Coffee Market Report February 28 2017

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 16.8% over the week of trade leading up to Tuesday 21st. February; to register a net long position of 19,398 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 7.5%, to register a net long position of 33,492 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their long position within the market by 22.71%, to register net long position of 21,489 Lots.   This net long position which is the equivalent of 6,092,036 bags has most likely been once again decreased, following the period of mixed but overall more negative trade which has since followed and likewise, that of the Managed Money fund sector of the market. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market decrease their net long position within this market by 2.45% during the week of trade leading up to Tuesday 21st. February; to register a record net long position of 38,710 Lots.  This net long position which is the equivalent of 6,451,667 bags has most likely been further decreased, following the period of mixed but overall more negative trade that has since followed. 

With the export registrations for the month in hand and with the month coming to a close, the Vietnam state authorities have forecast that the countries coffee exports for mostly robusta coffee for the month shall be approximately 9.2% higher than the same month last year, at a total of approximately 2.17 million bags.   This is an impressive figure in terms of these exports coming to the fore from what has been reported to have been a smaller new crop and one would suggest that while exports are presently continuing in good volume, that there is a possibility that within the next couple of months that they shall start to taper off in volume. 

The question shall be in terms of global robusta coffee supply and should Vietnam exports start to decline in volume and with little chance in terms of forecasts for yet another modest conilon robusta coffee crop in Brazil this year, to what volumes can Indonesia, India, Uganda and West Africa step in with their robusta coffee supply, to fill the gaps that would come with declining Vietnam robusta coffee supply during the second half of the year.  Presently and with some support from the certified robusta coffee stocks held against the London market there are no fears of any disruptive shortage of robusta coffee supply, but there is the potential of tighter supply and producer price resistant support that would assist to buoy the relative fortunes of the London market. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 45.85 usc/Lb., while this equates to 32.49% price discount for the London robusta coffee market.  This once again narrowing arbitrage is now becoming less of an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen decrease by 1,027 bags yesterday; to register these stocks at 1,328,887 bags.  There were meanwhile a larger in number 3,460 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 36,330 bags. 

The commodity markets had a mixed day yesterday but despite a softening of the U.S. dollar for the day and some buoyancy for the Gold and Silver markets along with a steady day for the Oil markets, the majority of the markets came under pressure for the day and with the overall macro commodity index taking a softer track for the day.   The Oil, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.84% lower, to see this Index registered at 423.32.  The day starts with the U.S. Dollar steady and trading at 1.243 to Sterling and at 1.058 to the Euro, while North Sea Oil is steady and is selling at $ 54.65 per barrel. 

The London market started the day yesterday near to steady but soon started to come under negative pressure, while the New York market started the day on a softer note.   Both markets retained this modestly softer stance into to afternoon trade but with a lack of aggressive producer selling in play, to maintain some degree of buoyancy within this softer sideways track.   The London market did however come under further pressure and some sell stops coming into play and to accentuate the losses but to bottom out and to take a sideways negative track for the rest of the day’s trade, while the New York market started on a steady downside track and with step down fund and speculative sell stops coming into play and to set the market for a late in the day mini collapse.   The London market continued to end the day on a soft note and with 78.8% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 91.1% of the losses of the day intact.  This close has somewhat ripped the technical heart out of the New York market and to a lesser extent for the London market and does little to inspire confidence, but one might think that following a dramatic negative start to the week that there is unlikely to be much in the way of producer selling in play and that there might be some advantageous industry price fixation buying coming into play, to assist towards some modest buoyancy to be due for early trade today, against the prices set yesterday, as follows: 

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

MAR     2066 – 29                                              MAR   139.10 – 5.30

MAY     2100 – 26                                              MAY    141.10 – 5.15

JUL      2119 – 24                                               JUL    143.45 – 5.05

SEP      2128 – 22                                              SEP    145.75 – 5.05

NOV     2132 – 22                                               DEC   148.90 – 5.05

JAN      2135 – 20                                              MAR   152.00 – 4.95

MAR     2137 – 21                                              MAY   153.85 – 4.95

MAY     2138 – 21                                               JUL    155.40 – 4.95

JUL      2139 – 21                                               SEP    156.95 – 4.85

SEP      2147 – 21                                               DEC   159.05 – 4.90