Coffee Market Report January 17 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 60.29% over the week of trade leading up to Tuesday 10th. January; to register a net long position of 13,565 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.26%, to register a net long position of 34,184 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 116.24%, to register net long position of 11,037 Lots.   This net long position which is the equivalent of 3,128,941 bags has most likely been marginally increased, 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 increase their net long position within this market by 13.96% during the week of trade leading up to Tuesday 10th. January; to register a long position of 39,171 Lots.  This net long position which is the equivalent of 6,528,500 bags has most likely been increased further, following the period of mixed but overall more positive trade that has since followed. 

West Africa’s leading robusta coffee producer the Ivory Coast have reported that the countries coffee exports for the first eleven months of last year and up to end of November were 216,917 bags or 22.75% higher than the same period in the previous year, at a total of 1,170,550 bags.  This increase is more than likely more related to the improved reference prices of the London robusta coffee market than to an improved crop, while it is noted that with only one month to go for the year, it still falls well short of the forecasted exports for the year of close to 1.5 million bags.   

The London robusta coffee market and following the dismal deficit Brazil conilon robusta coffee crop last year that has eliminated approximately 3.5 million bags of robusta coffee supply to the consumer markets and along with a smaller new Vietnam crop that is now coming to completion, is now looking to the prevailing mostly hot and dry weather in the leading Brazil conilon state of Espiritu Santo.   This is aside from the debate within Brazil on the possibility of lifting legislation that does not allow the Brazilian domestic industry to import cheaper robusta coffees to supplement the tight internal market supply of conilon robusta coffees and both factors, are tending to provide support for sentiment within the London market.   

The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 48.01 usc/Lb., while this equates to a 32.16% 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 6,077 bags yesterday; to register these stocks at 1,285,285 bags.  There was meanwhile a smaller in number 4,382 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 40,117 bags. 

The commodity markets lacked the participation of the dominant North American markets yesterday, which was taking the Martin Luther King Junior holiday, to provide little in the way of overall direction for the day’s trade.  While hose markets that were trading for the day, provided for a mixed day and the smaller overall macro commodity index taking something of a sideways track for the day.   The Natural Gas, London robusta Coffee, Soybean, Gold and Silver markets are on a positive track and the Oil, Cotton, Wheat and Corn markets are steady, while the Sugar, Cocoa, Copper and Orange Juice markets are tending softer.   There was with the U.S.A. off the field of play no change to the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets, which saw this Index last registered at 432.22.   The day starts with the U.S. dollar tending softer and trading at 1.212 to Sterling and 1.066 to the Euro, while North Sea Oil is steady and is selling at $ 54.40 per barrel. 

The New York market was off the field of play yesterday, while the London market started the day yesterday on a steady note and remained steady into the early afternoon trade, when confidence started to build and the market started to show some buoyancy.    As the afternoon progressed the market seemingly took heart from this positive track and set off for a late in the day positive upside track and to take the market, towards a relatively strong close.   The London market ended the day on a very positive note, with 86.1% of the gains of the day intact.   This close and with the charts tending to paint a positive picture for both markets might assist to buoy confidence and one might expect to see something of a steady start for the London market and perhaps some catch up buoyancy for the New York market for early trade today against the prices set in London yesterday and in New York on Friday, as follows: 

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

JAN      2241 + 27  

MAR     2233 + 31                                               MAR   149.30 – 0.30

MAY     2235 + 28                                               MAY   151.70 – 0.30

JUL      2238 + 24                                               JUL    154.00 – 0.30

SEP      2240 + 22                                              SEP     156.25 – 0.25

NOV     2240 + 22                                               DEC    159.30 – 0.25

JAN      2240 + 24                                               MAR   162.20 – 0.25

MAR     2239 + 24                                               MAY   163.85 – 0.30

MAY     2241 + 24                                               JUL    165.40 – 0.35

JUL      2251 + 24                                               SEP    166.90 – 0.40