Coffee Market Report November 29 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 5.29% over the week of trade leading up to Tuesday 21st. November; to register a new net short sold position of 47,229 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 4.71%, to register a net long position of 38,382 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 4.86%, to register a net short sold position of 48,863 Lots.  This net short sold position which is the equivalent of 13,852,444 bags has most likely been once again decreased, following a period of more positive trade, which has since followed. 

The General Statistical Office in Vietnam have forecast that with the export registration data in hand and with the month of November near to a close, that they foresee coffee exports for the month to be seasonally modest 1,42 million bags.  This figure if it proves to be reality they calculate, will result in the Vietnam coffee exports for the first eleven months of this year to be 22.4% lower than the same period last year, at a total of 21.2 million metric tons. 

These numbers were very much expected, following the smaller new Vietnam crop that was harvested over the last quarter of 2016 and into the first month of 2017, along with the delay of the delivery of the new crop coffees this year, which came with the rains that continued into early this month.   However, with the recent weeks of mostly dry and hot weather over the main coffee districts in the country, the harvest is now in full swing and with active catch up internal market selling in play, to suggest that there shall be sharply rising export volumes of mostly robusta coffees due for December and the first quarter of 2018.   Especially so as most forecasts from reliable sources, now foresee this to be a significantly larger new crop of more than 28 million bags. 

The Colombian Coffee Federation have reported yesterday that due to the recent spells of heavy rains over many of the country’s coffee districts and during the main crop harvest, that the production volumes for the last quarter of this year might be as much as 30% lower than the same period last year.   However, the report does not indicate damaged coffee but rather rain delayed ripening coffee and one might presume from this report, that while there may be a dip in last quarter 2017 export production volumes that there shall be a likewise increase in the export volumes for the first quarter of the coming year.  

The Colombian Coffee Federation did however voice fears that with the increase in cloud over the affected areas during the recent weeks, that it might be a negative factor for the flowerings for the follow on mid-year 2018 Mitaca crop and in this respect, have some negative effect upon overall production for 2018.   They do not though forward any specific data on this possibility and for the present with a free flow of new crop fine arabica coffees coming to the fore from Mexico and Central America for the coming months, it is unlikely to fuel much in the way of concern on the part of the consumer market industries. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 51.21 usc/Lb., while this equates to 39.44% 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 1,335 bags yesterday; to register these stocks at 1,922,141 bags.  There was meanwhile a larger in number 2,995 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,379 bags. 

The commodity markets encountered some stability for the U.S. dollar yesterday and with the majority of markets tending to be flat to marginally softer, to see the overall macro commodity index taking a modestly softer track yesterday.   The Natural Gas, Coffee and Cotton markets nevertheless had a day of buoyancy, while the Oil, Sugar, Cocoa, Copper, 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 0.04% lower; to register this index at 422.41.   The day starts with the U.S. Dollar steady and trading at 1.338 to Sterling and at 1.186 to the Euro, while North Sea Oil is steady and is selling at US$ 63.30 per barrel. 

The London and New York markets started the day yesterday marginally softer and with both markets trading south of par, into the early afternoon trade.    As the afternoon progressed, the London market steadied and moved back into positive territory and set on an upside path for the rest of the day’s trade.   This was followed by a similarly positive stance being taken by the New York market, which steadily added value through to the close of trade for the day. 

The London market ended the day on a positive note and with 82.1% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 82.5% of the earlier gains of the day intact.   This close and with the markets seemingly stabilising and coming off 17 month lows in London and with the New York market seen to be heavily sold short, is likely to inspire some degree of caution and a follow through steady start for early trade today against the prices set yesterday, as follows: 

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

NOV   1773 + 32                                             DEC   127.45 + 1.90

JAN    1743 + 23                                            MAR   129.85 + 1.65

MAR   1735 + 18                                            MAY   132.05 + 1.60

MAY   1747 + 19                                            JUL    134.30 + 1.55 

JUL    1778 + 20                                            SEP    136.60 + 1.55

SEP    1786 + 19                                            DEC   139.95 + 1.50

NOV   1795 + 19                                            MAR   143.20 + 1.50

JAN    1803 + 17                                            MAY   145.20 + 1.50

MAR   1820 + 17                                            JUL    147.05 + 1.45

MAY   1850 + 17                                            SEP    148.95 + 1.50