Coffee Market Report January 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 33.16% over the week of trade leading up to Tuesday 27th. December; to register a net long position of 12,706 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.33%, to register a net long position of 35,075 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 47.28%, to register net long position of 7,811 Lots.   This net long position which is the equivalent of 2,214,384 bags has most likely been increased again, following the period of mixed but overall more positive 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 4.6% during the week of trade leading up to Tuesday 27th. December; to register a long position of 31,951 Lots.  This net long position which is the equivalent of 5,326,500 bags has most likely been little marginally increased again, following the period of mixed but overall more positive trade that has since followed. 

The Coffee Federation in Colombia have reported that the country’s coffee production for the month of December were 135,000 bags or 9.31% lower than the same month in the previous year, at a total of 1,319,000 bags.  This dip in production does however follow a good performance in November and has contributed to the countries cumulative production the first three months of the new October 2016 to September 2017 coffee year to being 196,000 bags or 4.70% higher than the same period in the previous coffee year, at a total of 4,367,000 bags. 

In terms of exports, the Coffee Federation in Colombia have reported that the country’s coffee exports for the month of December were 275,000 bags or 22.99% higher than the same month in the previous year, at a total of 1,471,000 bags.  This improved performance contributes to the countries cumulative exports for the first three months of the new October 2016 to September 2017 coffee year to being 434,000 bags or 12.28% higher than the same period in the previous coffee year, at a total of 3,968,000 bags. 

The National Coffee Council in Costa Rica have reported that the countries coffee exports for the month of December were 11,039 bags or 26.11% less than the same month in the previous year, at a total of 31,247 bags.   This modest number contributes to the countries cumulative coffee exports for the first the first three months of the new October 2016 to September 2017 coffee year to being 5,953 bags or 6.33% less than the same period in the previous coffee year, at a total of 88,143 bags. 

The National Coffee Council in Honduras have reported that the countries coffee exports for the month of December were 200,122 bags or 63.86% higher than the same month in the previous year, at a total of 513,477 bags.   This improved volume has contributed to the countries cumulative coffee exports for the first three months of the present October 2016 to September 2017 coffee year to being 304,774 bags or 72.11% higher than the same period in the previous coffee year, at a total of 727,421 bags. 

With the evidence of the forward contracts already in hand and despite there only being three more weeks of commercial activity within the country before the closing on the 26th. January for the Tet New Year (Year of the Rooster) holidays, the trade within the country are already forecasting coffee exports of mostly robusta coffees for the month of approximately 3 million bags.    This with the soon to be completed and forecasted to be a smaller new crop of around marginally in excess of 26 million bags might be seen to be a somewhat ambitious number, but with good consumer market short to medium term demand for robusta coffees in play and the reference prices of the London market favourable for good internal market value, it is still a somewhat realistic number to forecast. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday, to register this at 41.06 usc/Lb., while this equates to a 29.88% price discount for the London robusta coffee market.  This narrowing arbitrage is now becoming less of an attractive factor for the 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 4,600 bags yesterday; to register these stocks at 1,249,979 bags.  There was meanwhile a smaller in number 1,995 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 45,993 bags. 

The Certified Robusta coffee stocks held against the London Exchange were seen to increase by 44,000 bags or 1.86% over the week of trade leading up to Monday 2nd. January, to register these stocks at 2,404,467 bags, on the day. 

The commodity markets had a mixed day yesterday but with the renewed muscle of the U.S. dollar tending to dampen spirits within many markets, to see the overall macro commodity index struggling to remain close to par.   The Sugar, Cocoa, New York arabica Coffee, Cotton, Wheat, Corn, Gold and Silver markets had a day of buoyancy, while the Oil, Natural Gas, London robusta Coffee, Copper, Orange Juice and Soybean markets had a softer day’s trade.    The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.23% higher; to see this Index registered at 421.61.   The day starts with the U.S. dollar showing some degree of buoyancy and trading at 1.224 to Sterling and 1.041 to the Euro, while North Sea Oil is steady and is selling at $ 54.70 per barrel. 

The London market started the day close to par yesterday, while the New York market showed early buoyancy and started to increase its value into the early afternoon trade, but with the London market remaining marginally south of par.   However, as the afternoon progressed the New York market started to come under pressure, to join the London market in negative territory.   The New York market having headed south attracted sell stops and dipped further into negative territory and with losses of 2.65 usc/Lb., while the London market took a modestly negative sideways track, but with the New York market recovering in late trade and moving back into modest positive territory.   The London market ended the day on a soft note and with 60.9% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 17.5% of the earlier gains of the day intact.  The late in the day recovery for the more volatile New York market might be seen to be supportive for confidence and one might expect to see a steady start for early trade today against the prices set yesterday, as follows: 

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

JAN      2137 – 22

MAR     2124 – 14                                               MAR   137.40 + 0.35

MAY     2131 – 13                                               MAY   139.70 + 0.30

JUL      2139 – 10                                               JUL     142.00 + 0.30

SEP      2143 – 9                                                SEP     143.95 + 0.25

NOV     2144 – 7                                                 DEC    146.85 + 0.15

JAN      2142 – 7                                                 MAR   149.75 + 0.15

MAR     2143 – 7                                                 MAY   151.45 + 0.15

MAY     2148 – 7                                                 JUL    153.10 + 0.20

JUL      2158 – 7                                                 SEP    154.80 + 0.20