Coffee Market Report June 20 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 short sold position within the market by 13.05% over the week of trade leading up to Tuesday 13th. June; to register a new net short-sold position of 30,987 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.78%, to register a net long position of 33,090 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 13.52%, to register a net short sold position of 30,665 Lots.  This net short sold position which is the equivalent of 8,693,392 bags has most likely been further increased, following the mixed but overall more negative trade that has since followed. 

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 1.78% during the week of trade leading up to Tuesday 13th. June; to register a net long position of 18,956 Lots.  This net long position which is the equivalent of 3,159,333 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall more positive trade that has since followed. 

The respected United States Department of Agriculture USDA have reported that the following a record crop of 2.3 million bags for Nicaragua during their last October 2016 to February 2017 harvest, that they forecast a follow-on crop of similar proportions for the next harvest.   The country they report presently produces a ratio of 98% arabica coffees, to 2% of robusta coffees. 

This past Nicaraguan coffee crop the USDA foresee shall fuel exports of in excess of 1.9 million bags for the present October 2016 to September 2017 coffee year, which shall be similar in volume for the forthcoming October 2017 to September 2018 coffee year.  

Reports from Colombia indicate that some districts are still encountering harvest interrupting rains for the incoming Mitaca crop, but seemingly there are coffees steadily coming to the mills and the exporters from many other districts.   Thus, indicating that while the weather interrupting delays have been causing some problems for exporters to keep up with their forward contract commitments, it has not proved to be that serious so far.  It has however limited the volumes of coffees available for prompt shipment new business, which is perhaps not so much a problem ahead of the slow summer roasting season for the mainstream consumer markets.  

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 30.98 usc/Lb., while this equates to a 24.47% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 4,794 bags yesterday; to register these stocks at 1,512,294 bags.  There was meanwhile a larger in number 12,651 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 29,972 bags. 

The commodity markets had a rather dismal day yesterday, with the overall macro commodity index taking a softer track for the day.  The Sugar, New York arabica Coffee, Copper, Wheat and Soybean markets nevertheless had a day of buoyancy, while the Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton, Orange Juice, Corn, 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 0.81% lower, to see this Index registered at 395.05.  The day starts with the U.S. Dollar steady and trading at 1.274 to Sterling and at 1.116 to the Euro, while North Sea Oil is steady and is selling at $ 45.50 per barrel. 

The markets started the day yesterday with the London market trading around par, while the New York market started the day with early buoyancy and with the markets maintaining this track through into the early afternoon trade.  As the afternoon progressed the inverted in nature prompt months within the London market came under some pressure and drifted back into negative territory and taking the forward months on a more modest softer track, while the New York market shed its gains and drifted back to trade around par.   The New York market did however recover in later trade and to move back into positive territory, while the London market bounced back from the lows, to post more modest losses. 

The London market ended the day on a negative note and with 73.9% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 65% of the earlier gains of the day intact.  This close provides little in the way of direction but with the news of the extensive net short positions of the Managed money funds and the speculative sectors of the New York market, one might think that it shall limit the downside for this volatile market and that the markets might be due for a cautious steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    2091 – 18                                            JUL     124.20 + 0.65 

SEP    2108 – 17                                            SEP    126.60 + 0.65

NOV   2087 – 10                                            DEC    130.05 + 0.70

JAN    2058 – 4                                              MAR   133.50 + 0.70

MAR   2035 unch                                          MAY   135.85 + 0.75

MAY   2030 – 1                                              JUL    138.05 + 0.75

JUL    2044 – 2                                              SEP    140.20 + 0.80

SEP    2054 – 2                                              DEC   142.90 + 0.85

NOV   2063 – 2                                              MAR   145.50 + 0.85

JAN    2070 – 2                                              MAY   146.60 + 0.85