Coffee Market Report January 03 2018

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 1.66% over the week of trade leading up to Tuesday 26th. December; to register a new net short sold position of 57,846 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.7%, to register a net long position of 35,125 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 0.86%, to register a net short sold position of 58,558 Lots.  This net short sold position which is the equivalent of 16,600,933 bags has most likely been once again decreased, following a period of overall more positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

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 4.32% during the week of trade leading up to Tuesday 26th. December; to register a net short sold position of 25,534 Lots on the day.  This net short sold position which is the equivalent of 4,255,667 bags has most likely been once again decreased, following the mixed but overall more positive trade, which has since followed. 

The Ministry of Trade in Brazil have reported that the countries coffee exports for the month of December were 332,327 bags or 11.41% lower than the same month in the previous year, at a total of 2,580,389 bags. 

This dip in export performance for Brazil coffee one would guess is as much related to internal market price resistance and the continued issues of finding sufficient freight space out of the port of Santos, as it might have some reflection upon the more modest Brazil arabica coffee harvest in 2017.   Noting that many leading main stream consumer market industry players have been taking advantage over the past few months of discounted aged washed arabica coffee stocks held within these markets, as a supplement for some of their Brazil natural arabica coffee requirements. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 51.59 usc/Lb., while this equates to 39.62% 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 10,830 bags yesterday; to register these stocks at 1,984,499 bags.  There was meanwhile a larger in number 11,210 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 45,555 bags.    

The commodity markets assisted by the softer nature of the U.S. dollar had a mostly positive start to the new year, to see the overall macro commodity index taking an upside track for the day.   The Brent Oil, Sugar, Cocoa, Coffee and Gold markets had a day of buoyancy, while the U.S. Oil, Copper and Silver markets experienced a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.02% higher; to register this index at 424.88.   The day starts with the U.S. Dollar steady and trading at 1.359 to Sterling, at 1.205 to the Euro and 3.259 to the Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 67.00 per barrel. 

The London market started the day yesterday with immediate buoyancy, while the New York market started off the day on a more cautious steady note, but to soon pick up some support and to join the London market on a positive track into the early afternoon trade.  As the afternoon progressed the New York market started to attract support from the combination of speculative short covering buying activity in reaction to the evidence of the extensive net short positions held within the market and from a firming of the Brazil Real, which buoyed speculative sentiment in that it inferred that there would be restrained price fixation hedge selling activity out of Brazil.   These gains brought buy stops into play and to see the New York market extending the gains and taking a steady upside track for the day, with a more muted response within the London market which continues to attract origin selling over the market and slipped back a bit in later in the day’s trade. 

The London market nevertheless ended the day on a positive note, but with only 51.7% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 89.9% of the earlier gains of the day intact.   This close further assists to paint a positive picture for the charts for both markets, but it is difficult to adjudge how much more short covering activity might be on the cards for the New York market and one would think that this shall bring with it a degree of caution and only a hesitant start for early trade today, against the prices set yesterday, as follows: 

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

JAN    1714 + 41

MAR   1718 + 15                                            MAR   130.20 + 4.00

MAY   1727 + 13                                            MAY   132.40 + 3.85

JUL    1764 + 10                                            JUL     134.70 + 3.75 

SEP    1772 + 9                                              SEP    137.00 + 3.70

NOV   1779 + 10                                            DEC    140.40 + 3.70

JAN    1788 + 11                                            MAR   143.65 + 3.65

MAR   1800 + 11                                            MAY   145.60 + 3.65

MAY   1825 + 11                                            JUL    147.40 + 3.55

JUL    1857 + 11                                            SEP    149.15 + 3.55