Coffee Market Report March 14 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 decrease their net long position within the market by 39% over the week of trade leading up to Tuesday 7th. March; to register a net long position of 8,780 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.12%, to register a net long position of 31,798 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 22.39%, to register net long position of 14,276 Lots.   This net long position which is the equivalent of 4,047,183 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but overall more marginally more positive 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 increase their net long position within this market by 3.29% during the week of trade leading up to Tuesday 7th. March; to register a record net long position of 39,036 Lots.  This net long position which is the equivalent of 6,506,000 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed. 

The evidence of the more modest long positions being held within the New York market might in terms of the fact that there is in reality only close to stable global coffee supply and ahead of what most forecast to be a smaller new Brazil crop this year, might well inspire some degree of support coming to the fore for the market.  It is however always difficult to predict the funds and there is no certainty that they might wish to go long into the market on the short term, but one might suspect that the New York market might presently be close to the bottom side of the short to medium term trading range and might well add some weight in the coming weeks. 

The May to May contracts arbitrage between the London and New York markets broadened yesterday, to register this at 44.19 usc/Lb., while this equates to 31.04% 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 to decrease by 1,030 bags yesterday; to register these stocks at 1,340,044 bags.  There were meanwhile a larger in number 3,995 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,295 bags. 

The commodity markets had a relatively steady day yesterday, to see the overall macro commodity index taking a modestly positive track for the day.    The Natural Gas, Cocoa, New York arabica Coffee, Copper, Orange Juice, Gold and Silver markets had a day of buoyancy and the Soybean market was steady, while the Oil, Sugar, London robusta Coffee, Cotton, Wheat and Corn markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.36% higher, to see this Index registered at 417.85.  The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.214 to Sterling and at 1.064 to the Euro, while North Sea Oil is steady and is selling at $ 50.00 per barrel. 

The London and New York markets started the day with a degree of buoyancy yesterday and taking a steady track into the early afternoon trade, but as the afternoon progressed both markets came under pressure and headed back into negative territory and to continue south with sell stops being triggered, to post significant losses for both markets.    But as the day progressed and with little in the way of producer selling pressure over the markets, there was a bounce back from the lows and with buy stops being triggered the London market made an almost complete recovery from the relatively dramatic losses, while the New York market moved back into modest positive territory.  The London market ended the day on a modestly negative note but having recovered 83.3% of the earlier losses of the day, while the New York market ended the day on a positive note and with 44.4% of the earlier gains of the day intact.    This close and with the ability of both markets to shrug off the negative pressure that had developed during the day might assist to inspire a degree of confidence and despite the negative influences of the renewed muscle of the U.S. dollar, one might expect to see as steady to perhaps even buoyant start for early trade today against the prices set yesterday, as follows: 

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

MAR     2146 – 7                                                MAR   140.50 + 0.85

MAY     2164 – 6                                                MAY    142.35 + 1.00

JUL      2181 – 5                                                 JUL    144.70 + 1.00

SEP      2191 – 4                                                SEP    146.95 + 0.95

NOV     2194 – 2                                                 DEC   150.25 + 0.95

JAN      2194 – 2                                                MAR   153.55 + 1.00

MAR     2195 – 2                                                MAY   155.65 + 1.00

MAY     2196 – 2                                                 JUL    157.40 + 1.05

JUL      2198 – 2                                                 SEP    159.05 + 1.05

SEP      2206 – 2                                                 DEC   161.25 + 1.00