Coffee Market Report November 06 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 1.06% during the week of trade leading up to Tuesday 31st. October; to register a net short sold position of 46,469 Lots on the day. This net short-sold position which is the equivalent of 13,173,756 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall more negative 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 23.15% during the week of trade leading up to Tuesday 31st. October; to register a net short sold position of 6,735 Lots.  This net short sold position which is the equivalent of 1,122,500 bags has most likely been little changed following the period of mixed but mostly sideways trade, which has since followed. 

The Colombian Coffee Federation have reported that the country’s coffee production for the month of October was 322,000 bags or 23.08% lower than the same month last year, at a total of 1,073,000 bags.    In terms of coffee exports from Colombia the Coffee Federation have reported that the country’s coffee exports for the month were 94,000 bags or 7.53% lower than the same month last year, at a total of 1,155,000 bags.  

This has been a relatively slow start for the new coffee year for Colombia, but so far there have been no indications that it is due to any problems with the new main crop harvest that is presently in progress, as there might well be some stability in terms of production keeping in line with forecasts, over the coming two to three months.  But perhaps the lower numbers for the month of October, might assist to slow the bearish pressure that has recently prevailed for the already well sold short New York market.  

There have been many reports over the impact of Typhoon Damrey which hit central Vietnam early in the weekend, but with most of the mortality and damage reports being related to the coastal areas, rather than the coffee growing districts within the central highlands.  There have though been reports of ripe cherry drop on many farms and some modest damage to coffee trees, but with many reports noting that the cherries dropped shall still be harvested and dried and with sunshine now returning to the central highlands, that the new crop harvest shall likely start to pick up in volume during the week.  

The January 2018 to December 2017 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 39.76 usc/Lb., while this equates to 32.08% 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 10,860 bags on Friday; to register these stocks at 1,926,350 bags.  There was meanwhile a larger in number 13,217 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,088 bags. 

The commodity markets were mixed in trade on Friday but with the buoyancy within the influential energy markets that were reacting towards the corruption reports and leadership changes within Saudi Arabia, assisting to buoy the overall macro commodity index for the day.   The Oil, Natural Gas, Sugar and Orange Juice markets had a day of buoyancy and the Cocoa and Wheat markets were steady for the day, while the Coffee, Cotton, Copper, Corn, Soybean, 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 0.05% higher, to see this Index registered at 418.16.  The day starts with the U.S. Dollar steady and trading at 1.307 to Sterling and at 1.161 to the Euro, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 62.45 per barrel. 

The London market started the day on Friday trading close to but mostly to the positive side of par, while the New York market started the day showing buoyancy and posting some early gains, but to see the New York market soon come off the boil and to see the London market slip south of par and the New York market struggling to remain on par for the early afternoon trade.   As the afternoon progressed the New York market started to come under pressure and to attract sell stops to accentuate the losses, with the London market following suit before bouncing off the lows.  To see both markets taking a soft track towards a soft close, for late in the day trade. 

The London market ended the day on a negative note and with 50% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 77.8% of the earlier losses of the day intact.   This close does little to inspire but one might think that there might nevertheless be some degree of caution in terms of the uncertainty of the delays in the start of the new Vietnam harvest and some concerns over the potential for a degree of exhaustion on the part of the short-sold speculators and funds within the New York market, which might result in 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   1904 – 12                                             DEC   123.95 – 2.45

JAN    1856 – 14                                            MAR   127.50 – 2.35

MAR   1834 – 16                                            MAY   129.80 – 2.35

MAY   1842 – 17                                            JUL    132.10 – 2.35 

JUL    1865 – 18                                            SEP    134.35 – 2.35

SEP    1871 – 19                                            DEC   137.70 – 2.30

NOV   1874 – 25                                            MAR   140.95 – 2.30

JAN    1875 – 27                                            MAY   142.95 – 2.35

MAR   1874 – 27                                            JUL    144.90 – 2.30

MAY   1879 – 27                                            SEP    146.80 – 2.30