Coffee Market Report April 11 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 short sold position within the market by 15.95% over the week of trade leading up to Tuesday 4th. April; to register a net short position of 1,846 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 4.33%, to register a net long position of 29,686 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 22.51%, to register net long position of 2,703 Lots.   This net long position which is the equivalent of 766,289 bags has most likely been marginally increased again, following a period of mixed but overall positive trade that has since followed and likewise, the new net short sold position of the Managed Money fund sector of the market might well have been liquidated. 

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 23.21% during the week of trade leading up to Tuesday 4th. April; to register a net long position of 47,226 Lots.  This net long position which is the equivalent of 7,871,000 bags has most likely been little changed, following the period of mixed but overall steady trade that has since followed. 

The Vietnam Customs authorities who had estimated on the 29th. March that the countries coffee exports of mostly robusta coffees for the month of March would be 3 million bags, have now announced that these exports were in fact approximately 2.8 million bags, which is still higher than what most of the private trade had forecasted for the month.   These exports for the month of March would contribute to the countries coffee exports for the first three months of this year, to have been close to 7.6 million bags. 

These export volumes from Vietnam are however with internal market farm stocks foreseen to be relatively modest, expected to start tailing off in the coming months.   But with the advent of the new Indonesian robusta coffee crop that is due to start coming to the market in volume for May onwards, there is presently no concern over medium terms robusta coffee supply. 

The well-respected commodity bank Rabobank, who on the basis of the forecasted dip in the new Brazil arabica coffee crop for this year, have revised their global coffee supply forecast for the coming October 2017 to September 2018 coffee year to 153 million bags.  As against this they have forecasted rising global coffee consumption to be as high as 158.4 million bags, which would indicate a global coffee supply deficit for the coming coffee year of 5.3 million bags.    This report being somewhat supportive for market sentiment. 

One might comment that most trade and industry reports agree that there shall be a deficit coffee supply for the forthcoming October 2017 to September 2018 coffee year and a factor that most probably shall assist to buoy terminal market prices for the second half of the year, which might encourage the producers who are overall low in stocks to increase their price resistance and to look to build up some stocks.   A factor that would assist to support the presently relatively soft New York market, while maintaining the relatively strong stance that is being taken by the London market for the present. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 43.27 usc/Lb., while this equates to 30.44% 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 5,783 bags yesterday; to register these stocks at 1,380,265 bags.  There was meanwhile a smaller in number 4,759 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 63,565 bags. 

The commodity markets worked with a strong dollar again yesterday to dampen upside spirits within many markets, to see the overall macro commodity index taking a hesitant sideways track for the day.   The Oil, Cotton, Orange Juice, Wheat and Corn markets had a day of buoyancy and the New York arabica Coffee market was close to steady for the day, while the Natural Gas, Sugar, Cocoa, London robusta Coffee, Copper, Soybean, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.15% lower, to see this Index registered at 417.42.  The day starts with the U.S. Dollar steady and trading at 1.241 to Sterling and at 1.058 to the Euro, while North Sea Oil is steady and is selling at $ 54.75 per barrel. 

The London and New York markets started the day yesterday on a softer note and with both markets taking a softer track into the early afternoon trade, when the New York market started to attract support and to move back into positive territory.   As the afternoon progressed the London market recovered and moved back to par but to dip back into negative territory for late trade, while the New York market shed its gains and moved back into modest negative territory.   The London market ended the day on a soft note and with 70% of the earlier losses of the day intact, while the New York market ended the day on a marginally softer note and with 25% of the earlier losses of the day intact.  This close is somewhat indecisive in nature and one might see it as more a down day for the presently sideways in nature markets and one might not expect to see any follow through negative pressure, but rather to see a hesitantly steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY     2154 – 16                                             MAY   139.85 – 0.20

JUL      2180 – 14                                              JUL    142.15 – 0.25

SEP      2185 – 14                                             SEP    144.50 – 0.25

NOV     2185 – 15                                              DEC   147.90 – 0.25

JAN      2181 – 14                                             MAR   151.20 – 0.15

MAR     2183 – 14                                             MAY   153.40 – 0.15

MAY     2187 – 14                                              JUL    155.25 unch

JUL      2195 – 14                                              SEP    156.80 + 0.05

SEP      2203 – 14                                              DEC   158.95 + 0.10

NOV     2210 – 14                                              MAR   161.05 + 0.10