top qualities
will soon be coming to an end.
Burundi:
No news out of Burundi this week
Uganda:
The flow of washed coffees is improving. The best washing stations are producing excellent quality this year. The Drugar season is now starting up with usual mixed views on both crop size & quality.
Papua New Guinea:
The fresh cherry volumes are slowing down. The availability of “A” and “X” grades remains very tight, however other grades are being offered for Sept / Oct. shipments.
The fresh cherry volumes are slowing down. The availability of “A” and “X” grades remains very tight, however other grades are being offered for Sept / Oct. shipments.
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Ex-dock diffs. for arrival / delivery in cents/lb basis respective “C”
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Growth
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Aug - Sept.
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Oct - Dec.
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1st Quarter (approx)
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Brazil Santos 2/3 MTGBSS 10/11
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-.0900
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-.1000
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-.0900
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Colombia Excelso UGQEP
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+.7000
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+.6300
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+.6000
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Peru Hard Bean MC EP
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+.3300
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+.3300
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+.3600
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Honduras SHGEP 10/11 crop
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+.3600
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N/A
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+.2300
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Costa Rican SHBEP 10/11 crop
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N/A
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N/A
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+.5000
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Guatemala SHBEP 10/11 crop
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+.5500
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+.5500
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+.5300
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Guatemala Hard Bean 10/11 crop
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+.5000
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+.3500
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+.4300
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Nicaragua SHG 10/11 crop
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+.4000
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+.4000
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+.3600
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Mexican Altura 09/10 crop
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N/A
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+.4000
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+.2500
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El Salvador SHG 10/11 crop
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N/A
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+.2500
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+.2300
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Kenya AB FAQ
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N/A
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+2.300
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+2.300
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Sumatra Mandheling
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+.3500
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+.4500
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+.4000
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