Coffee Market Report January 15 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 12.39% during the week of trade leading up to Tuesday 9th. January; to register a net short sold position of 42,828 Lots on the day. This net short-sold position which is the equivalent of 12,141,548 bags has most likely been once again increased, following the period of mixed but overall softer 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 decrease their net short sold position within this market by 1.16% during the week of trade leading up to Tuesday 9th. January; to register a net short sold position of 26,575 Lots on the day.  This net short sold position which is the equivalent of 4,4429,167 bags has most likely been little changed, following a period of mixed and overall sideways trade, which has since followed. 

The Vietnam Customs authorities reported on Friday that the countries coffee exports for the month of December were 57.6% higher than the previous month, at a total of more than 2.63 million bags.  Thus, signalling that with a larger new coffee crop now completed, that one can expect export volumes to be consumer market friendly for the coming months. 

In the same report the Vietnam Customs authorities and within the inclusion of their latest December export figure that exports for the year 2017 were 19% lower than the previous year, at a total of approximately 24 million bags.    However, in terms of value, they report that despite the sharp dip in volume, the value of these exports that would have been dominated by an approximate 95% share in the form of robusta coffees, was only 2.7% lower than the previous coffee year, at a total of approximately 3.24 billion U.S. dollars. 

One might comment that with the reference prices of the London robusta coffee market that is related to most of Vietnam’s coffee exports and unless there is some presently unforeseen fundamental reason for the market to recover now so much softer than the average for last year, that income from the 2018 exports is being threatened.   However, in terms the larger new crop and with expectations that coffee export volumes shall increase by at least 10% this year, that the increased yields and volumes shall assist to a degree, the farmers and the Vietnam coffee industry to counter some of the negative effects of the softer international coffee prices. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 43.87 usc/Lb., while this equates to 35.89% 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 250 bags on Friday; to register these stocks at 2,005,320 bags.  There was meanwhile a larger in number 30,780 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 55,158 bags.  

The commodity markets were mixed in trade on Friday and with some support coming from the weaker nature of the U.S. dollar, to see the overall macro commodity index managing to maintain some degree of modest buoyancy for the day.   The Oil, Natural Gas, Soybean, Gold and Silver markets had a day of buoyancy and the London robusta Coffee market ended the day on a steady note, while the Sugar, Cocoa, New York arabica Coffee, Cotton, Coper, Orange Juice, Wheat and Corn markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.08% higher; to register this index at 424.00.   The day starts with the U.S. Dollar marginally softer and trading at 1.374 to Sterling, at 1.222 to the Euro and 3.205 to the Brazilian Real, while North Sea Oil is showing a degree of early bouoyancy and is selling at US$ 70.55 per barrel. 

The London and New York markets started the day on Friday on a steady note and with the London market sticking close to par and the New York market maintaining some modest buoyancy, into the early afternoon trade.   As the afternoon progressed the London market continued to trade close to par, but with the New York market starting to falter and head back into negative territory and followed by some more modest losses for the London market, but with both markets able to bounce off the lows and to see the New York market recover most of its losses and the London market head back into modest positive territory. 

The London market ended the day on a steady note and with 12.5% of the earlier gains of the day intact, while the New York market ended the day on a negative note, but having recovered 71.1% of the earlier losses of the day by the close.   The New York market shall be closed for the Martin Luther King Jnr. Public holiday today and to leave the London market to trade solo for the day, which is unlikely to develop any excitement for the London market and one might expect to see this market due for only a steady start for early trade today, against the prices set on Friday, as follows: 

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

JAN    1746 + 1 

MAR   1728 + 1                                              MAR   122.25 – 0.55

MAY   1724 – 3                                              MAY   124.70 – 0.55

JUL    1754 – 3                                              JUL    127.05 – 0.55 

SEP    1758 – 4                                              SEP    129.40 – 0.60

NOV   1763 – 4                                              DEC    132.85 – 0.55

JAN    1769 – 4                                              MAR   136.15 – 0.60

MAR   1785 – 4                                              MAY   138.30 – 0.55

MAY   1804 – 4                                               JUL   140.20 – 0.55

JUL    1836 – 4                                               SEP   141.95 – 0.60