Coffee Market Report March 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 28.45% over the week of trade leading up to Tuesday 21st. March; to register a net long position of 6,926 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.2%, to register a net long position of 30,976 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their long position within the market by 24.15%, to register net long position of 13,637 Lots.   This net long position which is the equivalent of 3,866,029 bags has most likely been decreased again, following a period of mixed but overall negative trade that 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 2.81% during the week of trade leading up to Tuesday 21st. March; to register a record net long position of 38,766 Lots.  This net long position which is the equivalent of 6,461,000 bags has most likely been marginally increased again, following the period of mixed but overall more positive trade that has since followed. 

With the new Indian arabica coffee crop now well into the new crop harvest and following late last year’s forecast by the well-respected United States Department of Agriculture Foreign Agriculture Service forecast for a 17.7% lower new arabica coffee crop of 1.42 million bags and an 8% lower new robusta coffee crop of 3.75 million bags, the Coffee Board of India is now reported to be forecasting an overall 9% lower new coffee crop to fuel supply for the present October 2016 to September 2017 coffee year.    There is however some debate on the size of this new crop on the part of private trade and industry players as while the USDA talk in terms of a new Indian crop of an overall 10.86% lower new Indian crop of 5.17 million bags, there are many private trade and industry forecasts that point to a marginally higher figure but with now apparently no doubt that India shall have a smaller new coffee coffee crop of between 5.2 to 5.4 million bags this year. 

Post last week’s National Coffee Association annual meeting in the U.S.A. they report a survey that indicates that more Americans are drinking a daily cup of coffee, which is a reversal of four years of decline.   However, the report does indicate that while 29% of the survey respondents had ownership of the more parsimonious single cup coffee brewing machines, that this has now risen to 33% of respondents.   Thus, indicating that while there might be more cups being consumed, that this is possibly not going to directly relate to any dramatic increase in the actual volume of coffee being consumed, within this well-developed traditional coffee market.   

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 40.04 usc/Lb., while this equates to 28.76% 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 4,013 bags yesterday; to register these stocks at 1,346,198 bags.  There was meanwhile a smaller in number 825 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 51,399 bags. 

The commodity markets were mixed but mostly looking a little south yesterday, with the exception of the precious metals and coffee markets, to see the overall macro commodity index taking a softer track for the day.   The Coffee, Gold and Silver markets had a day of buoyancy and the Cocoa markets was relatively steady for the day, while the Oil, Natural Gas, Sugar, Orange Juice, Grains and Copper markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.25% lower, to see this Index registered at 419.21.  The day starts with the U.S. Dollar steady and trading at 1.254 to Sterling and at 1.085 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at $ 50.40 per barrel. 

The London and New York markets started the day yesterday on marginally softer note and taking something of a sideways negative track, into the early afternoon trade.   However, as the afternoon progressed and despite the negative influences of the overall macro commodity index, the London markets bounce off its modest lows and with buy stops being triggered swiftly moved into strong positive territory and shortly followed, by a similar bounce on the part of the New York market, but with the latter market making an impressive but more modest recovery.   Both markets from thereon took something of a sideways track, through to a positive close for the day.   The London market ended the day on a positive note and with 78.3% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 91.4% of the earlier gains of the day intact.   This close assists to paint a more positive technical picture and may prove to be positive for confidence and thus, one might expect that the markets will be set for a relatively steady start for early trade today against the prices set yesterday, as follows: 

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

MAR     2161 + 52

MAY     2186 + 47                                               MAY   139.20 + 1.60

JUL      2208 + 48                                               JUL    141.55 + 1.55

SEP      2219 + 47                                              SEP    143.90 + 1.50

NOV     2222 + 48                                               DEC   147.20 + 1.50

JAN      2215 + 49                                              MAR   150.40 + 1.50

MAR     2215 + 49                                               MAY   152.50 + 1.60

MAY     2218 + 49                                               JUL    154.30 + 1.65

JUL      2220 + 49                                               SEP    155.95 + 1.65

SEP      2228 + 49                                               DEC   158.00 + 1.65

NOV     2200 unch                                              MAR   160.05 + 1.65