Coffee Market Report May 01 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 182.93% during the week of trade leading up to Tuesday 25th. April; to switch to and register a short-sold position of 8,745 Lots on the day.  This net short-sold position which is the equivalent of 2,479,169 bags has most likely been little changed to perhaps marginally decreased again, following the late in the day rally within the New York market on Friday. 

The authorities in Vietnam have reported on Friday that the countries coffee exports for the month of April shall most likely prove to be 2.5 million bags, which would contribute to the countries coffee exports of mostly robusta coffees for the first four months of this year to be 8.8% lower than the same period last year, at a total of 10.07 million bags. 

This number with the countries domestic coffee demand now at close to 3 million bags per annum, would indicate the potential to still export in excess of 12 million bag of coffee over the next eight months.   This is however only an average of 1.5 million bags per month and in this respect, would indicate a slowing in Vietnams monthly exports for the third quarter of this year, with Indonesia, India and Uganda having to step in to fill some gaps for the consumer market industries robusta coffee demand. 

The International Coffee Organisation ICO have reported that global coffee exports for the month of March were 2% lower than the same month last year, at a total of 10.72 million bags.  They do however report that despite this dip, the cumulative global coffee exports for the first six months of the present October 2016 to September 2017 coffee year are 4.8% higher than the same period in the previous coffee year, at a total of 60.08 million bags. 

In terms of variety of global coffee exports, the ICO have reported that there was a ratio of 63.57 to 36.43 for arabica coffees to robusta coffees, for the first six months of the present October 2016 to September 2017 coffee year.  This ratio indicating that in terms of what is presumed to be higher share being held by robusta coffees within the consumer market blends, that the prevailing significant consumer market coffee stocks are heavily weighted towards the arabica coffees.  

The July to July contracts arbitrage between the London and New York markets broadened on Friday, to register this at 45.13 usc/Lb., while this equates to 33.83% price discount for the London robusta coffee market.  This still relatively low arbitrage remains not such 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 68 bags on Friday; to register these stocks at 1,408,158 bags.  There was meanwhile a larger in number 4,685 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,875 bags. 

The commodity markets were mixed but overall more positive in trade on Friday and ahead of the long weekend that come with today’s International Workers day holiday for most of the world, with the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat and Gold markets had a day of buoyancy, while the Cocoa, Corn, Soybean and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.98% higher, to see this Index registered at 411.90.  The day starts with the U.S. Dollar steady and trading at 1.293 to Sterling and at 1.089 to the Euro, while North Sea Oil closed on Friday on a steady note and selling at $ 50.60 per barrel. 

The London and New York markets started the day on Friday with early buoyancy, but while the London market maintained its buoyancy into the early afternoon trade, the New York market slipped back to trade around par.  As the afternoon progressed the New York market remained close to par, but with the London market started to add some more value and to take a steady upside track, which was joined late in the day by a rally for the New York market that with the assistance of buy stops being triggered and little in the way of producer selling over the market, became a sharp positive correction for the market.  

The London market ended the on a positive note and with 65.5% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 97.5% of the gains of the day intact.   The London market is close today for the International Workers Day Bank Holiday as are most of the world markets, wot leave the New York market to trade solo for a shortened day’s trade.   However, with the evidence of the speculative sector of the New York market having switched into a net short sold structure and with the market having closed on a high on Friday while producers are mostly on holiday for the day and not available to sell into the market, it is likely that the New York market is due for a cautious steady start for trade today, against the prices set on Friday, as follows: 

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

MAY     1917 + 39                                             MAY   131.05 + 3.95

JUL      1946 + 36                                              JUL    133.40 + 3.90

SEP      1960 + 35                                             SEP    135.75 + 3.85

NOV     1967 + 35                                              DEC   139.35 + 3.90

JAN      1969 + 33                                             MAR   142.75 + 3.85

MAR     1971 + 33                                             MAY   144.95 + 3.85

MAY     1976 + 33                                              JUL    147.00 + 3.80

JUL      1983 + 33                                              SEP    148.95 + 3.80

SEP      1991 + 33                                              DEC   151.30 + 3.85

NOV     1998 + 33                                              MAR   153.60 + 3.90