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1944 views January 10, 2014 posted by Maja Wallengren

MARKET INSIGHT: Mar Arabica Coffee Ends Up 1.30 Cts At $1.2065/Lb Jan 10 As Brazil Concerns Remain

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JAN 10 (SpillingTheBeans)–Active March Arabica coffee futures closed stronger on Friday, settling 1.30 cents higher at $1.2065 cents per pound at the ICE futures exchange in New York. Prices opened lower across the board as the bear camp in the market made another attempt to drive prices back down. But the left over concerns from Thursday, when a 3rd forecast predicted lower crops in the world’s largest coffee producer Brazil, quickly had the market rejecting the downward move and instead starting to move higher to recover most of the losses from the previous session. More forward May Arabica contract closed down 1.40 cents at $1.2290/lb. Arabica futures for March have gained over 9 percent since the first trading day of the year, or posting net gains of about 10 cents/lb since Jan 2nd.

For all our latest coverage this week on the dramatic cuts to the forecasts for both Brazil’s 2013-14 and 2014-15 harvest, please see:

*For the full report on the 1st Conab forecast for the 2014-15 Brazil crop, please see: http://spilling-the-beans.net/brazils-conab-pegs-2014-14-coffee-harvest-in-brazil-down-to-46-5m-51-15m-bags/

*For more on the Volcafe report, please see: http://spilling-the-beans.net/harvest-analysis-volcafe-cuts-2013-14-crop-view-for-brazil-by-3-8m-bags-pegs-14-15-down-to-51m-bags/

*For more on the new Somar figures, please see: http://spilling-the-beans.net/brazils-somar-cuts-estimate-for-2013-14-crop-by-3m-bags-to-51m-bags-predicts-rain-damage-in-2014-15/

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JAN 9 (SpillingTheBeans)–Active March Arabica coffee futures closed down on predictable profit-taking to Thursday, settling 1.55 cents lower at $1.1935 cents per pound at the ICE futures exchange in New York. Prices opened flat across the board but quickly started to rise, extending gains from the previous two sessions in early trade before profit taking set in and pulled the market back down in another day marked by “very solid volume” and trading interest. But as news hit the market in late session that Brazil’s crop supply agency Conab, in their first forecast for the upcoming 2014-15 harvest has projected a drop in the world’s largest grower, the market retreated from intraday lows and recovered about 1 c/lb in the final hour of operations.

“With Conab now coming out lower, adding to the Volcafe report and Somar agronomists making solid arguments for why not just the current but also the next crop in Brazil is going to be lower, ECOM is left in a very lonely spot trying to defend their short positions and lower prices, and the market clearly has rejected their forecast for a bumper crop,” said one trader in New York. More forward May Arabica contract closed down 1.50 cents at $1.2150/lb.

JAN 8 (SpillingTheBeans)–Active March Arabica coffee futures returned to rallying on Wednesday, closing up 3.65 cents at $1.2090 cents per pound at the ICE futures exchange in New York as the market chose to embraced a series of reports that all projects a lower-than-expected 2013-14 crop from Brazil as well as a lower crop in the next 2014-15 Brazilian crop. Rejecting a report from the bear camp predicting a record crop in Brazil in the next 2014-15 crop cycle for which the harvest starts in late April, traders said the session was the busiest in weeks, extending gains 9.2 percent since the first trading day of the year, or posting net gains of 10.20 cents/lb, since Jan 2nd.

“Traders have for the last few years paid more respect to the Volcafe figures than that of ECOM and this is why the sentiment on the market still settles for a lower Brazil crop next year,” one trader told SpillingTheBeans from New York. Both the March and May contract also succeeded in trading back over the important psychological barrier of $1.20/lb for the first time in almost five months, with the more forward May Arabica contract settling up 3.65 cents at $1.2300/lb.

Since the first week of December, Arabica prices have gained close to 15 cents/lb, or strengthened over 14 percent on the combination of disappointing exports out of Vietnam and the latest crop news from Brazil, which are all pointing to significant weather damage to the new crops in the world’s two largest producing countries and a growing world deficit in both 2013-14 and 2014-15. This has resulted in funds launching a buying spree in order to cover short position.

*For our previous reports on Arabica futures this week and the rally since the beginning of 2014, please see: http://spilling-the-beans.net/market-insight-march-arabica-coffee-rally-ends-up-4-65-cents-at-1-2100lb-jan-6-on-lower-brazil-crop-view-slow-vietnam-sales/

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JAN 8 (SpillingTheBeans)–Active March Arabica coffee futures returned to rally on Wednesday, trading up 3.60 cents to $1.2085 cents per pound in mid-morning trade at the ICE futures exchange in New York as the market rejected a report from the bear camp predicting a record crop in Brazil in the next 2014-15 crop cycle for which the harvest starts in late April. “Traders have for the last few years paid more respect to the Volcafe figures than that of ECOM and this is why the sentiment on the market still settles for a lower Brazil crop next year,” one trader told SpillingTheBeans from New York. Both the March and May contract also succeeded in trading back over the important psychological barrier of $1.20/lb for the first time in almost five months, with the more forward May Arabica contract up 3.65 cents at $1.2300/lb in mid-morning trade. (10:32a.m. EDT)
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*For the latest on the market as of Jan 9, 2014, please see: http://spilling-the-beans.net/market-insight-march-arabica-coffee-close-up-0-70-cent-on-jan-2-at-1-1140lb-in-solid-start-to-2014/

