Coffee Market Report October 31 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 13.52% over the week of trade leading up to Tuesday 24th. October; to register a new net short sold position of 45,989 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.03%, to register a net long position of 33,957 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 10.98%, to register a net short sold position of 46,967 Lots.  This net short sold position which is the equivalent of 13,314,936 bags has most likely been modestly decreased, following a period of sideways trade but tending towards the positive which has since followed and likewise, that of the Managed Money fund sector of the market. 

The Uganda Coffee Development Authority UCDA have reported that the country’s coffee exports for the month of September were 132,883 bags or 63.59% higher than the same month last year, at a total of 341,839 bags.   This higher figure contributes to the countries coffee exports for the just completed October 2016 to September 2017 coffee year, to be 1,290,257 bags or 38.92% higher than the previous coffee year, at a total of 4,605,824 bags. 

This impressive figure from Uganda in terms of coffee exports, presently seals the countries position as Africa’s leading coffee supplier to the global consumer markets.  While with evidence of the young coffee that has been planted over the past few years and despite the potential for some climatic issues to dent export volumes for the present October 2017 to September 2018 coffee year, one would think that Uganda shall become an even more significant contributor in terms of not only African but also global coffee supply, in the coming years. 

This potential steady increase in Ugandan coffee production is being well supported by state sponsored programs to support more farming districts and farmers to enter the coffee industry, which is further supported by a host of private support and extension service programs to assist existing and new farmers to improve their farm husbandry and coffee yields. 

Germany and with many physical coffee market players based there, shall be off the field of play today, as the country celebrates 500 years since Martin Luther inspired the reformation for European religion.   However, this is unlikely to have any impact upon the market today, as the present lacklustre nature of the physical coffee market is having little influence upon direction.  

The January 2018 to December 2017 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 39.26 usc/Lb., while this equates to 31.18% 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 3,996 bags yesterday; to register these stocks at 1,911,424 bags.  There was meanwhile a smaller in number 31 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 52,089 bags. 

The commodity markets and with a marginally softer dollar in play were mostly showing a degree of buoyancy yesterday, to see the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Gold and Silver markets had a day of buoyancy and the Corn market was steady, while the Coffee, Wheat and Soybean markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.44% higher, to see this Index registered at 416.22.  The day starts with the U.S. Dollar steady and trading at 1.321 to Sterling and at 1.163 to the Euro, while North Sea Oil is steady and is selling at US$ 60.95 per barrel. 

The London and New York markets started the day yesterday on a modestly positive note, but with the London market soon slipping back to the south of par, while the New York market retained its modest buoyancy into the early afternoon trade.   As the afternoon progressed and with trade reasonably active within the London market but remaining thin within the New York market, the latter New York market slipped back into negative territory and the London market started to extend its losses.   This set the course for the day and while the New York market did bounce back partially from the lows of the day, the London market continued towards a soft close.  

The London market ended the day on a very negative note and with 94.4% of the earlier losses of the day intact, while the New York market ended the day on a negative note and with 45.2% of the earlier losses of the day intact.   This dismal close was accompanied by a weakening of the Brazil Real and its potential to inspire Brazilian internal market selling and with the Brazil Real at close to 3.29 to the dollar, it is unlikely to inspire much better than a near to steady start for early trade today against the prices set yesterday, as follows: 

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

NOV   1945 – 40                                             DEC   125.90 – 0.70

JAN    1910 – 34                                            MAR   129.45 – 0.70

MAR   1890 – 29                                            MAY   131.85 – 0.70

MAY   1897 – 28                                            JUL    134.20 – 0.70 

JUL    1919 – 28                                            SEP    136.50 – 0.65

SEP    1927 – 27                                            DEC   139.85 – 0.65

NOV   1934 – 27                                            MAR   143.20 – 0.60

JAN    1937 – 27                                            MAY   145.25 – 0.60

MAR   1936 – 27                                            JUL    147.25 – 0.55

MAY   1941 – 27                                            SEP    149.20 – 0.50