Coffee Market Report August 22 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 decrease their net short sold position within the market by 123.27% over the week of trade leading up to Tuesday 15th. August; to register a new net long position of 285 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.85%, to register a net long position of 34,225 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 9.65%, to register a net short sold position of 4,120 Lots.  This net short sold position which is the equivalent of 1,168,002 bags has most likely been increased again, following the mixed but overall more negative trade which has since followed and likewise, that of the Managed Money fund sector of the market. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market decrease their net long position within this market by 17.24% during the week of trade leading up to Tuesday 15th. August; to register a net long position of 20,789 Lots.  This net long position which is the equivalent of 3,464,833 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 Rwanda National Agricultural Export Board and working with the countries July 2016 to June 2017 Financial year, have reported that the countries coffee production for the recently completed Financial year were 26,503 bags or 7.94% lower than the previous Financial year, at a total of 307,319 bags.   This resulted and with presumably carryover stocks assisting, in the countries green coffee exports for the July 2016 to June 2017 Financial year to have been only 17,637 bags or 5.41% lower than the previous Financial year, at a total of 308,374 bags. 

With the new Tanzanian coffee harvest now in progress the harvest this year is three to four weeks behind that of last year and with a 25% dip in the new crop parchment receipts, as against the same time last year.   Meanwhile there are a number of forecasts for this new crop, but it would appear in these early days for the new crop that it shall be made up by a 65 to 35 ratio of arabica and robusta coffee, with an approximate total of close to 900,000 bags. 

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 34.03 usc/Lb., while this equates to 26.15% 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 10,401 bags yesterday; to register these stocks at 1,634,124 bags.  There was meanwhile a smaller in number 5,218 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 92,304 bags. 

The commodity markets had a mixed day yesterday, but with the influential oil markets turning south during the day, the overall macro commodity index took a negative track for the day.   The Natural Gas, Sugar, Cocoa, London robusta Coffee, Cotton, Copper, Gold and Silver markets had a day of buoyancy, while the Oil, New York arabica Coffee, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.38% lower, to see this Index registered at 395.44.  The day starts with the U.S. Dollar steady and trading at 1.288 to Sterling and at 1.180 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at $ 51.95 per barrel. 

The London and New York markets started the day yesterday with immediate buoyancy and with both markets taking a positive track into the early afternoon trade, but with the New York market soon starting to come under pressure.  As the afternoon progressed the New York market and with presumably the combination of the news of the liquidation of the speculative and managed money short positions and the negative nature of the overall macro commodity index playing their part, fell deeper into negative territory.   The London market while falling back from its highs and gains of $ 30.00 per metric ton, managed to retain buoyancy and take a positive track through to the close, while the New York market remained on a sideways negative track for the rest of the day. 

The London market ended the day on a positive note and with 60% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 81.6% of the earlier losses of the day intact.   This mixed close and with the charts somewhat supportive for sentiment within the London market, while remaining and negative for the New York market, provides for mixed signals and perhaps a degree of caution for the players within the markets.   Thus, one might expect to see a hesitant close to par start for the London market and perhaps some modest corrective buoyancy for the New York for early trade today, against the prices set yesterday, as follows: 

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

SEP    2141 + 25                                             SEP    126.40 – 1.65

NOV   2119 + 18                                              DEC   130.15 – 1.55

JAN    2080 + 14                                             MAR   133.70 – 1.60

MAR   2067 + 15                                             MAY   136.00 – 1.65

MAY   2069 + 13                                             JUL    138.25 – 1.60

JUL    2086 + 12                                             SEP    140.45 – 1.55

SEP    2093 + 13                                             DEC   143.65 – 1.45

NOV   2105 + 13                                             MAR   146.75 – 1.40

JAN    2111 + 13                                             MAY   148.65 – 1.40

MAR   2116 + 13                                             JUL    150.40 – 1.35