Coffee Market Report January 29 2018

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 7.12% during the week of trade leading up to Tuesday 23rd. January; to register a net short sold position of 58,970 Lots on the day. This net short-sold position which is the equivalent of 16,717,734 bags has most likely been once again decreased, following the period of mixed but mostly more positive 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 31.15% during the week of trade leading up to Tuesday 23rd. January; to register a net short sold position of 15,957 Lots on the day.  This net short sold position which is the equivalent of 2,659,500 bags has most likely been further reduced, following a period of mixed but overall more buoyant trade, which has since followed. 

The extensive nature of the speculative net short sold position within the New York market would be seen to be supportive for market sentiment, but there is no doubt that some of the volumes of positive trade over the second half of last week would have included speculative short covering and reduced this net short position.  But what is also interesting is the fact that the certified stocks held against the New York market that had over the past few months been steadily increasing and had broken through the somewhat phycological 2 million bags market, had again started to decline and this might perhaps, encourage some more speculative short covering for the New York market to come into play in today’s trade. 

With the export registrations for the month of January in hand the General Statistics Office in Vietnam have estimated that the countries coffee exports of mostly robusta coffees for the month shall be 25.1% higher than the same month last year, at a total of approximately 2.92 million bags.   This is not an unexpected number in terms of exports, as it comes to the fore as something of a catch up in export volumes following the late start to the rain delayed new crop harvest at the end of last year, which with a lack of carry over stocks in hand, had tightened up Vietnam coffee supply for the last quarter of the year. 

The March 2018 to March 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 45.00 usc/Lb., while this equates to 35.96% 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 2,231 bags on Friday; to register these stocks at 1,979,375 bags.  There was meanwhile a larger in number 16,338 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,708 bags.  

The commodity markets had a mixed but relatively stable day on Friday, to see the overall macro commodity index maintaining a degree of buoyancy for the day.   The Oil, Natural Gas, Sugar, Cocoa, Coffee, Orange Juice, Wheat and Corn markets had a day of buoyancy, while the Cotton, Copper, 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 0.195% higher; to register this index at 433.67.   The day starts with the U.S. Dollar showing some degree of early buoyancy and trading at 1.413 to Sterling, at 1.241 to the Euro and the dollar is buying 3.153 Brazilian Real, while North Sea Oil is steady and is selling at US$ 70.41 per barrel. 

The London market started the day on Friday trading to the positive side of par, while the New York market started the day with some degree of buoyancy before falling back towards par, to join the London market in trading around par into the early afternoon trade.   The New York market did however very quickly move back into positive territory and to take a somewhat sideways modestly positive track for the rest of the day, while the London market maintained a sideways track at closer to par and towards a steady close for the day that was somewhat less impressive, that the New York market moving to close the day on something of a high. 

The London market ended the day on a steady note and with 50% of the earlier modest gains of the day intact, while the New York market ended the day on a positive note and with 88.2% of the earlier gains of the day intact.   This close and with some degree of stability being experienced within the New York market might assist towards some degree of confidence and despite the potential pressure that comes with good volumes of producer selling hanging over both the markets, for the markets to be due a follow through steady to buoyant start for early trade today against the prices set on Friday, as follows: 

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

JAN    1772 – 5     

MAR   1767 + 4                                              MAR   125.15 + 1.50

MAY   1746 + 1                                              MAY   127.50 + 1.45

JUL    1778 + 3                                               JUL   129.85 + 1.40 

SEP    1781 + 2                                              SEP    132.25 + 1.40

NOV   1787 + 1                                              DEC    135.70 + 1.30

JAN    1794 + 2                                              MAR   139.00 + 1.25

MAR   1807 + 2                                              MAY   141.00 + 1.30

MAY   1821 + 2                                               JUL   142.70 + 1.25

JUL    1851 + 2                                               SEP   144.35 + 1.25