Coffee Market Report September 05 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 81.76% over the week of trade leading up to Tuesday 29th. August; to register a new net short sold position of 26,066 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.8%, to register a net long position of 33,702 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 38.66%, to register a net short sold position of 26,362 Lots.  This net short sold position which is the equivalent of 7,473,510 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but steadier 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 increase their net long position within this market by 0.18% during the week of trade leading up to Tuesday 29th. August; to register a net long position of 20,677 Lots.  This net long position which is the equivalent of 3,446,167 bags has most likely been little changed to perhaps marginally decreased again, following the period of mixed but overall more negative trade that 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 August were 63,874 bags or 12.09% higher than the same month in the previous year, at a total of 592,047 bags.   This contributes to the cumulative Sumatran robusta coffee exports for the first eleven months of the present October 2016 to September 2017 coffee year to being 677,684 bags or 22.02% higher than the same period in the previous coffee year, at a total of 3,755,698 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.   But with only one month to go, the island cannot be expected to even get close to the 5.3 million bags of robusta coffee that was exported over the 2014/2015 coffee year. 

The Colombian Coffee Federation have reported that the country’s coffee production for the month of August was 105,000 bags or 8.83% higher than the same month last year, at a total of 1,294,000 bags.   This has contributed to the countries cumulative production for the first eleven months of the present October 2016 to September 2017 coffee year to being 431,000 bags or 3.32% higher than the same period in the previous coffee year, at a total of 13,406,000 bags. 

In terms of coffee exports from Colombia the Coffee Federation have reported that the country’s coffee exports for the month of August were 87,000 bags or 6.94% lower than the same month last year, at a total of 1,167,000 bags.   This contributes to the countries cumulative exports for the first eleven months of the present October 2016 to September 2017 coffee year to being 1,096,000 bags or 9.74% higher than the same period in the previous coffee year, at a total of 12,347,000 bags. 

The November to December contracts arbitrage between the London and New York markets broadened yesterday, to register this at 37.38 usc/Lb., while this equates to 28.97% price discount for the London Robusta coffee market.  

The Certified washed Arabica coffee stocks held against the New York exchange with the North American markets closed yesterday, remained unchanged from the numbers on Friday; to register these stocks at 1,715,082 bags.  There was meanwhile also no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 78,833 bags. 

The commodity markets lacked the participation of U.S.A. based markets yesterday, with the country taking their Labour Day long weekend holiday, to see a mixed day for the remaining markets operating for the day.  Albeit that direction for these remaining markets were perhaps often distorted, by the fact that most of the U.S.A. players were not upon the field of play.   Thus, without the full string of players the Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets remains unchanged from Friday, to see this Index registered at 406.63.  The day starts with the U.S. Dollar near to steady and trading at 1.293 to Sterling and at 1.190 to the Euro, while North Sea Oil is steady and is selling at $ 53.30 per barrel. 

The London market and lacking the influences of the New York market that was closed for the day yesterday, started the day yesterday on a steady note.  The market did though soon start to slip below par and entered the early afternoon trade south of par and setting the market for a steady downside track, which was accelerated later in the afternoon by speculative and fund sell stops coming into play, which saw the market heading further south and towards a soft close for the day and with 90.5% of the earlier losses of the day intact. 

The question is what impact this move to the south might have upon sentiment within the New York market on its return today, but one might think that following Friday’s softer close and the evidence of the extended short sold positions of the speculative and managed money sectors, that there might be some degree of hesitancy to follow the track set by London yesterday.   Thus, one might expect to perhaps see some marginal recovery for the London market and perhaps a near to steady start for the New York market for early trade today against the prices set in New York on Friday and in London yesterday, as follows: 

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

SEP    2034 – 37                                             SEP    127.75 – 0.40

NOV   2021 – 38                                              DEC   129.05 – 0.30

JAN    2000 – 36                                             MAR   132.65 – 0.20

MAR   1989 – 35                                             MAY   134.95 – 0.25

MAY   1996 – 35                                              JUL   137.30 – 0.25

JUL    2016 – 34                                             SEP    139.60 – 0.25

SEP    2024 – 31                                             DEC   142.90 – 0.20

NOV   2028 – 31                                             MAR   146.05 – 0.20

JAN    2034 – 31                                             MAY   148.00 – 0.20

MAR   2039 – 31                                             JUL    149.95 – 0.20