Coffee Market Report September 27 2016

The latest Commitment of Traders report from the New York arabica coffee market has seen the shorter term in nature Managed Money fund sector of this market increase their net long position within the market by 9.11% over the week of trade leading up to Tuesday 20th. September; to register a net long position of 46,708 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.9%, to register a net long position of 39,803 Lots on the day. 

Over the same week the Non Commercial Speculative sector of this market increased their long position within the market by 4.69%, to register net long position of 39,951 Lots.   This net long position which is the equivalent of 11,325,931 bags is most likely to have been slightly eroded, following the period of mixed but overall more negative trade that has since followed. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non Commercial sector of this market increase their net long position within this market by 2.77% during the week of trade leading up to Tuesday 20th. September; to register a long position of 37,076 Lots.  This net long position which is the equivalent of 6,179,333 bags has most likely been since increased, following the period of mixed but overall more positive trade that has since followed. 

The Uganda Coffee Development Authority has reported that the countries coffee exports of the month of August were 29,548 bags or 9.22% lower than the same month last year, at a total of 291,059 bags.  This dip in export performance in contributes to the countries cumulative coffee exports for the first eleven months of the present October 2015 to September 2016 coffee year, to be only marginally 61,852 bags or 1.95% lower than the same period in the previous coffee year, at a total of 3,107,678 bags. 

This decline in the overall Ugandan coffee exports for the first eleven months of the present coffee year is however mostly related to the climatic problems that have affected the central robusta coffee districts of the country, as while the arabica coffee exports over this eleven month period were in fact 136,141 bags or 20.03% higher at 815,737 bags, the robusta coffee exports were 197,993 bags or 7.95% lower at 2,291,941 bags.    While the ration of arabica to robusta coffee exports was 26.25 to 73.75, as against a ratio of 21.44 to 78.56 over the same period in the previous coffee year. 

Despite the improved performance of the relatively higher value arabica coffees for the first eleven months of the present coffee year, the value of the overall Ugandan coffee exports for the first eleven months of this year is US$ 99,599,855.00 or 24.66% lower than the value of the overall coffee exports over the same period in the previous coffee year, at a total of US$ 304,278,939.00.    However, with the past couple of months of improved international prices, one would expect that the value of Ugandan coffee exports shall start to improve and likewise, to continue to encourage the countries free market farmers to continue to invest in their existing coffee farms and to bring forth expansion and new farmers to the industry in the coming year. 

The November to December contracts arbitrage between the London and New York markets broadened yesterday, to register this at 63.97 usc/Lb., while this equates to a 41.66% price discount for the London robusta coffee market.  This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry. 

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange were seen to increase by 1,898 bags yesterday; to register these stocks at 1,265,143 bags.  There was meanwhile a larger in number 4,443 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 8,478 bags. 

The commodity markets had a mixed day yesterday, but with the energy markets recovering and assisting to set the overall macro commodity index to take a positive track for the day.   The Oil, Natural Gas, Sugar, Coffee, Orange Juice and Gold markets had a day of buoyancy, while the Cocoa, Cotton, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.09% higher; to see this Index registered at 421.58.   The day starts with the U.S. dollar steady in early trade and trading at 1.300 to Sterling and 1.124 to the Euro, while North Sea Oil is showing a degree of buoyancy in early trade and trading at 46.50 per barrel. 

The London and New York markets opened the day yesterday on a near to steady note and took this hesitant track into the early afternoon trade, when selling pressure took both markets south into modest negative territory.   This was however short lived and as the afternoon progressed, both markets recovered and attracted support to take the markets back into positive territory and towards a positive close for the day.   The London market ended the day on a modestly positive note and with 75% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 89.6% of the earlier gains of the day intact.    This close is somewhat constructive but with the charts not really portraying a very positive picture, one might not expect to see much more than a hesitantly steady start for early trade today against the prices set yesterday, as follows: 

LONDON ROBUSTA US$/MT                           NEW YORK ARABICA USc/Lb. 

SEP      1970 + 9

NOV     1975 + 9                                                 DEC   153.55 + 2.15

JAN      1997 + 9                                                MAR   156.85 + 2.25

MAR     2007 + 10                                              MAY   158.75 + 2.30

MAY     2014 + 11                                               JUL   160.40 + 2.35

JUL      2020 + 10                                               SEP   161.80 + 2.35

SEP      2029 + 10                                              DEC   163.60 + 2.30

NOV     2037 + 10                                              MAR   165.30 + 2.25

JAN      2047 + 10                                              MAY   166.30 + 2.20

MAR     2054 + 10                                               JUL   167.30 + 2.20