Coffee Market Report October 02 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 7.27% during the week of trade leading up to Tuesday 26th. September; to register a net short sold position of 17,872 Lots on the day. This net short-sold position which is the equivalent of 5,066,633 bags has most likely been increased again, following the period of mixed but overall more negative 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 September were 135,457 bags or 28.38% lower than the same month in the previous year, at a total of 341,833 bags.   This contributes to the cumulative Sumatran robusta coffee exports for the just completed October 2016 to September 2017 coffee year to being 542,227 bags or 15.25% higher than the previous 2015/2016 coffee year, at a total of 4,097,531 bags. 

One might comment though while the robusta coffee exports for the just completed 2016/2017 coffee year from Sumatra were a significant improvement 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.  With the improved export volumes for the 2016/217 coffee year, remaining 22.7% below the 5.3 million bags exported during the 2014/2015 coffee year.   With these improved but still relatively modest robusta coffee exports for the 2016/2017 coffee year having accompanied a significant dip in robusta coffee exports from Vietnam for the same coffee year. 

In this latter respect the General Statistics Office in Vietnam and with the export registrations at hand, have estimated that the countries coffee exports for the month of September were a modest 1.5 million bags, which they say has contributed to the countries cumulative coffee exports for the first nine months of 2017 to have been 20.5% lower than the same period last year, at a total of 18.7 million bags.   They do however despite the sharp dip in coffee exports of mostly robusta coffees for the year, estimate the income from these exports was marginally higher than the same period last year.  

Meanwhile and with little in the way of carryover stocks into the new crop harvest that is soon to start in Vietnam and with declining competition from the much reduced robusta coffee stocks within Indonesia, there remains a degree of price resistance within the internal market in Vietnam.   This price resistance and in reaction to the relatively soft nature of the reference prices of the London market, is resulting in thin and lacklustre trading activity for Asian robusta coffees for the present. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 39.87 usc/Lb., while this equates to 31.14% 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 535 bags on Friday; to register these stocks at 1,805,686 bags.  There was meanwhile a larger in number 8,076 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 79,983 bags. 

The commodity markets had a mixed day on Friday, but with the overall macro commodity index nevertheless showing a degree of buoyancy for the day.   The Sugar, Cocoa, London robusta Coffee, Orange Juice, Corn and Soybean markets had a day of buoyancy and the Natural Gas market was steady, while the Oil, New York arabica Coffee, Cotton, Copper, 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 0.16% higher, to see this Index registered at 406.17.  The day starts with the U.S. Dollar showing a degree of buoyancy and trading at 1.335 to Sterling and at 1.176 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 57.20 per barrel. 

The London and New York markets had a mixed day’s trade on Friday and with trade mostly technical and fund related for the day, as there were only modest volumes of origin selling coming to the market.   With the London market tending to be the better performer for the day, with a degree of support coming from speculative and fund short covering activity. 

The London market ended the day on a modestly positive note and with 51.4% of the earlier gains of the day intact, while the New York market ended the day on a modestly softer note, but having recovered 64% of the earlier losses of the day.  This somewhat hesitantly mixed close and accompanied by an uncertain technical picture for the markets and against as some degree of dollar buoyancy does little to inspire, which might indicate that the markets are due for little better than a hesitantly steady start for early trade today, against the prices set on Friday, as follows: 

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

NOV   1968 + 19                                             DEC   128.05 – 0.45

JAN    1944 + 16                                            MAR   131.65 – 0.45

MAR   1928 + 9                                              MAY   134.00 – 0.45

MAY   1935 + 6                                              JUL    136.25 – 0.45 

JUL    1962 + 5                                              SEP    138.50 – 0.45

SEP    1970 + 5                                              DEC   141.80 – 0.40

NOV   1978 + 5                                              MAR   145.05 – 0.35

JAN    1987 + 5                                              MAY   147.05 – 0.35

MAR   1993 + 5                                              JUL    149.00 – 0.35

MAY   1992 unch                                          SEP    150.90 – 0.35