Coffee Market Report August 29 2017
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 0.72% during the week of trade leading up to Tuesday 22nd. August; to register a net long position of 20,640 Lots. This net long position which is the equivalent of 3,440,000 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 General Statistics Office in Vietnam have forecasted that with the month of August coming to an end and with export registrations for the month in hand, that the countries coffee exports of mostly robusta coffees for the month shall be relatively modest 1.583 million bags. This slow export performance they say, shall contribute to Vietnam’s coffee exports for the first eight months of this year to be 19.4% lower than the same period in the previous year, at a total of only 17.1 million bags.
However, despite the 19.4% dip in coffee exports from Vietnam so far, this year, the Vietnam Customs authorities are quoted to say that there was a 30.4% increase in the value of the exports for this year so far, compared to the same period last year. Thus, indicating that in terms of farmers farm gate income and despite the smaller crop that came in over October 2016 to January 2017, that it has not been such a bad year.
While with Vietnam now holding minimal coffee stock levels and likely to have only very modest carryover stocks into the new crop that is due to start being harvested in October, the Vietnam Coffee and Cocoa Association have voiced confidence in prices for the countries new robusta coffee crop holding steady for at least the medium term. Despite the generally accepted forecasts that this shall be a larger new crop.
The news has not been so good from Central America where the Business Intelligence Unit of the Central American Data organisation have reported that while the regions coffee export volumes increased by 5% in 2016, that the income for 2016 was 6% lower than the previous year.
The new Tanzanian coffee harvest is now in full swing, but there are concerns on the part of the exporters over the shortage of sisal and jute bags within the country. This with new bag imports seemingly close to a month to the fore, is likely to delay the start of milling and sales of new crop coffees in volume and likewise, delay the start of the exports of the new crop coffees.
The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.55 usc/Lb., while this equates to 27.06% 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 7,218 bags yesterday; to register these stocks at 1,665,759 bags. There was meanwhile a larger in number 13,698 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 113,561 bags.
Hurricane Harvey has had its effect upon the certified warehouses of the New York exchange in Houston and Galveston Texas, as the certified stocks and any pending grading stocks held within these warehouses have been temporarily suspended from delivery. It is however not really a serious issue, as these warehouses only presently hold a modest 7.73% of the certified stocks held against the New York exchange.
The commodity markets lacked the participation of the markets in London, where the country celebrated the Summer Bank Holiday, but with many of the remaining markets in play finding support coming to the fore with the weakening of the U.S. dollar, to see the overall macro commodity index remaining steady for the day. The Sugar, Cocoa, Copper, Gold and Silver markets had a day of buoyancy and the New York arabica Coffee market was steady, while the Oil and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.34% higher, to see this Index registered at 399.29. The day starts with the U.S. Dollar tending softer and trading at 1.295 to Sterling and at 1.198 to the Euro, while North Sea Oil is tending softer and is selling at $ 51.75 per barrel.
The London market was close yesterday for the holiday and leaving the New York market to trade solo for the day, with a three and a quarter hour late start for this market. There was a steady start for the New York market and with the market posting modest gains for early trade, but this was short lived and the market came under pressure in thin trade and to slip back into negative territory. As the day progressed however, the market recovered and carried on to finish off the day trading sideways on either side of par.
The New York market ended the day on a steady note and having recovered 97.2% of the earlier losses of the day by the close, which might in terms of the strong recovery on Friday, assist to bring a degree of confidence to this market. Thus, one might expect that with the addition of some support from a weaker U.S. dollar, to see something of a steady start for early trade today for the London market on its return to the field of play and likewise for the New York market, against the prices set on Friday in London and in New York yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
SEP 2150 + 39 SEP 129.90 – 0.30
NOV 2112 + 45 DEC 131.35 – 0.05
JAN 2075 + 41 MAR 134.80 – 0.10
MAR 2059 + 39 MAY 137.05 – 0.15
MAY 2061 + 36 JUL 139.35 – 0.10
JUL 2078 + 37 SEP 141.60 – 0.15
SEP 2084 + 40 DEC 144.90 – 0.15
NOV 2094 + 40 MAR 148.10 – 0.15
JAN 2105 + 45 MAY 150.20 – 0.10
MAR 2110 + 55 JUL 152.15 – 0.05