Coffee Market Report October 30 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 10.99% during the week of trade leading up to Tuesday 24th. October; to register a net short sold position of 46,967 Lots on the day. This net short-sold position which is the equivalent of 13,314,936 bags has most likely been marginally decreased again, following the period of mixed but overall more positive trade, which has since followed. 

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 short sold position within this market by 119.02% during the week of trade leading up to Tuesday 24th. October; to register a net short sold position of 5,469 Lots.  This net short sold position which is the equivalent of 911,500 bags has most likely been little changed following the period of mixed but mostly sideways trade, which has since followed. 

The extensive net short position within the New York market had been anticipated and is not much of a shock to the market, but by the very nature of size of this position and with some degree of exhaustion on the part of the speculative sector of the market, there was some short covering buying experienced ahead of the weekend.   This activity and with the Brazil Real starting to steady on Friday, having assisted to buoy the New York market for trade on Friday. 

The General Statistical Office in Vietnam with the month of October ending, forecast that the country’s coffee exports for the month shall be a relatively modest, 1.34 million bags.   Such an export performance they say, shall contribute to the countries cumulative coffee exports for the first ten months of this year to be 22% lower than the same period last year, at a total of 19.7 million bags. 

One might speculate that with the rain delays to the start of the new Vietnam crop this year and with this new crop harvest now foreseen to only start to pick up in volume in two to three weeks’ time, that the coffee exports of mostly robusta coffees shall only start to surge again in December this year.   However, with good steady demand for robusta coffees from the consumer markets at present, one might expect something of an improved performance for the coming month. 

The January 2018 to December 2017 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 38.42 usc/Lb., while this equates to 30.35% 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 4,489 bags on Friday; to register these stocks at 1,907,428 bags.  There was meanwhile a smaller in number 260 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 52,120 bags. 

The commodity markets were mixed in trade on Friday but with the assistance of the positive nature of the influential Oil markets, the overall macro commodity index took a modest positive track for the day.   The Oil, Sugar, New York arabica Coffee, Orange Juice, Soybean and Gold markets had a day of buoyancy, while the Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Wheat, Corn and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.02% higher, to see this Index registered at 414.40.  The day starts with the U.S. Dollar near to steady and trading at 1.315 to Sterling and at 1.162 to the Euro, while North Sea Oil is steady and is selling at US$ 60.40 per barrel. 

The London market started the day on Friday on a softer note, while the New York market started the day trading around par and with both markets maintaining this stance, into the early afternoon trade.  As the afternoon progressed and with the Americans coming onto the field of play, the New York market started to attract support and to step up into positive territory, while the London market bounced off the lows and moved back to trade close to par.    The New York market following the reasonably swift move to the North settled into a positive sideways track for the balance of the day’s trade, while the London market took a hesitant sideways track mostly marginally south of par, through to the close.

The London market ended the day on a negative note and with 26.3% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 69.5% of the earlier gains of the day intact.   This mixed close but with a reasonable recovery from the lows within the London market and while the New York market had held on too much of its gains that is accompanied by the combination of the evidence of the extensive speculative short position within the New York market and a slightly firmer Brazil Real, might prove to be slightly supportive for sentiment.   Thus the chance for a steady start being due for the markets for early trade today against the prices set on Friday, as follows: 

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

NOV   1985 – 10                                             DEC   126.60 + 2.05

JAN    1944 – 5                                              MAR   130.15 + 2.00

MAR   1919 – 6                                              MAY   132.55 + 2.00

MAY   1925 – 7                                              JUL    134.90 + 1.95 

JUL    1947 – 8                                              SEP    137.15 + 1.90

SEP    1954 – 7                                              DEC   140.50 + 1.85

NOV   1961 – 6                                              MAR   143.80 + 1.80

JAN    1964 – 6                                              MAY   145.85 + 1.80

MAR   1963 – 6                                              JUL    147.80 + 1.75

MAY   1968 – 6                                              SEP    149.70 + 1.75