Coffee Market Report April 04 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 122.98% over the week of trade leading up to Tuesday 28th. March; to register a net short position of 1,592 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.16%, to register a net long position of 31,030 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 74.42%, to register net long position of 3,488 Lots.   This net long position which is the equivalent of 988,833 bags has most likely been marginally decreased further, following a period of mixed but overall negative trade that has since followed and likewise, the new net short sold position of the Managed Money fund sector of the market has been marginally increased. 

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 1.12% during the week of trade leading up to Tuesday 28th. March; to register a record net long position of 38,330 Lots.  This net long position which is the equivalent of 6,388,333 bags has most likely been marginally decreased further, following the period of mixed but overall more negative trade that has since followed. 

With the conclusion of the month of March the National Coffee Institute in Honduras has reported that the countries coffee exports for the month were 393,620 bags or 62.12% higher than the same month last year, at a total of 1,027,214 bags.   This surge in the March exports they report, has resulted in the countries cumulative coffee exports for the first six months of the present October 2016 to September 2017 coffee year to be close to 38% higher than the same period in the previous coffee year, at 3.22 million bags. 

These figures from Honduras are however very much in line with the expectations of the National Coffee Institute, who have been predicting coffee exports from this small country and to put it into perspective a country that has a landmass that is only 19.35% of that of Kenya, of well in excess of 6 million bags for this new coffee year.   A very impressive and fruitful result for the countries coffee farmers who over the past few years, have been alike the Colombian farmers, been working with an aggressive farm rejuvenation program and with the planting out of new disease resistant and higher yield varieties of coffee trees.  

The trade ministry in Brazil have reported that the countries coffee exports for the month of March were 290,000 bags or 10.43% lower than the same month last year, at a total of 2.49 million bags.   This did is however not surprising as following last year’s dismal conilon robusta coffee crop in Brazil, there has been a minimal contribution this year to the coffee exports volumes, from the conilon robusta sector of the country’s coffee farmers.    Thus, one would say that in terms of consumer market coffee supply, that the contribution from Brazil arabica coffees remains relatively steady.     

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.64 usc/Lb., while this equates to 29.69% 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 2,417 bags yesterday; to register these stocks at 1,364,014 bags.  There was meanwhile a larger in number 11,184 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 42,354 bags. 

The commodity markets were mostly on a road south yesterday, with the overall macro commodity index taking a negative track for the day.  The Cocoa, London arabica Coffee, Wheat, Corn and Gold markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Orange Juice, Soybean and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.8% lower, to see this Index registered at 414.79.  The day starts with the U.S. Dollar steady and trading at 1.243 to Sterling and at 1.066 to the Euro, while North Sea Oil is near to steady and is selling at $ 51.80 per barrel. 

The London market started the day yesterday on a near to steady note, while the New York market and presumably taking speculative heart from the evidence of the liquidation of fund and speculative longs, started the day with immediate buoyancy.  The London market soon recovered and with both markets taking a modest positive track into the early afternoon trade, when with the added support of buy stops being triggered, the New York market added additional value and with the London market taking a more settled sideways track.   The surge in value for the New York market that peaked with gains of 3.5 usc/Lb. for the day did finally falter and there was a steady erosion for the rest of the day’s trade within this market that took steady downside track into negative territory, while the London market continued on its modestly positive sideways track for the day.   The London market ended the day on a steady note but with only 23.1% of the earlier gains of the day intact, while the New York market ended the day on a soft note and with 82.4% of the losses of the day intact.   This close does little to inspire confidence and contributes to painting a negative technical picture for the markets, which is likely to see the markets due of only a near to steady start for early trade today against the prices set yesterday, as follows: 

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

MAY     2150 + 1                                                 MAY   137.85 – 1.45

JUL      2174 + 3                                                 JUL    140.25 – 1.40

SEP      2184 + 5                                                SEP    142.60 – 1.40

NOV     2188 + 5                                                 DEC   145.95 – 1.40

JAN      2183 + 7                                                MAR   149.10 – 1.40

MAR     2184 + 7                                                MAY   151.20 – 1.40

MAY     2188 + 7                                                 JUL    152.90 – 1.45

JUL      2194 + 4                                                 SEP    154.45 – 1.55

SEP      2202 + 4                                                 DEC   156.55 – 1.55

NOV     2209 + 4                                                 MAR   158.70 – 1.55