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Coffee Market Report 28th September to 2nd October 2015

COFFEE MARKET NEWS Week Ending: 2nd Oct 2015

28thSep

29th Sep

30th Sep

1st Oct

2ndOct

NYC

119.15

120.85

121.35

120.75

124.30

LIFFE

1548

1576

1549

1556

1578

 GBP/USD

1.5183

1.5163

1.5148

1.5131

1.5191

 

 

 

 

NYC:

NY broke free over the 123.3 resistance to develop this weeks’ action into a small flag Friday. The fairly short flagpole only projects on to 126.8 now but there could be potential to engage the weekly downtrend beyond (130) where something more enduring in terms of an impact might be made. Otherwise only swiftly turning tail back through 122.5 would dilute the effort made here and keep the 118’s on alert as a doorway on into new lows around 110.

LIFFE:

The Robusta market remained in its recent rage of $1540 to $1590. A lack of overhead selling allowed for a late surge on Friday and the market closed $22 higher than on Thursday, taking it to $1578.

Currency:

Weakness in commodity prices and the expectation (it hasn’t gone away despite the recent FOMC decision) of US interest rate hikes are combining to strengthen the US Dollar. It does also benefit from ‘safe haven’ flows as investors seek the certainty of investment in Uncle Sam through the US Treasury markets. At the same time though, the UK economy is looking like one of the few strong ones in global terms. Result? We have seen the GBP-USD rate sitting smack bang in the middle of its 2015 range around the $1.51 level all week. Barring the first few days of the year, 2015 has seen the Sterling – Euro rate consolidate in a 10 cent range between €1.34 and €1.44. No change there.

Origins

Colombia:

Rules are made to be broken. Or changed. Export restrictions are put in place so that Colombia can maintain its reputation for providing only the highest-quality Arabica beans. However, drought caused by the El Nino weather phenomenon could reduce production of these high-quality beans and the FNC is looking at ways to respond to this. Colombia is studying changes to regulations on its local coffee purchases that could lead to lifting export restrictions to allow producers to counter the effects of drought on output and revenue.  Currently Colombia only allows producers to sell sacks of coffee containing pasilla – seconds or inferior quality beans – for domestic consumption. Farmers are allowed to sell their coffee with no more than 5 percent of pasilla. That could be increased to 10 percent, Roberto Velez, head of the Coffee Federation said. And if drought means there is considerable volume of such beans, the federation could consider exporting them, he said.  

Honduras:

Fill your boots. Honduras could see its exports rise by 9% in the coming 2015/6 season, the national coffee institute IHCAFE said on Wednesday. Plantations have recovered well from the roya fungus that damaged crops in previous harvests, IHCAFE official Mario Ordonez told Reuters.

 

Intercontinental Exchange (ICE):

U.S. coffee roasters have drawn down certified stocks to their lowest levels in three years, as soaring premiums for high-quality Centrals have prompted them to incorporate older beans from the exchange in their blends instead.

The level of certified Arabica coffee stored in ICE Futures U.S. warehouses fell below 2 million 60-kg bags on Tuesday, the most recent day for which data is available, totalling 1,998,621 bags. It was the first time since September 2012 that the levels fell below 2 million bags.

The declines have been pronounced for beans from Central American origins. Production of these beans, prized for their quality, has been hurt by dry weather and lingering effects of a leaf rust disease known as roya.

Indonesia:

More bad news from this origin. Indonesian coffee production may fall to a two-decade low next year if the drought continues within the next few months, according to the Association of Indonesian Coffee Exporters and Industries (AEKI). AEKI deputy chairman Theng Hong Sioe said on Thursday that if rain did not fall until December or January, coffee bean production would fall to 400,000 tons next year, the lowest level since 1990. Saimi Saleh, another AEKI deputy chairman, said that the production slump was expected to result in higher coffee prices next year. ‘For robusta coffee, I’m not sure [if prices will go up], but I believe that prices for arabica coffee will surge as the demand will remain high,’ he said. Presently, Indonesia’s coffee plantation areas cover 1.24 million hectares (ha) of land across the archipelago. Robusta coffee crops male up 933,000 ha of land, while the remaining 307,000 ha are Arabica coffee crops, according to the Industry Ministry’s data.

In other news…

Analytics provider Square released the Square Coffee Report, which included some interesting data related both to consumer trends and operational strategies among thousands of U.S. cafes. Read an overview at Daily Coffee News.