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Coffee Market Report 7th December to 11th December 2015

COFFEE MARKET NEWS Week Ending: 11th Dec 2015

7thDec

8thDec

9thDec

10th Dec

11thDec

NYC

126.05

125.20

126.80

126.35

121.20

LIFFE

1562

1557

1555

1550

1528

 GBP/USD

1.5057

1.5005

1.5182

1.5162

1.5211

 

 

 

 

Good time to be in M & A? The value of mergers and acquisitions has hit an all-time high following the $13.9bn takeover of the US coffee company Keurig Green Mountain by Germany’s Reimann family.

NYC:

Arabica coffee futures suffered yet another strong downfall on Friday due to selling induced by weak currencies in producing countries. The most active contract for March delivery settled 515 points lower at 121.20 cents per pound.

LIFFE:

Activity in London has become very stale during the week with the business generated around the addressing of the spot month. The March contract saw a general downward trend steadily falling throughout the week.

Currency:

GBP/USD:

It is widely expected that the Fed will raise interest rates this week. The current trading range for the Sterling – US Dollar rate is $1.4850 to $1.5250 but this is a declining trading range. Hence we are likely to see lower levels in the months ahead; especially if the Fed raises the base rate by more than a few basis points.

GBP/EUR:

It was predicted that there would be interest rate cuts and further QE by the ECB but the delayed implementation of these two measures saw the Euro strengthen.

Origins:

Brazil:

Exports of coffee from Brazil, the world’s biggest producer, stayed strong in November despite the impact of two years of drought on output, with Arabica shipments firm and Robusta easing off from heavier sales earlier in the year. Brazil’s main Arabica growing areas in South Minas and Sao Paulo are still recovering from an early 2014 drought and this combined with recent rains causing good flowering and fruit formation are likely to ensure a bumper Arabica crop in mid 2016. It’s a different story for Robusta though. Conillon areas in the main producer state of Espirito Santo, have had continued weather problems after suffering a severe drought in early 2015.

Ethiopia:

The total crop volume appears to be down by about 10/15 % on last year’s crop due to the El Nino effects. Two members of our trade team, Phil & MT, are out in Ethiopia right now. Watch this space for a more in depth update next week!

Guatemala:

The crop is developing but ongoing rain is hindering processing as most wet-mills sun-dry their coffee. Reports are that later this month and January will present more rain but a much more manageable amount, with weather becoming calmer and more akin to the norm. We cupped some pre shipment samples on the table today and quality is looking good for this time of year.

In other news…

Expensive cuppa? Tea prices have gone up Rs 4-5 a kg at the auction level since October following a decline in production in the largest-producing state Assam due to erratic weather conditions.

While tea prices appreciated in the domestic market, Indian produce can command higher prices internationally as well because production of Kenyan tea saw a decline this season. Kenya’s tea output dropped 14% in nine months to September due to a drought that hit the country at the start of the year.

No caffeine cliff? Experts at Nestle, in partnership with École Polytechnique Fédérale de Lausanne and university ETH Zurich, have developed a technique that makes it possible to release caffeine in a slow and sustained way.