JAN 7 (SpillingTheBeans)–Active March Arabica coffee futures settled down 3.75 cents on Tuesday at the ICE futures exchange in New York to close at $1.1725 cents per pound. Prices opened stronger across the board and continued to rise on the latest news from top trading house Volcafe/ED&F Man. In a research note Monday the group announced it had lowered its forecast for Brazil’s next 2014-15 crop to 51 million 60-kilogram bags from its previous crop view of 60 million bags, leaving a world deficit of 5 million bags in the upcoming cycle. But by mid-morning news from competing Swiss coffee traders ECOM said the group expects the new Brazil crop to reach 60 million bags and the rally that has been on since the start of the new year started losing steam and profit taking set in as well. Several traders, however, told SpillingTheBeans the comments from ECOM were “highly manipulative” given that it’s well known in the market “that this particular trader needs to cover short positions and obviously want to do so at lower prices” while Volcafe is known to need to cover supply contracts and has little vested interest in higher prices. More forward May Arabica futures settled down 3.80 cents at $1.1935/lb.

JAN 6 (SpillingTheBeans)–Active March Arabica coffee futures continued to rally on Monday, settling up an impressive 4.65 cents at the ICE futures exchange in New York to close at fresh 4-month highs of $1.2100 cents per pound. Prices opened stronger across the board and continued to trade in higher territory throughout the session as concerns over the continuing slow exports out of Vietnam, combined with news of lower forecasts out of Brazil weighed heavily on the market. Despite month-long expectations of a new record crop out of the world’s Number 2 grower Vietnam, exports have fallen well below not only expectations but also that of last year, with no evidence yet pointing to the alleged record crop. In Brazil, meanwhile, top trading house Volcafe/ED&F Man said in a new research note they had lowered its forecast to 56.2 million 60-kilogram bags from its previous crop view of 60 million bags in the 2013-14 harvest. Volcafe also said a deficit of 5 million bags is expected in preliminary forecasts for the world supply-demand balance in the new 2014-15 cycle, primarily because of expectations for the Brazil crop to drop to 51 million bags after multiple problems to the flowering process. Both the March and May contract succeeded in surpassing the important psychological barrier and closing above $1.20/lb for the first time since August, with the more forward May Arabica contract settling up 4.60 cents at $1.2315/lb following the buying spree by funds out to cover short positions.

MID-DAY: Mar Arabica Coffee Continues To Rally, Up 3.45 Cents Jan 6 To Fresh 4-Mo Highs On Vietnam Concerns
JAN 6 (SpillingTheBeans)–Active March Arabica coffee futures continued to rally on Monday, trading up 3.45 cents in late session at the ICE futures exchange in New York and hitting fresh 4-month highs at $1.1980 cents per pound. Prices opened stronger and traders said “volumes were very good with one of the highest levels of trading interest seen in months” as concerns over the continuing slow exports out of Vietnam continues to weigh on the market, leading to a buying spree by funds covering short positions. Both the March and May contract also succeeded in surpassing the important psychological barrier of $1.20/lb for the first time in months, with the more forward May Arabica contract up 3.20 cents at $1.2175/lb. (12:08 p.m. EDT)
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JAN 3 (SpillingTheBeans)–Active March Arabica coffee futures rallied on Friday to close up 4.95 cents at $1.1635 cents per pound at the ICE futures exchange in New York, climbing to near fresh 4-month highs and posting a “strong start to the new year” as the market continued to extend gains from the previous session and first trading day of 2014, traders said. Traders told SpillingTheBeans the market remained under pressure by the “extremely slow and disappointing exports” out of the world’s second largest producer Vietnam, where expectations of a record 2013-14 crop by the bear camp in the market has failed to materialize, despite the physical harvesting for the new crop cycle now being well through its peak. Arabica prices have gained close to 11 cents in the last three weeks, or added over 10 percent in value. More forward May Arabica futures settled up 4.85 cents at $1.1855/lb.

JAN 3 (SpillingTheBeans)–Active March Arabica coffee futures were up 4.40 cents in late session on Friday at the ICE futures exchange in New York, rallying to near 4-month highs of $1.1580 cents per pound and continuing to extend gains from the previous session and initial trading day of the new year. More forward May Arabica futures closed up 4.30 cents at $1.1800/lb. (12:00 p.m.)
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JAN 2 (SpillingTheBeans)–Active March Arabica coffee futures closed up 0.70 cent on Thursday at $1.1140 cents per pound at the ICE futures exchange in New York, posting a solid start to the new year on the first trading day of 2014 with “good volume” and active participation by market players, traders said. Traders said the market “should continue to enjoy support” from concern over slow exports out of the world’s second largest producer Vietnam, which last month resulted in net gains of close to 10 cents, or adding about 10 percent in value to Arabica beans. More forward May Arabica futures closed up 0.75 cents at $1.1370/lb.

*For the latest on the market as of Jan 9, 2014, please see: http://spilling-the-beans.net/market-insight-march-arabica-coffee-close-up-0-70-cent-on-jan-2-at-1-1140lb-in-solid-start-to-2014/

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