Market Reports Blog / Market Reports / Coffee Market Report 7th to 11th March 2016

Coffee Market Report 7th to 11th March 2016

COFFEE MARKET NEWS Week Ending: 11th Mar 2016

 

07thFeb

08thMar

09thMar

10th Mar

11thMar

NYC

118.65

121.70

122.35

122.15

125.80

LIFFE

1394

1408

1420

1402

1427

 GBP/USD

1.4270

1.4205

1.4227

1.4294

1.4386

 

 

 

 

 

Fun coffee fact of the day: Coffee demand to surge, driven by marked increased in Asia. Over the 2015-16 marketing year, which began in October last year, the ICO expects coffee consumption to reach 152m 60-kg bags-an all time high!

NYC:

The Arabica coffee market advanced on Friday due to aggressive buying, covering short term positions by investors. Friday closed 715 points higher than Monday’s close.

LIFFE:

Robusta coffee futures rallied on Friday amid a flurry of speculative support, but overhead origin pressure limited the advance. The May contract gained $25 to settle at $1,427/tonne on Friday, just off its peak of $1,432/tonne. This meant a rise of $34 (2.4%) on the week given the previous Friday’s settlement of $1,393/tonne.

Currency:

GBP/EUR:

On Thursday, Mario Draghi, the president of the ECB, cut the ECB’s base rate to 0.0%, making it even more expensive for banks to deposit funds with the ECB, rather than just lending them out. He announced that the ECB would subsidise banks if they lent to business and warned interest rates might fall further. This saw the Euro weaken. However, the Euro has since strengthened, as Mr. Draghi has changed his tune and has announced that interest rates were not likely to change for a considerable time.

GBP/USD:

The Pound has gained ground over the Dollar during the course of the week with a strong finish on Friday. The recovery in pound sterling against the US dollar is being driven by the dawning realisation that the UK currency is undervalued against its American counterpart.

 

Origin News:

Brazil:

Rabobank pegs 2016-2017 Brazil crop at 51.8 million bags, up 2.6 million bags from the previous crop. Of this, 39.2 million bags will be of Arabica (up 6.5 million bags from 2015-2016) and 12.6 million bags of Robusta (down 3.9 million bags from 2015-2016). Among six industry estimates since the start of the year, the forecast for Brazilian 2016-17 coffee has averaged 53m tonnes, with estimates ranging from 49.1 to 55.5m bags. Brazil accounted for nearly half of world Arabica exports in January. Accounting for 46.29% of the total, Brazil remained the world’s biggest exporter of Arabica coffee, and totalled 2,418,574 bags in January. Nevertheless, this volume represented 3.09% decline from the same month last year (2,495,586 bags) and 13.98% decline compared to the month prior.

Cameroon:

Cameroon sees serious decline in cocoa production and hopes to offset this with coffee. The Cocoa and Coffee Interprofessional Council (CCIC) has announced an emergency program that will make around 2 million new coffee plants available to producers by 2017. With the new plants, the CCIC hopes to create 600 hectares of new coffee farms each year, totalling 1,800 hectares in three years, covering three selected regions which are said to be the most ideal for coffee production.

Colombia:

Coffee Borer Beetle proving hard to rid. The National Federation of Coffee Growers (FNC) urgently called on producers to keep the outbreak of broca, or the coffee borer beetle, under control. Based on research conducted by the National Centre for Coffee Research (Cenicafé), the coffee borer beetle can survive for up to 150 days in cherries, potentially problematic for when the rainfalls increases in April and May, which could cause larger outbreaks. The beetles could affect the maturation and development of the cherries. In the current situation of El Niño, the Extension Service of the FNC has found significant damage mainly in harvested cherries. The departments with higher outbreaks are Antioquia, Caldas, Huila, Quindio, Risaralda, Tolima and Valle del Cauca.

The solution?  Avoiding cherries reaching the ground. Cherries left on the trees or in the sun should be placed on a tray or plastic covered container, as an oven, to kill the beetle. It is necessary to prevent the cherries from dropping to the ground: Healthy fruits fallen on the ground can be attacked by the borer beetle. Borer populations in these fruits will generate re-infestations in the fruits of the trees that will be harvested in the second half of the year. So far this year, exports have exceeded 2.2 million bags, 5% higher than the 2.1 million bags exported in the first two months of 2015. Making sure that the coffee borer problem is overcome will be key to ensuring more increases in production.

In other news:

Illy named as a 2016 world's most ethical company by the Ethisphere Institute. Illy, the world's leader in responsibly sourced coffee, has been recognized by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices, as a 2016 World's Most Ethical Company®. Illy has now been recognized as a World's Most Ethical Company for four consecutive years. The company is one of only four honourees in the Food, Beverage and Agriculture category for 2016, and the only Italy-based honouree.

Coffee prices poised for increases. The impact of supply shortages are being masked by the weakness of major producing countries’ currencies, which has cut the value of beans in the dollar terms they are traded in. Because of the Colombian peso devaluation, the Brazilian real devaluation, and devaluation in many other producing countries, the supply/demand situation is not being properly reflected in US dollar prices. Ultimately, the tightness of supplies will feed through and we can expect to see the NYC increase soon.