Coffee Market Report November 13 2017

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 123.56% during the week of trade leading up to Tuesday 6th. November; to register a net short sold position of 15,057 Lots.  This net short sold position which is the equivalent of 2,509,500 bags has most likely been marginally increased following a period of mixed but tending softer trade, which has since followed. 

The trade house Volcafe have highlighted that following this year’s relatively modest arabica coffee crop in Brazil, that the country shall be holding minimal arabica coffee stocks by the start of the delivery of the new crop coffees in July 2018.   This view is very much in line with most other internal market and international market forecasts, which foresee relatively tight internal market arabica coffee supply through to the next crop and with the resulting buoyancy in terms of differentials for these coffees. 

However, this is a factor has not yet had much of a positive influence upon the fortunes of the overall short sold New York arabica coffee market, as the tighter Brazil arabica coffees supply is countered by the prevailing good levels of consumer market arabica coffees stocks and the larger new arabica coffee crops that are foreseen to come from Mexico, Central America and Colombia.   Factors that indicate that so long as there are no damaging weather issues coming to the fore to counter the forecasts for a significantly larger new Brazil arabica coffee crop next year, that there is no need to fear any problems for short to medium term overall arabica coffee supply. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 49.34 usc/Lb., while this equates to 37.69% 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 275 bags on Friday; to register these stocks at 1,911,954 bags.  There was meanwhile a larger in number 7,114 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 38,308 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day.  The Sugar, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a day of buoyancy, while the Oil, Natural Gas, London robusta Coffee, Copper, 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 0.01% lower, to see this Index registered at 423.35.  The day starts with the U.S. Dollar steady and trading at 1.313 to Sterling and at 1.166 to the Euro, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 63.85 per barrel. 

The London market started the day on Friday trading marginally to the south of par, while the New York market started the day on a sideways track and keeping close to par, but with both markets settling into a lacklustre sideways track and hovering either side of par, into the early afternoon trade.   As the afternoon progressed the New York market started to attract support and moved back into positive territory and with volumes picking up, the market showed some degree of muscle, but with the London market and in an environment of thin trade, continuing to struggle to maintain par and to set the markets on track for a mixed close for the day. 

The London market ended the day on a negative note and with 40% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 61.1% of the earlier gains of the day intact.  This mixed close provides little in the way of direction but perhaps the positive nature of the close in New York and against the fact that both markets are overall short sold, might bring to the fore some cautious support and set the markets for a steady to perhaps even buoyant start for early trade today, against the prices set on Friday, as follows: 

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

NOV   1865 – 8                                               DEC   127.55 + 1.15

JAN    1816 – 8                                              MAR   130.90 + 1.10

MAR   1798 – 6                                              MAY   133.15 + 1.15

MAY   1804 – 4                                              JUL    135.50 + 1.15 

JUL    1827 – 4                                              SEP    137.85 + 1.25

SEP    1830 – 4                                              DEC   141.30 + 1.35

NOV   1833 – 1                                              MAR   144.55 + 1.40

JAN    1838 unch                                          MAY   146.50 + 1.40

MAR   1861 + 1                                              JUL    148.35 + 1.40

MAY   1867 + 2                                              SEP    150.20 + 1.40