Coffee Market Report November 27 2017

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market decrease their net short sold position within this market by 5.57% during the week of trade leading up to Tuesday 21st. November; to register a net short sold position of 14,171 Lots.  This net short sold position which is the equivalent of 2,361,833 bags has most likely been increased again following a period of overall softer trade, which has since followed. 

Following on from the Brazil Exporters Association Cecafé forecasts for significantly lower overall coffee exports from Brazil of this year, the domestic coffee industries association Abics very much agreed on Friday, that they foresee a 15% dip in the country’s exports of value added soluble coffees for this year.   But they did concede that while coffee supply within Brazil in terms of the relatively low conilon robusta coffee crop had been tight since the 2016 harvest and had pressured prices higher, that it was more the price competition from the steadily increasing Asian soluble coffee production than a shortage of coffee, that has been the problem. 

This aside there was nothing in the way of striking news coming to the coffee markets on Friday and with trade post the Thursday close of New York starting the day in a quite manner, but with nevertheless the volumes surprisingly fair later in the day.   Not that in the end it had any marked effect upon closing values of the markets, which ended the day close to par for both markets.   With the weaker U.S. dollar seemingly supportive for the New York market, while the London market remains under some pressure from active origin selling activity. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 48.76 usc/Lb., while this equates to 38.23% 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 1,000 bags on Friday; to register these stocks at 1,922,642 bags.  There was meanwhile a larger in number 16,432 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 39,778 bags. 

The commodity markets had a mixed day on Friday and despite the support from a softer U.S. dollar, it did little to assist for buoyancy within many markets, to see the overall macro commodity index taking a very much sideways track for most of the day.   The Oil, Sugar, New York arabica Coffee, Cotton and Copper markets had a day of buoyancy, while the Natural Gas, Cocoa, London robusta Coffee, Orange Juice, Wheat, 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 0.13% lower; to register this index at 422.53.   The day starts with the U.S. Dollar steady and trading at 1.331 to Sterling and at 1.192 to the Euro, while North Sea Oil is near to steady and is selling at US$ 63.70 per barrel. 

The London and New York markets started the day on Friday with a degree of modest buoyancy, to see both markets maintaining this stance into the early afternoon trade.   As the afternoon progressed the London market started to come under pressure and slipped back into modest negative territory, while the New York market maintained its buoyancy and with some support from a softer dollar, started to trigger buy stops and to extend its gains and to peak with gains of 3.40 usc/Lb.   This rally in New York assisted for a moment to buoy spirits within the London market, but with the New York market soon hitting a ceiling and falling off in value, the London market slipped back into negative territory and in the meantime, the New York market continued towards a steady close. 

The London market ended the day on a negative note and with 36.8% of the earlier losses of the day intact, while the New York market ended the day on a positive note, but with only 16.2% of the earlier gains of the day intact.   This close once again does little to indicate direction and one might think that it shall be another slow and steady start for early trade today against the prices set on Friday, as follows: 

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

NOV   1765 – 19                                             DEC   124.80 + 0.25

JAN    1749 – 7                                              MAR   127.55 + 0.55

MAR   1737 – 6                                              MAY   129.85 + 0.60

MAY   1745 – 8                                               JUL   132.15 + 0.55 

JUL    1773 – 6                                              SEP    134.45 + 0.55

SEP    1782 – 5                                              DEC   137.80 + 0.55

NOV   1791 – 5                                              MAR   141.10 + 0.55

JAN    1801 – 5                                              MAY   143.10 + 0.55

MAR   1818 – 5                                              JUL    145.00 + 0.50

MAY   1848 – 5                                              SEP    146.85 + 0.50