Coffee Market Report March 20 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net long position within the market by 23.05% during the week of trade leading up to Tuesday 14th. March; to register a net long position of 10,985 Lots on the day.  This net long position which is the equivalent of 3,114,199 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but overall steady to buoyant trade, which has since followed. 

The temporary ban by India on the importation of six commodities from Vietnam and including coffee, will assist to free up approximately 64,000 bags of Vietnam coffee per month for alternative markets.   However, with these coffees being mostly imported to fuel soluble coffee factories in India which is related to the reexport of value added processed coffees and with these industries needing to fulfil their export commitments, on would expect that they shall just replace supply from alternative origins and that is shall have no marked impact upon the potentially tightening global robusta coffee supply.  

The coffee markets aside from the rising volume of speculation for a new El Nino phenomenon to come into play for the second half of this year, remain devoid of striking fundamental new items and continued to trade within the prevailing narrow trading range last week.   While the latest commitment of traders reports from the volatile New York market would tend to suggest that with little in the way of supportive news, the speculative sector of the market is more focused upon other more exciting commodities for the present. 

The May to May contracts arbitrage between the London and New York markets broadened on Friday, to register this at 42.99 usc/Lb., while this equates to 30.26% 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 increase by 2,333 bags on Friday; to register these stocks at 1,341,092 bags.  There was meanwhile a larger in number 3,704 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,595 bags. 

It was a relatively steady day in the commodity markets on Friday and with the dollar a bit softer and the influential oil markets stabilizing, the overall macro commodity index had a day of buoyancy.   The Oil, Natural Gas, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Gold and Soybean markets had a day of buoyancy and the London robusta Coffee market was steady, while the Sugar, Cocoa and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.23% higher, to see this Index registered at 421.55.  The day starts with the U.S. Dollar close to steady and trading at 1.239 to Sterling and at 1.077 to the Euro, while North Sea Oil is tending softer and is selling at $ 50.20 per barrel. 

The London and New York markets started the day on Friday with a degree of buoyancy yesterday and with both markets taking a hesitant positive track into early afternoon trade, but as the afternoon progressed the London market came under some pressure and fell back into negative territory and with the New York market briefly following suit, but with the New York market mostly maintaining a modestly positive stance.   The London market did however manage to recover and to take a steady track for the end of the day, with the New York market and perhaps assisted by the positive influences of the macro commodity index, maintaining a positive stance for the day.  The London market ended the day on a very modest positive note and with only 14.3% of the modest gains of the day intact, while the New York market ended the day on a positive note and with 63.2% of the earlier gains of the day intact.  This close provides little in the way of direction, but with U.S. dollar tending softer and little in the way of selling aggression on the part of the producers for both markets, one might think that is shall set the markets for a hesitantly steady start for early trade today against the prices set on Friday, as follows: 

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

MAR     2160 unch                                             MAR   140.80 + 1.05

MAY     2184 + 1                                                 MAY   142.05 + 0.60

JUL      2203 + 1                                                 JUL    144.35 + 0.60

SEP      2212 unch                                             SEP    146.65 + 0.65

NOV     2214 – 2                                                 DEC    149.90 + 0.60

JAN      2208 – 1                                                 MAR   153.10 + 0.60

MAR     2207 – 1                                                 MAY   155.15 + 0.60

MAY     2209 unch                                              JUL    156.95 + 0.60

JUL      2211 unch                                              SEP    158.60 + 0.65

SEP      2219 unch                                              DEC   160.65 + 0.60