Coffee Market Report March 21 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 38.59% over the week of trade leading up to Tuesday 14th. March; to register a net long position of 5,392 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 3.39%, to register a net long position of 30,612 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 23.05%, to register net long position of 10,985 Lots.   This net long position which is the equivalent of 3,114,199 bags has most likely been increased again, following yesterday’s correction that followed a period of overall sideways 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 3.41% during the week of trade leading up to Tuesday 14th. March; to register a record net long position of 37,705 Lots.  This net long position which is the equivalent of 6,284,167 bags has most likely been marginally increased again, following the period of mixed but overall positive trade that has since followed. 

The evidence of the lower than expected fund and speculative exposure within the volatile New York market and in terms of the general perspective that a more modest Brazil arabica coffee crop this year shall tighten up the present small arabica coffee supply surplus, has seemingly inspired some degree of positive reaction in trade for the New York market yesterday.   While the relatively firm London market followed this correction in a more modest manner, with this latter market experiencing a more modest positive correction for the day.  

The May to May contracts arbitrage between the London and New York markets broadened yesterday, to register this at 45.64 usc/Lb., while this equates to 31.42% 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 1,140 bags yesterday; to register these stocks at 1,342,232 bags.  There was meanwhile a larger in number 2,467 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,128 bags. 

The commodity markets encountered a degree of stability for the U.S. Dollar yesterday which took some of the lustre out of some of the markets, but the overall macro commodity index did nevertheless have a modestly positive day.    The Natural Gas, Cocoa, Coffee, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Oil, Sugar, Cotton, Copper, 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 0.28% higher, to see this Index registered at 422.74.  The day starts with the U.S. Dollar near to steady and trading at 1.235 to Sterling and at 1.076 to the Euro, while North Sea Oil is steady and is selling at $ 50.75 per barrel. 

The London market started the day yesterday on a near to steady note, while the New York market started the day marginally on the positive side of par and to see the markets maintain this mixed track either side of par, into the early afternoon trade.  As the afternoon progressed the New York market started to add some value and with the London market with only thin producer selling over the market moved back into modest positive territory.   The positive nature of trade within the New York market and with sentiment seemingly supported by the latest commitment of trader’s report for the market triggered buy stops and further gains but to soon hit a ceiling, while the London market added a little more value and with both market taking an erratic sideways track for the rest of the day’s trade.   The London market continued to end the day on a positive note and with 92.3% of the earlier gains of the day, while the New York market ended on a likewise positive note and with 94.1% of the earlier gains of the day intact.   This correction and the positive close is likely to paint a better technical picture for the markets and is likely to inspire some degree of confidence and could well set the markets for a steady start for early trade today against the prices set yesterday, as follows: 

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

MAR     2174 + 14                                              MAR   144.00 + 3.20

MAY     2196 + 12                                               MAY   145.25 + 3.20

JUL      2214 + 11                                               JUL    147.60 + 3.25

SEP      2224 + 12                                              SEP    149.90 + 3.25

NOV     2227 + 13                                               DEC   153.15 + 3.25

JAN      2220 + 12                                               MAR   156.35 + 3.25

MAR     2219 + 12                                               MAY   158.40 + 3.25

MAY     2221 + 12                                               JUL    160.20 + 3.25

JUL      2223 + 12                                               SEP    161.80 + 3.20

SEP      2231 + 12                                               DEC   163.85 + 3.20