CoffeeNetwork (New York) – Brazil-based TerraForte has released their third and final Brazil crop estimate. According to the report, April and May rainfall data was highly celebrated even though being months that total volume normally is fairly low. “Fact is from January/14 to June/14 accumulated rainfalls were the worst one we have seen so far.”
Considering Terra Forte farms are amongst the most well treated farms, the company has detected 20% loss against our forecast done prior to the drought. However, TerraForte estimates 30% losses for the rest of South Minas and Zona da Mata. Cerrado is by far the better one with 10% loss. The whole Mogiana region, around 15%, South of Minas and Zona da Mata region with an average of 30% loss. Therefore TerraForte’s 14/15 crop estimate has been revised to 28.344 million bags of Arabica and remains at 17.44 million bags of Conillon. First estimate prior to the drought: 53.7 million bags Second Estimate (February): 47.4 million bags Third and final estimate: 45.785 million bags BREAK DOWN BY REGIONS (in million bags) 2014 Prior drought 2014 after drought SUL DE MINAS 13.900.000 9.730.000 CERRADO 5.610.000 5.049.000 ZONA DA MATA 6.100.000 4.575.000 SÃO PAULO 5.100.000 4.335.000 ESPIRITO SANTO (Arabica) 2.200.000 1.650.000 (Robusta) 13.300.000 13.300.000 PARANA 900.000 765.000 BAHIA (Arabica) 1.600.000 1.440.000 (Robusta) 1.800.000 1.800.000 RIO DE JANEIRO (Arabica) 150.000 150.000 (Robusta) 40.000 40.000 RONDONIA 1.500.000 1.500.000 MATO GROSSO 500.000 500.000 GOIAS 500.000 450.000 OTHER ARABICA 200.000 200.000 OTHER CONILLON 800.000 800.000 TOTAL 53.700.000 45.784.000 ARABICA 36.260.000 28.344.000 CONILON 17.440.000 17.440.000 CARRY OVER STOCKS Crop 13/14: 53.290.000 Carry 01/07/13: 9.840.928 Beginning Stocks: 63.130.928 Total exports: 33.971.000 Internal Consumption: 21.000.000 Carry 01/07/14: 8.159.928 2015 / 2016 PROSPECTS • Jan/Jun 2013 – accumulated rainfalls circa 1050 mm • Jan/Jun 2014 – accumulated rainfalls circa 470 mm • Right now, they are witnessing plantations which were fully loaded, simply falling apart and losing most of its leaves. On those, normally TerraForte would expect a downturn of maximum 25% due to cycle. The way things are going, we basically cannot count on them. • Pruned plantations which should make up for the loaded ones are showing a 20% loss in vegetative growth, depending on the region sometimes 40%. • Surprisingly they detected a higher incidence of leaf rust. It is unusual for this time of the year, especially because normally it occurs during the wet season. Maybe due to extreme stress plantations are going through. • TerraForte definitely won´t give any estimate on numbers for 15/16. Based on their track record, they forecast a very strong flowering due to the extreme stress of the plantations, which might mislead the market again when wonderful pictures of the flowering start circulating. • Considering all facts above, they believe a huge percentage of abortion will take place. • What is clear is prospects aren´t good and we would need an extreme change in weather pattern to avoid further disruption.
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ICE Coffee Futures Rally sharply on Bullish Fundamental News
ICE Coffee futures rallied sharply throughout today’s session motivated by bullish fundamental news and short covering. FCStone do Brazil published a report which suggested yield declines of up to 25% throughout many of the Brazilian coffee producing regions. The report also inferred that next year’s crop (2015/2016) was likely to be affected, given that some plantations which have received rain are already flowering. This is of particular concern to producers since we are now entering a period of drought which is normal at this time of year. Throughout the morning session the market was particularly quiet, however the report generated some buying interest which in turn forced many speculative shorts to cover their positions. On the way up several stops were hit especially around the 173-175 area basis September which further pushed the market higher to test the 180 area. Volume was higher than past sessions at 20,896 lots traded. The September contract shows technical resistance around the 178 area and support at 167.00. London - Reports indicate physical differentials in Vietnam have been weakening over the last few days. Local comments suggest more willing sellers but the fact remain buyers have also backed away. Volume was better in London as the market probed lower with weakness enough to activate stops below the 1980 area and attracted a mixture of what appeared liquidation type selling. Switches put together better numbers in the weakness with the September premium back to level money. Limited change in the spot month exposure continues to attracted attention with only 5 trading sessions remaining before the position expires next Thursday. Balance open position coming into this morning was 2114 lots down only 3 contracts. The rate of grading although consistent is relatively slow with only 19 lots coming forward this morning. Export numbers out of Vietnam were reported around 108,000 tonnes and although the monthly performance has slowed we are still around 12% higher on the season with local stocks at high levels. Prices recovered on the back of New York’s rally edging back above the 1980 pivot in September as the market trapped shorts. Improved structure activity generated better turnover on the day. Arbitrage widening produced selling into Robusta as the premium traded back above 83 cents putting pressure on shorts. |
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