Coffee Market Report October 10 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 106.3% over the week of trade leading up to Tuesday 3rd. October; to register a new net short sold position of 27,131 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.13%, to register a net long position of 34,776 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 73.67%, to register a net short sold position of 31,039 Lots.  This net short sold position which is the equivalent of 8,799,419 bags has most likely been significantly decreased again, following a period of mixed but mostly positive trade that has since followed and likewise, that of the Managed Money fund sector of the market. 

The Customs Authorities in Vietnam and with more precise figures in hand, have reported that the country’s coffee exports of mostly robusta coffees for the month of September were lower than initially expected, at only 1,325,000 bags.    This they say has contributed to the countries coffee exports for the just completed October 2016 to September 2017 coffee year to have been 14.9% lower than the previous 2015/2016 coffee year, at a total of 24.7 million bags. 

This figure is alike or perhaps only marginally lower than the previous harvest and in terms of the countries close on 3 million bags of domestic coffee demand, it is a good indication of how low the carryover stocks shall be, into the soon to start new crop harvest.   It is only a question as to when the rain season that is tending to linger a little shall halt, as to when the much-needed new crop harvest shall start to pick up in volume.   But in the meantime, and ahead of these new crop coffees coming into play, there are expectations that export volumes of robusta coffees from Vietnam shall be relatively low for this and the coming month of November. 

The Coffee Board of India have reported that the country’s coffee exports for the October 2016 to September 2017 coffee year were 9.36% higher than the previous 2015/2016 coffee year, at a total of 5,743,550 bags.  These exports that include re-exports of imported coffees and at a value only 7.31% higher than the previous coffee year, come in ahead of the Coffee Boards earlier forecast that the countries new crop coffee supply for the new October 2017 to September 2018 coffee year shall be 12.3% higher than the just completed 2016/2017 coffee year.   Thus joining Vietnam, Colombia and Central America in terms of forecasts, who are all looking towards rising coffee supply for this new coffee year and countered only, by the more modest Brazil crop this year. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 41.41 usc/Lb., while this equates to 31.62% 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 4,705 bags yesterday; to register these stocks at 1,846,581 bags.  There was meanwhile a smaller in number 3,115 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 60,592 bags. 

The commodity markets were mixed but with many markets on the back foot yesterday, to see the overall macro commodity index taking a hesitant sideways track yesterday.  The Oil, Sugar, New York arabica Coffee, Copper, Orange Juice, Gold and Silver markets had a day of buoyancy, while the Natural Gas, Cocoa, London robusta Coffee, Cotton, 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 0.05% lower, to see this Index registered at 408.38.  The day starts with the U.S. Dollar near to steady and trading at 1.317 to Sterling and at 1.177 to the Euro, while North Sea Oil is near to steady and is selling at US$ 55.60 per barrel. 

The London and New York markets started the day yesterday with early buoyancy, but with the London market soon coming under pressure and falling back to trade either side of par, while the New York market maintained a positive stance, into the early afternoon trade.   As the afternoon progressed the New York market retained its buoyancy and added some value, while the London market remained under pressure and to fall back further in value in late trade, while the New York market shed some of its gains. 

The London market ended the day on a soft note and with 71.4% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 50% of the earlier gains of the day intact.  This mixed close paints a somewhat indecisive picture and with little in the way of supportive fundamental news in play for the present might indicate that the markets are due for little better than a steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV    2003 – 12                                            DEC   130.95 + 0.95

JAN    1974 – 15                                            MAR   134.60 + 1.00

MAR   1959 – 17                                            MAY   137.00 + 1.05

MAY   1969 – 17                                            JUL    139.35 + 1.05 

JUL    1994 – 17                                            SEP    141.65 + 1.05

SEP    1999 – 17                                            DEC   145.05 + 1.05

NOV   2003 – 17                                            MAR   148.35 + 1.10

JAN    2005 – 17                                            MAY   150.35 + 1.10

MAR   2010 – 17                                            JUL    152.35 + 1.15

MAY   2015 – 17                                            SEP    154.25 + 1.15