Coffee Market Report June 12 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 43.28% during the week of trade leading up to Tuesday 6th. June; to register a net short sold position of 27,011 Lots on the day. This net short-sold position which is the equivalent of 7,657,499 bags has most likely been little changed to perhaps marginally decreased, following the mixed but overall steady trade that has since followed. 

The Brazilian Exporters Association Cecafé have reported that the countries green coffee exports for the month of May were 0.9% lower than the same month last year, at a total of 2.21 million bags.   These exports they comment were mostly related to arabica coffees, with the exports of conilon robusta coffees having been 71.2% lower at a very modest 19.600 bags.   Thus, indicating little change for the month, in terms of arabica coffee exports for the month. 

Adding to the prevailing negative reports towards the fortunes of the New York market on Friday was a report from the Brazilian exporter Comexim, who have forecasted that the new crop that is presently in harvest, shall be approximately 52 million bags.   This they say is only modestly 5.45% lower than their estimates for last year’s crop and is a new crop forecast that falls within the higher end of the range of other new crop forecasts, which are being viewed by the market players.  

The report does however seemingly anticipate rising global coffee consumption, as despite the forecast for a relatively modest decline in production for this year, they foresee global coffee supply deficit for the forthcoming October 2017 to September 2018 to be 4.2 million bags.   However, the report also forecasts the potential for and unforeseen negative weather conditions aside, the follow on 2018 Brazil crop to come to the fore with as much as 65 million bags. 

This latter forecast for the 2018 Brazil crop on the part of Comexim might be seen to be overly ambitions by many, but it does nevertheless follow the line of many other forecasts, which do foresee that so long as weather does not become a factor later in the year and early next year, a significantly larger Brazil coffee crop for next year.   Which is a factor that assists to dampen speculative spirts within the volatile New York market for the present.  

Brazil’s largest coffee cooperative Cooxupé have reported that the cooperative has so far taken delivery of 11.4% of the coffees expected from their members this year, which is a little better than the 9.9% collected at the same time last year.  While they also report that so far the quality of these arabica coffees has been generally of relatively good quality, which would with the later maturing cherries most usually of better overall size and quality, to a reasonable outturn for their member farmers this year.   Albeit that the cooperative does voice concern over the value of the reference prices of the New York market at present, against which they have to price their new crop coffee sales. 

The September to September contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 37.18 usc/Lb., while this equates to 28.85% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,339 bags on Friday; to register these stocks at 1,509,830 bags.  There was meanwhile a larger in number 4,506 bags decline to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,573 bags. 

It was a mixed but mostly more positive day for the commodity markets on Friday, with the overall macro commodity index taking a positive track for the day.    The Oil, Natural Gas, Cocoa, Coffee, Copper, Orange Juice, Corn and Soybean markets had a day of buoyancy, while the Sugar, Cotton, Wheat, 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 0.26% higher, to see this Index registered at 405.68.  The day starts with the U.S. Dollar tending a little softer and trading at 1.274 to Sterling and at 1.121 to the Euro, while North Sea Oil is near to steady in early trade and selling at $ 46.55 per barrel. 

The London market and New York markets started the day on Friday with early buoyancy and maintained this track into the early afternoon trade, which set a positive base for further gains within both markets, as the afternoon progressed.   However, as the day progressed, the London market started to come off the boil and dropped back from the highs, which was followed by the New York market, which fell back more significantly and headed back to par, to take a hesitant sideways track through to the close.   

The London market ended the day on a positive note and with 77.8% of the earlier gains of the day intact, while the New York market ended the day on a steady note, but with only 0.9% of the earlier gains of the day intact.  This close and with the New York market struggling to remain in positive territory does little to inspire and one might think to see little better than a steady start for early trade today against the prices set on Friday, as follows: 

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

JUL    2022 + 19                                            JUL     126.55 + 0.20 

SEP    2021 + 21                                            SEP    128.85 + 0.20

NOV   2011 + 16                                            DEC    131.35 + 0.20

JAN    1991 + 12                                            MAR   135.90 + 0.20

MAR   1976 + 10                                            MAY   138.25 + 0.25

MAY   1975 + 9                                              JUL    140.50 + 0.25

JUL    1988 + 10                                            SEP    142.55 + 0.25

SEP    2000 + 10                                            DEC   145.00 + 0.25

NOV   2007 + 10                                            MAR   147.40 + 0.25

JAN    2014 + 10                                            MAY   148.45 + 0.25