Good morning, and Happy Monday.
The latest set of commitment of traders reports revealed that in KC, the funds added 3,920 fresh shorts, leaving us with a new net short of 58,790 whilst in Robusta, we saw a reduction of 7220 off the net short, leaving us 15,957 short.
London therefore looks the more bearish of the two contracts, it’ll be interesting to see what happens with the Arb as a result, it was looking pretty cheap at 43 and rallied to its high of the week on Friday at 47.45 towards the close.
In macro news, the dollar finally firmed after a week long slide overnight. President Trump gives his state of the union address later in the week, and is expected to discuss a big push for infrastructure spending.
At time of writing, the preopen shows March Robusta at 1765 (-2) and March Arabica at 125.50 (+0.35).
Coffee Crops Have Been Hit By Climate Change But Sumatran Farmers Are Fighting BackEmily Beament
HuffPost UK 29 December 2017
Increasingly unpredictable weather caused by climate change is impacting coffee harvests in Sumatra.
Some coffee farming groups in the Indonesian island’s northern Gayo Highlands say they have seen coffee harvests fall by up to 50%, with damage to plants caused by unexpected rain or dry spells.
The rain has also affected efforts to sun-dry the coffee beans, while warmer temperatures mean pests and diseases previously only seen at lower altitudes now threaten the high-quality Arabica coffee for which the highlands are known.
Unpredictable weather is damaging coffee flowers and cherries in Sumatra, Indonesia (James Robinson/Fairtrade Foundation)
In an attempt to rectify this, co-operatives that sell their coffee as Fairtrade-certified are using money from the scheme to invest in measures to counteract the impacts of rising temperatures.
Through Fairtrade, producers receive a guaranteed minimum price for coffee and an additional “premium”, which communities decide for themselves how best to spend.
In the Gayo Highlands these include schemes such as installing electricity, building libraries, providing cervical cancer screenings and purchasing ambulances, buying pruning scissors and strimmers providing agricultural training.
But cooperatives are now also turning their attention to preventing climate change hitting productivity by distributing new, more resilient varieties of coffee plant.
Farmers are also encouraged to plant shade trees in the coffee gardens to protect the precious harvest, prevent erosion on sloping hillsides and provide an alternative income such as avocados, oranges or timber to reduce reliance on a single crop.
Coffee cooperatives are facing a number of challenges, including ageing coffee plants and young people seeking alternative jobs to farming.
But the chairperson of 2,000 member-strong Permata Gayo cooperative Armia Ahmad said a big issue is the changing weather.
“The climate has already changed, for example the harvest is normally starting from October to January, but now we can’t predict it any more,” he said.
The harvest had not come by December, he said, adding: “This year in December, it should be the dry season, but now rain, rain, rain.”
The cooperative is providing hundreds of thousands of seedlings of the new, more resilient varieties of coffee to members, and has built a canopy for its drying areas to prevent rain from damaging the coffee during processing.
They are also providing avocado trees to farmers to generate income if the weather hits the coffee harvest.
At another of the region’s cooperatives, KBQB, the management team have also reported a shift in the harvest and increases in pests and diseases being found in the region’s high altitudes.
Another local environmental problem is illegal logging, despite the remaining natural forest being protected, which causes flash flooding and landslides when it rains.
The cooperative is implementing environmental measures because, the team say, they have been informed by various sources that climate change is affecting Indonesia and planting trees can be climate-friendly.
Cooperative chairman Rizwan Husin said: “We distribute trees to farmers so they can plant on their farms, and we advise the farmers to grow shade trees, and on the unproductive land to grow trees for wood and avocado.”
The reforestation scheme being run by the cooperative has seen a group of farmers plant 24,000 trees over 32 hectares to create sustainable agroforestry on unproductive land.
But the chairman said he was “really, really worried” about climate change.
“They say that within 50 years there may be no more coffee in Gayo, and it may be similar in Africa,” he said.
“We need not just a local movement, but a world movement for the climate.”