Coffee Market Report May 08 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 44.7% during the week of trade leading up to Tuesday 2nd. May; to register a net short sold position of 12,654 Lots on the day. This net short-sold position which is the equivalent of 3,587,353 bags has most likely been little changed to perhaps marginally decreased again, following the mixed but overall sideways trade that has since followed. 

The Colombian Coffee Federation have reported that the countries coffee production for the month of April was 209,000 bags or 20.04% lower than the same month last year, at a total of 834,000 bags.   This dip in production does however follow many months of improved production volumes and contributes to the countries cumulative coffee production for the first seven months of the present October 2016 to September 2017 coffee year to being 443,000 bags or 5.28% higher than the same period in the previous coffee year, at a total of 8,833,000 bags. 

In terms of coffee exports from Colombia the Coffee Federation have reported that the countries coffee exports for the month of April were 30,000 bags or 3.31% higher than the same month last year, at a total of 936,000 bags.   This contributes to the countries cumulative exports for the first seven months of the present October 2016 to September 2017 coffee year to being 635,000 bags or 8.21% higher than the same period in the previous coffee year, at a total of 8,369,000 bags. 

These are despite the dip in production for the month of April, still impressive figures, albeit that it does seemingly indicate a slow start to this year’s Mitaca crop this year.   It is however, still early days for this two crop producer in terms of the usually smaller Mitaca crop, to speculate that the country might still not end the coffee year with production at close to 15 million bags.   

Colombian coffees that are competing within the mainstream consumer markets with what have been overall good flows of fine washed arabica coffees from the neighbouring producer bloc of Mexico and Central America and shortly, from the flow of new crop fine washed arabica coffees from Peru and into what is seen to be well stocks consumer market.    But with talks of dry weather from some of the Colombian coffee districts in recent weeks, there will no doubt be keen interest foreseen for the coffee production levels that shall be reported over the coming three months. 

The July to July contracts arbitrage between the London and New York markets broadened on Friday, to register this at 44.89 usc/Lb., while this equates to 33.08% 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 1,735 bags on Friday; to register these stocks at 1,413,116 bags.    There was meanwhile a larger in number 4,810 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 26,055 bags. 

The commodity markets mixed in trade on Friday, with many markets attracting some buoyancy and the overall macro commodity index taking a positive track for the day.    The Oil, Natural Gas, Cocoa, Coffee, Copper, Wheat, Corn and Soybean markets had a positive day’s trade, while the Sugar, Cotton, Orange Juice, Gold and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.39% higher, to see this Index registered at 404.84.  The day starts with the U.S. Dollar tending softer and trading at 1.297 to Sterling and at 1.098 to the Euro, while North Sea Oil is steady and is selling at $ 47.95 per barrel. 

The London and New York market started the day on Friday with early buoyancy but with both markets soon drifting back to par and taking an uncertain hesitant track into the early afternoon trade, with the London market tending to maintain a steadier stance.   As the afternoon progressed the New York came under some pressure and headed into negative territory, but to soon recover and take a modestly positive track into the late in the day trade.  

The London market ended the day on a positive note and with 66.7% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 57.7% of the earlier gains of the day intact.   This close and with the markets holding steady later in the day assists to steady the technical picture of the markets and might assist to buoy sentiment within the markets for early trade today and to set the markets for a steady start, against the prices set on Friday, as follows: 

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

MAY     1977 + 10                                              MAY   133.10 + 0.40

JUL      2002 + 10                                              JUL    135.70 + 0.75

SEP      2019 + 10                                             SEP    138.00 + 0.70

NOV     2027 + 10                                              DEC   141.50 + 0.70

JAN      2030 + 8                                               MAR   145.00 + 0.75

MAR     2030 + 8                                               MAY   147.20 + 0.75

MAY     2030 + 8                                                JUL    149.20 + 0.65

JUL      2040 + 8                                                SEP    151.10 + 0.60

SEP      2048 + 8                                                DEC   153.55 + 0.70

NOV     2055 + 8                                                MAR   155.80 + 0.65