Coffee Market Report February 13 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 10.41% over the week of trade leading up to Tuesday 6th. February; to register a new net short sold position of 55,459 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 6.71%, to register a net long position of 41,470 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 4.88%, to register a net short sold position of 56,600 Lots.  This net short sold position which is the equivalent of 16,045,849 bags has most likely been further increased, following a period of mixed but overall more negative trade that has since followed and likewise, that of the managed money fund sector of the market. 

The evidence of the net short positions held by the speculative and managed money fund sectors of the New York market as of Tuesday last week and with this market having lost further weight since then, might be a sign for some degree of exhaustion and the potential for some degree of buoyancy in the coming days.  Especially in terms of the fact that Brazil while enjoying the carnival holiday is off the field of play at present, which reduces the volume of price fixation selling over the New York market.   But so far and with the repetitive forecasts for a larger new coffee crop soon due for Brazil, it would seem that any recovery shall be modest and would soon encounter price fixation selling pressure from the presently relatively price resistant and quiet Mexican and Central American producer bloc. 

The May 2018 to May 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 43.26 usc/Lb., while this equates to 35.03% 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 285 bags yesterday; to register these stocks at 1,917,677 bags.  There was meanwhile a larger in number 8,820 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 23,470 bags.  

These Certified New York stocks as is traditional remain dominated by the coffees from Mexico and Central America, which account for 68.87% of the stocks and followed by Peru with an 11.14% share and Colombia with an 8.02% share of the stocks, while the African bloc and made up by arabica coffees from Burundi, Rwanda and Uganda, account for 8.61% of the coffees.   The modest balance of these stocks are made up by a 1.88% share contributed from India, an 1.09% share from Brazil and a very modest 0.39% share from Papua New Guinea. 

The European based warehouses of the exchange that are based in Antwerp, Barcelona, Hamburg and Bremen account for 76.02% of the Certified stocks of this New York washed arabica coffee exchange, with the U.S.A. based warehouses of the exchange in Houston, Miami, New Orleans, New York and Virginia remaining with their relatively modest 459,917 bags of certified stocks.   While the Antwerp based warehouses of the exchange presently account for all of the coffees pending grading for the exchange. 

The commodity markets were mixed yesterday and with many encountering some degree of corrective buoyancy, following the overall soft close to last week, to see the overall macro commodity index taking a positive track for the day.   The Oil, Sugar, Copper, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a day of buoyancy and the London robusta Coffee market was steady, while the Natural Gas, Cocoa, New York arabica Coffee and Cotton markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.68% higher; to register this index at 418.98.   The day starts with the U.S. Dollar tending softer and trading at 1.386 to Sterling, at 1.232 to the Euro and the dollar is buying 3.295 Brazilian Real, while North Sea Oil is tending softer in early trade and is selling at US$ 62.00 per barrel. 

The London and New York markets started trading around par yesterday and with both markets soon showing some buoyancy, to see the markets taking a positive track into the early afternoon trade.   As the afternoon progressed and with volumes picking up, the New York market started to come under pressure and to drop back into modest negative territory, before bouncing off the lows adn taking a sideways softer track for the rest of the day and while the London market drifted back to trade close to par through to the close. 

The London market ended the day on a steady note and on par, while the New York market ended the day on a softer note, but having recovered 71.4% of the earlier losses of the day.    This close and with a softer U.S. dollar in play, only modest price fixation selling activity from the producers and the speculative sector of the market somewhat excessively sold short, is perhaps supportive for some degree of correction due for the New York market.   This potential factor, might be supportive for sentiment and indicate the potential for a steady to perhaps even buoyant start for the New York market and a steady start for the London market for early trade today, against the prices set yesterday, as follows: 

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

MAR   1789 – 4                                               MAR   121.40 – 0.45

MAY   1769 unch                                            MAY   123.50 – 0.30

JUL    1793 + 1                                                JUL    125.65 – 0.30 

SEP    1792 + 1                                                SEP    127.90 – 0.35

NOV   1794 – 2                                                DEC    131.40 – 0.30

JAN    1799 – 1                                                MAR   134.75 – 0.25

MAR   1810 – 1                                                MAY   136.75 – 0.25

MAY   1824 – 1                                                 JUL   138.50 – 0.25

JUL    1853 – 1                                                 SEP   140.05 – 0.20

SEP    1856 – 1                                                 DEC   142.50 – 0.20