Coffee Market Report February 05 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 8.49% during the week of trade leading up to Tuesday 30th. January; to register a net short sold position of 53,965 Lots on the day. This net short-sold position which is the equivalent of 15,298,838 bags has most likely been once again increased, following the period of mixed but mostly more negative 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 10.79% during the week of trade leading up to Tuesday 30th. January; to register a net short sold position of 17,678 Lots on the day.  This net short sold position which is the equivalent of 2,946,333 bags has most likely been reduced, following a period of mixed but overall more buoyant trade, which has since followed. 

Last week saw the New York and London markets mostly on opposite tracks, with the New York market tending softer as against the somewhat unexpected relative buoyancy within the London market.   It is traditional for Vietnamese farmers to show some degree of selling aggression of new crop coffee stocks ahead of the Tet New Year holiday, but with this week-long holiday due to start on Thursday afternoon next week, there seemingly has not yet been any particularly aggressive price fixation selling pressure impacting upon the London. 

But with only nine more trading days’ or rather eight more days if one is to assume that farmers shall already start celebrating on the 15th. as the eve of the new Year of the Dog, one would think that there might remain some weight of producer selling pressure due for the London market in the coming days.  Especially so if the somewhat unpredictable and volatile New York market continues to remain at the lower end of the prevailing price trading range, which would do little to inspire confidence in the coffee markets in general.  

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 43.60 usc/Lb., while this equates to 35.52% 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 11,250 bags on Friday; to register these stocks at 1,953,220 bags.  There was meanwhile a smaller in number 1,425 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 16,036 bags.  

The commodity markets and with the U.S. dollar starting to show some renewed muscle on Friday, we mostly softer in nature, to see the overall macro commodity index taking a softer track for the day.  The Natural Gas, Sugar and Cocoa markets nevertheless had a day of buoyancy, while the Oil, Coffee, Cotton, 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 0.46% lower; to register this index at 428.43.   The day starts with the U.S. Dollar steady and trading at 1.412 to Sterling, at 1.246 to the Euro and the dollar is buying 3.218 Brazilian Real, while North Sea Oil is tending softer and selling at US$ 67.25 per barrel. 

The London and New York markets started the day on Friday on a hesitantly steady note and trading either side of par, but the New York market soon started to falter and while the London market remained close to par, the New York market slipped into negative territory by the early afternoon trade.   As the afternoon progressed the London market joined the New York market in negative territory and with both markets taking an erratic negative sideways track though to the close of the day.  

The London market ended the day on a negative note and with 46.7% of the earlier losses of the day intact, while the New York market ended the day on a negative note, but having recovered 64.6% of the earlier losses of the day.   This close and with the more robust U.S. dollar in play and with the added weakness of the Brazil Real that tends to indicate increased price fixation selling volumes due to come to the New York market, is unlikely to inspire confidence and one might expect to see only a near to steady start due for the markets for early trade today, against the prices set yesterday, as follows: 

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

MAR   1764 – 5                                              MAR   120.40 – 1.00

MAY   1745 – 7                                              MAY   122.75 – 1.00

JUL    1779 – 7                                               JUL   125.10 – 1.05 

SEP    1781 – 8                                              SEP    127.50 – 1.00

NOV   1784 – 9                                              DEC    130.90 – 1.00

JAN    1789 – 10                                            MAR   134.15 – 1.05

MAR   1803 – 8                                              MAY   136.20 – 1.00

MAY   1819 – 6                                               JUL   138.00 – 1.00

JUL    1849 – 6                                               SEP   139.70 – 1.00

SEP    1852 – 6                                              DEC   142.50 – 0.95