Coffee Market Report May 03 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 and liquidate their previous net long position within the market by 272.69% over the week of trade leading up to Tuesday 25th. April; to register a new net short-sold position of 8,769 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.23%, to register a net long position of 31,460 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased and liquidated their net long position within the market by 182.94%, to register a new net short-sold position of 8,745 Lots.   This net short sold position which is the equivalent of 2,479,169 bags and following the period of mixed but overall more positive trade over the recent days, has most likely been marginally reduced and likewise, that of the Managed Money fund sector of the market. 

The National Coffee Institute in Honduras have reported that the countries coffee exports for the month of April were 108,196 bags or 15.17% higher than the same month last year, at a total of 821,318 bags.   This improved performance they report, has contributed to the countries cumulative exports for the first seven months of the present October 2016 to September 2017 coffee year to be 32.5% higher than the same period in the previous coffee year, at a total of 4.04 million bags. 

There might however be some question over the seven-month export figure from Honduras of 4.04 million bags, as if one is to add the month by month coffee export reports from Honduras for the past seven months, the total adds up to a higher number of 4,417,597 bags.   In the meantime, the National Coffee Institute in Honduras say that they are targeting coffee exports for the present coffee year of well in excess of 6 million bags, which would indicate that one can expect good volumes of Honduras coffees still to come to the consumer markets in the coming months.   

The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of April were 22,307 bags or 13.11% lower than the same month last year, at a total of 147,862 bags.   This has contributed to the countries cumulative coffee exports for the first seven months of the present October 2016 to September 2017 coffee year to be 62,224 bags or 9.44% lower than the same period in the previous coffee year, at a total of 596,710 bags.   

The Trade Ministry in Brazil have reported that the countries coffee exports for the month of April were 303,354 bags or 13.59% lower than the same month last year, at a total of 1,928,889 bags.  This lower number does however not really cause any short-term concerns ahead of what is foreseen to be a larger new arabica coffee crop that is due to start in the coming weeks, as with the mainstream consumer market coffee stocks significantly high, there are no short to medium term concerns over global arabica coffee supply.  

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 45.76 usc/Lb., while this equates to 33.59% 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 845 bags yesterday; to register these stocks at 1,410,978 bags.  There was meanwhile a larger in number 1,990 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 14,185 bags. 

The commodity markets were somewhat on a back track yesterday, with most markets tending softer and the overall macro commodity index coming under pressure for the day.  The Coffee, Cotton and Gold markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, Copper, Orange Juice, Wheat, 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 0.48% lower, to see this Index registered at 410.12.  The day starts with the U.S. Dollar steady and trading at 1.289 to Sterling and at 1.092 to the Euro, while North Sea Oil is steady and is selling at $ 49.05 per barrel. 

The London market predictably post the long weekend and the firmer stance taken within the New York market started the day with immediate buoyancy, while the New York market started the day trading close to par and with the markets maintaining this stance into the early afternoon trade.    As the afternoon progressed and with the Americans entering the field of play the New York market started to come under pressure and to head south into negative territory, but with the London market managing to maintain its buoyancy.   The London market continued on a positive track for the rest of the day and with the New York market having bounced off its lows and losses of 2.6 usc/Lb., crawled its way back in late trade and into modest positive territory. 

The London market ended the day on a very positive note and with 86% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 50% of the gains of the day intact.   This close and with the ability of the New York market to shrug off the earlier in the day negative pressures is perhaps somewhat constructive for confidence and one might expect to see a steady start due for early trade today against the prices set yesterday, as follows: 

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

MAY     1962 + 45                                             MAY   134.00 + 0.40

JUL      1995 + 49                                              JUL    136.25 + 0.40

SEP      2009 + 49                                             SEP    138.55 + 0.40

NOV     2017 + 50                                              DEC   142.05 + 0.35

JAN      2019 + 50                                             MAR   145.50 + 0.35

MAR     2017 + 46                                             MAY   147.70 + 0.35

MAY     2020 + 44                                              JUL    149.75 + 0.35

JUL      2030 + 47                                              SEP    151.70 + 0.35

SEP      2038 + 47                                              DEC   154.05 + 0.35

NOV     2045 + 47                                              MAR   156.35 + 0.35