Coffee Market Report November 14 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 7.32% over the week of trade leading up to Tuesday 7th. November; to register a new net short sold position of 48,905 Lots.   

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 6.31%, to register a net short sold position of 49,399 Lots.  This net short sold position which is the equivalent of 14,004,398 bags has most likely been modestly reduced again, following a period of mixed but overall steady to buoyant trade that has since followed and likewise, that of the Managed Money fund sector of the market. 

The news of the extensive net short sold scenario within the New York market is likely to bring to the fore some degree of caution on the part of the speculative bears within the market, albeit that they might foresee the possibility of holding on to buy back into the potential for rising volumes of price fixation selling activity on the part of exporters taking in stocks of new crop coffees from the new Mexican, Central American and Colombian crops.   But the ability of this market to have halted its slide and this assisting to bring to the fore some degree of stability for the charts, might contribute to some degree of short covering profit taking in the coming weeks. 

The London market on the other hand and with the new Vietnam crop now in harvest and forecast by most to be a larger new crop, is likely to encounter increased producer price fixation selling activity and it is likely that the arbitrage between the London and New York markets might broaden further.   

Brazil shall be on holiday again tomorrow, as the country shall celebrate Proclamacão da Repúplica Day or Republic Day, which is related to the end of the Brazil Empire in 1889.    This will take Brazil off the field of play tomorrow but with internal market trade having proved to be price resistant and slow over the past few weeks of soft reference prices within the New York market and not having contributed to aggressive price fixation selling pressure for the New York market, it is unlikely to have much influence upon the New York market. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 49.01 usc/Lb., while this equates to 37.48% 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 1,142 bags yesterday; to register these stocks at 1,910,812 bags.  There was meanwhile a smaller in number 1,048 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,260 bags. 

The commodity markets were mixed in trade yesterday, but with many markets tending softer for the day, to see the overall macro commodity index taking something of a sideways to softer track for the day.  The Sugar, London robusta Coffee, Copper, Gold and Silver markets had a day of buoyancy and the New York arabica Coffee market was near to steady for the day, while the Oil, Natural Gas, Cocoa, Cotton, Orange Juice, Wheat, Corn and Soybean markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.14% lower, to see this Index registered at 422.74.  The day starts with the U.S. Dollar steady and trading at 1.311 to Sterling and at 1.167 to the Euro, while North Sea Oil is near to steady and is selling at US$ 62.55 per barrel. 

The London and New York markets started the day yesterday trading close to par, but with both markets soon slipping back into negative territory and maintaining this stance, into the early afternoon trade.   As the afternoon progressed both markets moved back into positive territory, but while the London market managed to hold on to its modest gains, the New York market slipped back to marginally south of par in closing trade. 

The London market ended the day on a positive note and with 88.9% of the earlier modest gains of the day intact, while the New York market ended the day on a near to steady note and having recovered 82.4% of the earlier modest losses of the day.   This close provides for little in the way of direction, but perhaps against the evidence of the large short sold position within the New York market it might prove to bring to the fore a degree of caution and modest support within the New York market and a sympathetic sideways stance being taken within the London market for early trade today, against the prices set yesterday, as follows: 

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

NOV   1873 + 8                                               DEC   127.60 + 0.05

JAN    1824 + 8                                              MAR   130.75 – 0.15

MAR   1802 + 4                                              MAY   133.05 – 0.10

MAY   1807 + 3                                              JUL    135.40 – 0.10 

JUL    1829 + 2                                              SEP    137.70 – 0.15

SEP    1832 + 2                                              DEC   141.10 – 0.20

NOV   1835 + 2                                              MAR   144.35 – 0.20

JAN    1840 + 2                                              MAY   146.30 – 0.20

MAR   1863 + 2                                              JUL    148.15 – 0.20

MAY   1869 + 2                                              SEP    150.00 – 0.20