Coffee Market Report July 03 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 18.92% during the week of trade leading up to Tuesday 27th. June; to register a net short sold position of 42,454 Lots on the day. This net short-sold position which is the equivalent of 12,035,521 bags has most likely been little changed to perhaps marginally decreased, following the period of mixed but overall more positive trade, which has since followed. 

The Indonesia government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of June were 26,402 bags or 9.78% higher than the same month in the previous year, at a total of 296,287 bags.   This contributes to the cumulative Sumatran robusta coffee exports for the first nine months of the present October 2016 to September 2017 coffee year to being 431,197 bags or 19.8% higher than the same period in the previous coffee year, at a total of 2,608,853 bags. 

It has to be noted though that while robusta coffee exports for the present 2016/ 2017 coffee year from Sumatra are so far posting a significant increase over the volumes exported during the previous 2015/2016 coffee year, that this latter 2015 to 2016 coffee year registered 50.49% lower exports than the previous 2014/ 2015 coffee year.   However, with the new crop now coming in and forecasted to be a larger new crop, one can expect that the islands monthly export volumes shall continue to improve and that by October, one shall see a much-improved performance for the present 2016/2017 coffee year.   But unlikely to get close to matching the 5.3 million bags exported during the 2014/2015 coffee year.   

The International Coffee Organisation have reported that global coffee exports for the month of May were 8.8% higher than the same month last year, at a total of 10.88 million bags.    This they report has contributed to the cumulative global coffee exports for the first eight months of the present October 2016 to September 2017 coffee year to be 5% higher than the same period in the previous coffee year, at a total of 81.32 million bags.   These cumulative exports made up by a 62.85 to 37.15 ratio, of arabica and robusta coffees. 

One might speculate though, that with the Mexicans and Central Americans seemingly already well sold and with a smaller new Brazil crop this year and along with the potential for declining export volumes for the next four months from Vietnam, that the global coffee export volumes for the present coffee year shall start to fall back to closer to those of the previous coffee year.  But in the meantime, the increased volumes for the first eight months of the present coffee year, have contributed to the prevailing relatively high levels of consumer market coffee stocks.   

West Africa’s largest robusta coffee producer the Ivory Coast have reported that the countries coffee exports for the first five months of this year were 260,817 bags or 51.94% lower than the same period in the previous year, at a total of 241,367 bags.   This number somewhat surprisingly low in terms of earlier forecasts for exports of close to a million bags for this year and in terms of the prevailing buoyancy for the reference prices of the London market, which should be encouraging for sales.  

The September to September contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 28.22 usc/Lb., while this equates to a 22.45% 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 6,605 bags on Friday; to register these stocks at 1,515,282 bags.  There were meanwhile a larger in number 14,657 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 51,522 bags. 

The commodity markets were mixed in trade on Friday and despite some stability for the U.S. dollar through the day many markets had a positive day’s trade, with the overall macro commodity index taking a positive track for the day.   The Oil, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas, New York arabica Coffee, 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 1.77%higher, to see this Index registered at 402.05.  The day starts with the U.S. Dollar steady and trading at 1.300 to Sterling and at 1.141 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at $ 47.60 per barrel. 

The coffee markets started the day on Friday with both markets encountering buoyancy, to see the markets take a positive track into the early afternoon trade.   As the afternoon progressed the London market and lacking producer selling aggression over the market, started to add more value and followed by some added value within the New York market.   However, while the London market hit something of a ceiling and lost a little weight prior to taking a sideways positive track for the day, the New York market lost all its gains and fell back below par and to take a softer sideways track through to the close.   

The London market ended the day on a positive note and with 37.8% of its earlier gains of the day intact, while the New York market ended the day on a negative note and with 65% of the earlier losses of the day intact.  The somewhat unexpected mixed close might not however have an impact upon confidence, as with the evidence of the weight of speculative net short sales within the New York market, the New York market still looks to be somewhat oversold.   Thus, one might think that ahead of tomorrow’s Independence Day holiday in New York, that it shall assist to inspire a steady start for both markets for early trade today, against the price set yesterday, as follows: 

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

JUL    2158 + 36                                            JUL     124.05 – 0.70 

SEP    2149 + 17                                            SEP    125.70 – 0.65

NOV   2127 + 20                                             DEC   129.20 – 0.65

JAN    2095 + 15                                            MAR   132.75 – 0.60

MAR   2081 + 20                                            MAY   135.10 – 0.55

MAY   2087 + 24                                            JUL    137.25 – 0.55

JUL    2104 + 24                                            SEP    139.30 – 0.50

SEP    2115 + 18                                            DEC   142.15 – 0.45

NOV   2100 + 2                                              MAR   144.95 – 0.35

JAN    2107 + 2                                              MAY   146.60 – 0.35