Coffee Market Report November 07 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 decrease their net short sold position within the market by 0.91% over the week of trade leading up to Tuesday 31st. October; to register a new net short sold position of 45,570 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.69%, to register a net long position of 33,724 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 1.06%, to register a net short sold position of 46,469 Lots.  This net short sold position which is the equivalent of 13,173,756 bags has most likely been little changed top perhaps modestly decreased again, following a period of mixed but overall steady trade that has since followed and likewise, that of the Managed Money fund sector of the market. 

The reports of damage to infrastructure and agriculture because of Typhoon Damrey in central Vietnam have had no impact upon sentiment within the London robusta coffee market, as there have been many reports from within the country and from the main central highlands coffee districts of the country, that have indicated minimal damage for the coffee farms.   Rather the reports have indicated a sunny weather and its assistance for farmers, to start with their new crop harvest and the prospects for good volumes of new crop robusta coffees to start flowing into the mills and warehouses in Ho Chi Minh City by the end of the month.  

In the meantime, and with the new main Colombian crop presently being harvested and along with the new crops from the lower grown districts in Central America and ahead of the pending surge in new crop coffees due from this region early in the new year, there is presently little in the way of supportive fundamental news for the speculatively oversold New York arabica coffee market.   But it is perhaps the fact that the speculative and fund sectors of the New York market are holding such extensive net short positions within the market, that can contribute to a degree of short term buoyancy, albeit that there is the potential for increasing volumes of price fixation hedge selling due form the Central American producers in the coming months. 

This one would think, shall leave the short to medium terms fortunes for the prevailing soft and lacklustre in trade New York market, very much in the hands of the Brazilian weather reports and their influence upon the prospects for the next 2018 new Brazil crop.  Noting that so far, the prospects for this next Brazil crop still look fair to good and do little to support sentiment within the New York market. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 45.95 usc/Lb., while this equates to 35.61% 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 1,391 bags yesterday; to register these stocks at 1,924,959 bags.  There was meanwhile a larger in number 7,330 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,418 bags. 

The commodity markets were mostly buoyant for during trade yesterday, to see the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy, while the London robusta Coffee ended off on a steady note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.39% higher, to see this Index registered at 423.96.  The day starts with the U.S. Dollar steady and trading at 1.317 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$ 64.80 per barrel. 

The London market started the day yesterday on a steady note and trading modestly north of par, while the New York market started the day on a softer note and with the markets maintaining this mixed stance into the early afternoon trade.   As the afternoon progressed the London market drifted back to trade around par and joined by a recovery on the part of the New York market, to likewise trade on a mostly sideways track and either side of par.   The London market continued towards a relatively unexciting close and close to par, while the New York market and perhaps with some assistance from the positive sentiment that came with the positive nature of the overall macro commodity index, registered a fair recovery and a positive end to trade for the day. 

The London market ended the day on a steady note and just about on par for the day, while the New York market ended the day on a positive note and with 67.4% of the earlier gains of the day intact.   This close provides little in the way of direction, but there might in terms of the ability of the New York market to end the day with some buoyancy be some degree of cautious support forthcoming, to inspire a steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1903 – 1                                               DEC   125.55 + 1.60

JAN    1855 – 1                                              MAR   129.05 + 1.55

MAR   1832 – 2                                              MAY   131.35 + 1.55

MAY   1838 – 4                                              JUL    133.65 + 1.55 

JUL    1861 – 4                                              SEP    135.95 + 1.60

SEP    1867 – 4                                              DEC   139.25 + 1.55

NOV   1870 – 4                                              MAR   142.45 + 1.50

JAN    1871 – 4                                              MAY   144.40 + 1.45

MAR   1870 – 4                                              JUL    146.35 + 1.45

MAY   1875 – 4                                              SEP    148.25 + 1.45