Coffee Market Report June 27 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 21.04% over the week of trade leading up to Tuesday 20th. June; to register a new net short-sold position of 37,506 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.11%, to register a net long position of 32,391 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 16.41%, to register a net short sold position of 35,699 Lots.  This net short sold position which is the equivalent of 10,120,508 bags has most likely been little changed, following the corrective trade over the past two days, which recovered the losses within this market during mid last week. 

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 13.73% during the week of trade leading up to Tuesday 20th. June; to register a net long position of 21,559 Lots.  This net long position which is the equivalent of 3,593,167 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 evidence of the extensive nature of the speculative and Managed Money net short sold position within the New York market and indicating a degree of selling exhaustion is presently proving to be somewhat supportive of the market for the present, which is now encountering lessening volumes of producer selling out of the already well sold producer bloc of Mexico and Central America.  While with an undeniable smaller new Brazil arabica coffee crop this year and with farmers having a close to a year to sell their coffees before the impact of the next crop, is likely to subdue selling aggression out of Brazil for the coming months and in terms of producer impact or influence upon the fortunes of this market, it is likely to assist to limit the downside potential for this market. 

The London market meanwhile remains buoyed by the fundamental of the prevailing tight supply of robusta coffees and it is clearly reflected by the speculative net long position within this market and the modest nature of the prevailing arbitrage between the London and New York markets, but one would think that with only four and half months until the start of the harvest of a larger new Vietnam robusta coffee crop, that the London market might start to come off the boil in a couple of months’ time.    It remains meanwhile though, the coffee market with relative muscle. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 29.70 usc/Lb., while this equates to a 23.86% 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 745 bags yesterday; to register these stocks at 1,509,158 bags.  There were meanwhile a larger in number 24,490 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 61,796 bags. 

The commodity markets had a mixed day yesterday and with the marginally softer U.S. dollar assisting for stability within many markets, to see the overall macro commodity index taking a modest positive track for the day.  The Oil, Natural Gas, Coffee, Copper, Orange Juice, Corn and Soybean markets had a day of buoyancy and the Cotton market was steady, while the Sugar, Cocoa, 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 0.07%higher, to see this Index registered at 389.76.  The day starts with the U.S. Dollar steady and trading at 1.273 to Sterling and at 1.119 to the Euro, while North Sea Oil is steady and is selling at $ 44.55 per barrel. 

The coffee markets started the day yesterday with follow through buoyancy and with both markets maintaining this positive stance, into the early afternoon trade.  As the afternoon progressed the New York market started to pick up more support and to extend the gains of the day, while the London market maintained an erratic sideways track.   The New York market did however soon hit a ceiling and dipped back to register more modest gains for the day and mirrored by the London market that likewise dipped back from its highs, to see both markets close off the day on a sideways track. 

The London market ended the day on a positive note and with 57.1% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 41.7% of the earlier gains of the day intact.  This close could be seen to be something of a consolidation of the Friday’s recovery for the markets and could be seen to be somewhat supportive for confidence, but one might expect to see some degree of hesitation and perhaps only a steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    2076 + 13                                            JUL     121.95 + 2.00 

SEP    2090 + 12                                            SEP    124.50 + 1.50

NOV   2065 + 9                                               DEC   128.05 + 1.50

JAN    2043 + 13                                            MAR   131.50 + 1.45

MAR   2031 + 18                                            MAY   133.90 + 1.50

MAY   2034 + 18                                            JUL    136.10 + 1.45

JUL    2056 + 17                                            SEP    138.20 + 1.40

SEP    2074 + 17                                            DEC   141.00 + 1.40

NOV   2083 + 17                                            MAR   143.75 + 1.35

JAN    2090 + 17                                            MAY   145.40 + 1.35