Coffee Market Report January 09 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 decrease their net short sold position within the market by 17.32% over the week of trade leading up to Tuesday 2nd. January; to register a new net short sold position of 47,827 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.77%, to register a net long position of 34,853 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 16.52%, to register a net short sold position of 48,883 Lots.  This net short sold position which is the equivalent of 13,858,114 bags has most likely been once again increased, following a period mixed but overall more negative trade that has since followed and likewise, that of the managed money fund sector of the market. 

So far there have been no troublesome reports or forecasts in terms of Brazil weather for the main coffee districts in the South East of Brazil, which is a factor that hangs over the coffee markets.   With the related forecast for a much larger new Brazil coffee crop this year, due to impact with new crop conilon robusta coffees coming to the market in only four and half months’ time and followed by the impact of the new Brazil arabica coffee crop in six and half to seven months’ time. 

There had been speculation late last year that there would be Index fund interest in increasing their net long positions within the New York market early this year, but so far this has not been the case, as is evident from the commitment of trader’s report for the market.  This lack of further investment on the part of the Index funds into the market so far, is seemingly also contributing to some degree of bearish sentiment coming to the fore within the speculative sector of 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 48.67 usc/Lb., while this equates to 38.89% 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 4,275 bags yesterday; to register these stocks at 1,992,070 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,575 bags.  

These certified washed arabica coffee crop remain dominated by the Mexican and Central American coffees, which contribute 63.77% of the stocks and followed by Peru with an 11% share and Colombia, with an 10.89% share of the stocks.  This dominant South and Central American share of the stocks followed by an 8.67% share that is related to East and Central African coffee, a 3.47% share related to Brazil coffees, a 1.81% share held by Indian coffees and a 0.39% share held by coffees from Papua New Guinea.   While in terms of the location of the coffees, the European warehouses of the exchange and mostly in the certified warehouses of the exchange in Antwerp and some smaller quantities in Bremen, Hamburg and Barcelona, hold a dominant 74.23% of the stocks and a likewise, dominant 91.64% share of the coffees pending grading for the exchange.  

The commodity markets encountered some renewed muscle coming into play for the U.S. dollar, which had a negative impact within many markets, to see the overall macro commodity index taking a softer track for the day.   The Oil, Natural Gas, Cocoa and Cotton markets nevertheless had a day of buoyancy, while the Sugar, Coffee, 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 0.27% lower; to register this index at 421.90.   The day starts with the U.S. Dollar near to steady and trading at 1.357 to Sterling, at 1.197 to the Euro and 3.241 to the Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 69.15 per barrel. 

The London market started the day yesterday marginally south of par and followed by a softer start for the New York market and with the London market soon losing a little bit of weight and to see both markets taking a marginally softer stance, into the early afternoon trade.   As the afternoon progressed the New York market started to come under further pressure and with sell stops being triggered, to accentuate the losses and followed by some additional negative pressure coming into play within the London market.  The markets did however encounter some modest support at in later in the day trade, to halt the significant slide experienced for both markets. 

The London market ended the day on a very negative note and with 84.4% of the earlier losses of the day intact, while the New York market ended the day on a likewise very negative note and with 79.5% of the earlier losses of the day intact.  This close tends to paint a negative picture for the charts and does little to inspire confidence, within both markets, but one might expect following the relatively sharp negative correction in trade yesterday, to see some degree of cautious hesitancy.   Thus, to set the markets for a slow and steady start for early trade today, against the prices set yesterday, as follows: 

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

JAN    1708 – 39 

MAR   1686 – 38                                            MAR   125.15 – 3.30

MAY   1692 – 39                                            MAY   127.50 – 3.25

JUL    1729 – 36                                             JUL    129.80 – 3.25 

SEP    1737 – 36                                            SEP    132.10 – 3.25

NOV   1745 – 36                                            DEC    135.45 – 3.30

JAN    1752 – 38                                            MAR   138.75 – 3.25

MAR   1762 – 42                                            MAY   140.75 – 3.25

MAY   1785 – 42                                             JUL   142.65 – 3.20

JUL    1817 – 42                                             SEP   144.50 – 3.10