Coffee Market Report April 18 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 48.35% during the week of trade leading up to Tuesday 11th. April; to register a net long position of 4,009 Lots on the day.  This net long position which is the equivalent of 1,136,534 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall more slightly more positive trade, which has since followed. 

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 3.85% during the week of trade leading up to Tuesday 11th. April; to register a net long position of 49,043 Lots.  This net long position which is the equivalent of 8,173,833 bags has most likely been little changed to perhaps marginally reduced again, following the period of mixed but overall softer trade that has since followed. 

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks increased by 279,083 bags or 4.33% during the month of March, to register these stocks at 6,724,857 bags at the end of the month.   This is the record highest figure for the these stocks, since this data started being recorded and assessed in January 2002.   

These stocks do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of 560,000 bags per week, would conservatively have been at least 1.1 million bags. If one is to consider the additional unreported stocks the end month stocks would equate to approximately 7.82 million bags, it would have equated to something in the order of 14 weeks of roasting activity.  This number may be considered a very safe reserve, in combination with the steady flow of new crop arabica coffees from Colombia, Central America, and Vietnam that are presently coming to the market and soon to be followed, but the new Indonesian and Brazil crop coffees.   

It is so far, the evidence of these North American stocks that accompany similar reports of relatively high levels of stock being held within Europe and Japan, that continues to side-line the many forecasts of deficit global coffee supply for the coming year.   Albeit that this perspective for tightening producer bloc coffee supply is related to the assumption of perfect weather conditions, which is often an unlikely scenario and does leave the markets open to a potentially sharp speculative reaction to any unforeseen weather issues developing for any of the main producer blocs over the coming months. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 44.93 usc/Lb., while this equates to 31.31% 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 4,570 bags yesterday; to register these stocks at 1,404,031 bags.  There was meanwhile a larger in number 8,206 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,331 bags. 

The commodity markets were in receipt of positive economic figures out of China yesterday, which can be expected to be supportive for buoyancy within selected markets, but with the European markets closed for the extended Easter long weekend yesterday, there was no real overall macro commodity index to adjudge direction for the day.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.05% lower, to see this Index registered at 418.61.  The day starts with the U.S. Dollar near to steady and trading at 1.257 to Sterling and at 1.065 to the Euro, while North Sea Oil is near to steady and is selling at $ 54.55 per barrel. 

The London market remained on holiday yesterday for the Easter Monday celebrations, while the New York market started the day with a late start and for a shortened day’s trade.   The New York market did however seemingly gain some heart from the hesitantly positive close to the shortened week on Thursday last week and lacking much in the way of producer selling activity over the market, took a positive track for the day and stepped up a little in terms of the prevailing range bound sideways trade that has been experienced over the past few weeks.   The New York market and despite the shortened day and with many players on holiday and off the field of play, had a surprisingly active day and with the market ending the day on a positive note and with 83.3% of the earlier gains of the day intact.   This close might be seen to be positive for confidence and is likely to set the markets for a catch up positive start for the post-holiday London market and  near to steady start for the New York market for early trade today against the prices set in London on Thursday last week and in New York yesterday, as follows: 

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

MAY     2145 – 12                                             MAY   141.10 + 2.20

JUL      2173 – 10                                              JUL    143.50 + 2.25

SEP      2180 – 10                                             SEP    145.75 + 2.20

NOV     2181 – 9                                                DEC   149.20 + 2.20

JAN      2177 – 9                                               MAR   152.60 + 2.25

MAR     2175 – 13                                             MAY   154.70 + 2.20

MAY     2177 – 15                                              JUL    156.55 + 2.25

JUL      2185 – 15                                              SEP    158.20 + 2.25

SEP      2193 – 15                                              DEC   160.35 + 2.20

NOV     2200 – 15                                              MAR   162.45 + 2.15