Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Brazil 2018-19 Crop Concerns: While the flowering of the Robusta regions occurred without a hitch, dry weather plagued parts ofMinas G erais and depleted soil moisture and putting some areas under extreme stress. Rains fell which spurred a flowering but not all received sufficient rain. Now the weather has turned dry again which could keep the blossoms from adhering properly to the trees.
Outcome: This is a very critical time in the development of the next crop and it is absolutely essential that follow-on rains occur within 10-15 days to adhere the flowers so they don’t abort and drop from the trees without fixing. Trees in good health and adequate
moisture reserves could hold for a long term,but warmer temperatures also forecast, hastens the lifespan of the flowers as does a tree that already was struggling. It is far worse for the crop outlook to not get these critical rains than it was for the rains to fall to initiate the main flowering. The trees would be under some stress, but still have a chance to blossom rather than actually have the flowers drop to the ground prematurely.
August and September are the months when there is floral bud growth in Brazil and then October is when the trees generally actually flower, bursting open.
By November, you have the very early stages of fruit growth. The follow-on rains are critical during this transition period from flower to fruit.
Prior to flowering is when a water deficit is actually critical (the buds are dormant during this time) and so a month of no rain is actually necessary. However, when the tree is starved of little to no rain for 100 days, the water deficit is too severe and the buds can wither and these floral buttons could be lost. In normal circumstances, from 8 to 16 days after the floral buds receive rain, the flower opens.
The longer the period without water, the more difficult it becomes for the fruit to set properly.
The healthier the tree the longer it can sustain the flowers.
Colombian Crop Outlook: A year ago there were concerns that heavy rains may have marred Colombia’s secondary harvest (AprilSeptember) and keep production from reaching its true potential. Now La Nina is being forecast for later this year and Colombia tends to have poorer crops whereas in an El Nino or neutral phase of ENSO, production fares better. Outcome: The final totals are in for the 2016-17 Colombian crop with production of just over 14.6 million bags or 600,000 better than the year prior. There seemed to be no detrimental impact from the weather, although it is possible that production could have been even higher. The market is not reacting to concerns for the 2018-19 season as a possible La Nina will come too late in the crops development to cause significant harm. United States Coffee Stocks: USA coffee stocks dropped in August, but still remain extremely large.
Outcome: USA coffee stocks kept climbing and climbing this year and finally posted a decline worth noting. However, inventories remain at the highest level since 1993 providing a safety net in the event of production issues. Global coffee exports are starting to soften and that may help to trim stocks in the months ahead.
Stats of the Month
The International Coffee Organization reported that August exports fell by 8.4% compared to August 2016.
Although there was a noted slowdown in shipments by around 900,000 bags to 9.872 million, last August exports were exceptional and so this difference is glaring.
Despite the large drop, cumulative exports for the first eleven months of the 2016-17 season are still 5.8% better than in 2015-16 and this gain in shipments this past season, which ended September 30, helped create a build in consumer stocks.
There had been worries that Vietnam would run out of coffee—it never happened. Vietnamese exports for the season are down only 3.4%. However, for August they were down considerably from 2.453 million to 1.6 million, but it was the higher figure last year which had boosted the total. While Brazil also has had lower exports, down 7.3% for the season and 16.6% in August, other nations have certainly helped to plug in the gaps.
The Green Coffee Association reported a decline in certified stocks.
The fall in stocks actually exceeded the decline from last year and therefore there was a marginal narrowing in the level of stocks VS year ago levels.
The difference though is still minimal enough to not make a big deal of it. With export volumes receding from Brazil reducing shipments, the slippage in stocks was not unexpected. However, with Brazilian exports expected to pick back up, it remains to be seen if warehouse stocks have reached a turning point other than the usual seasonal pattern.
There is still enough of a cushion in consumer stock levels that it is not worrisome at all. Total stocks of 7.266 million bags are still more than a million bags higher than they were a year ago and still the highest total since 1994 for any month and the largest stock volume for the month of August since 1993.