Coffee Market Report December 26 2017

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 4.63% during the week of trade leading up to Tuesday 19th. December; to register a net short sold position of 58,061 Lots on the day. This net short-sold position which is the equivalent of 16,460,036 bags has most likely been little changed to perhaps marginally increased against the sideways to marginally lower trade, which has since followed. 

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 9.28% during the week of trade leading up to Tuesday 19th. December; to register a net short sold position of 24,476 Lots on the day.  This net short sold position which is the equivalent of 4,079,333 bags has most likely been little changed, following the mixed but overall sideways trade, which has since followed. 

The Uganda Coffee Development Authority have reported that the countries coffee exports for the month of November were 35,407 bags or 8.68% higher than the same month last year, at a total of 443,100 bags.  This following a good performance in the previous month, results in the cumulative coffee exports for the first two months of the present October 2017 to September 2018 coffee year to be 207,899 bags or 33.7% higher than the same period in the previous coffee year, at a total of 824,736 bags. 

Thus, Uganda who reported exports coffee exports for the previous October 2016 to September 2017 coffee year of 4,605,158 bags, have started the new coffee year on a good upside track.   But it is early day’s in the new coffee year and while many have forecast for a dip due for the present coffee year, the impressive performance for the start of the new coffee year seems to somewhat counter these expectations. 

The National Coffee Institute in Honduras have reported that coffee exports from the start of the new October 2017 to September coffee year and up to the 20th. December were 5% higher than the same period in the previous coffee year, to total 543,435 bags.   However, in line with the prevailing softer prices of the reference prices of the New York market, the value of these sales was 12% lower than the same period in the previous coffee year, at only 83.8 million U.S. dollars. 

This report clearly illustrates the problems being encountered by coffee producers in general, with the reference prices of both the New York arabica coffee and London robusta coffee markets now trading within a lower price range.   A problem that is difficult to foresee being soon solved, so long as the weather reports from Brazil continue to point towards a larger new crop for the coming year. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 42.74 usc/Lb., while this equates to 35.50% 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 3,039 bags on Friday; to register these stocks at 1,965,815 bags.  There were meanwhile a smaller in number 464 bags decrease of the number bags pending grading for this exchange; to register these pending grading stocks at 51,888 bags. 

The commodity markets were mixed in trade on Friday, to see the overall macro commodity index taking an erratic sideways track for the day.   The Brent Oil, Natural Gas, London robusta Coffee, Cotton, Copper, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the U.S. Oil was steady for the day, while the Sugar, Cocoa, New York arabica Coffee, Orange Juice and Wheat markets had a softer day’s trade.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.05% lower; to register this index at 409.91.   The day starts with the U.S. Dollar steady and trading at 1.338 to Sterling, at 1.187 to the Euro and 3.337 to the Brazilian Real, while North Sea Oil is steady and is selling at US$ 64.95 per barrel. 

The London market started the day on Friday on the positive side of par and followed by a similar opening for the New York market, but while the London market maintained some degree of buoyancy into the early afternoon trade, the New York market started to slip south of par.   As the afternoon progressed, the New York market slipped back into the negative territory, while the London market managed to retain a degree of buoyancy and to set the markets towards a mixed end to the Christmas long weekend holiday. 

The London market ended the day on a positive note and with 63.6% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 68.5% of the earlier losses of the day intact.   This close does little to inspire confidence for the New York market that is due to trade solo today, while the London market remains on holiday.   However, with the news of the extended net short position within the somewhat oversold New York market, it is likely that there might be a degree of caution and the chances for a steady to perhaps even corrective start for trade today against the prices set on Friday, as follows: 

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

JAN    1711 + 6

MAR   1712 + 7                                              MAR   120.40 – 1.85

MAY   1722 + 6                                              MAY   122.70 – 1.85

JUL    1761 + 5                                              JUL     125.10 – 1.85 

SEP    1771 + 6                                              SEP    127.45 – 1.85

NOV   1780 + 5                                              DEC    130.95 – 1.85

JAN    1790 + 5                                              MAR   134.35 – 1.80

MAR   1802 + 7                                              MAY   136.40 – 1.85

MAY   1827 + 7                                              JUL    138.25 – 1.95

JUL    1859 + 7                                              SEP    140.10 – 1.95