Coffee Market Report April 04 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 0.035% over the week of trade leading up to Tuesday 27th. March; to register a new net short sold position of 59,589 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.17%, to register a net long position of 40,068 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 2.43%, to register a net short sold position of 55,978 Lots.  This net short sold position which is the equivalent of 15,869,515 bags has most likely been marginally increased again, 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 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 27.1% during the week of trade leading up to Tuesday 27th. March; to register a net short sold position of 21,601 Lots on the day.  This net short sold position which is the equivalent of 3,600,167 bags has most likely been reduced, following the mixed but overall more positive trade that has since followed. 

The International Coffee Organisation which presently includes 44 coffee producer counties, the full host of European Union countries and a further 6 further consumer market countries and including the USA, has announced that the Government of the USA has notified that it shall withdraw from the International Coffee Agreement.   This shall be effective of Sunday 3rd. June. 

The International Coffee Organisation has meanwhile reported that global coffee exports for the month of February were 0.4% higher than the same month last year, at a total of 9.93 million bags.   This they report has contributed to the global coffee exports for the first five months of the present October 2017 to September 2018 coffee year to be 3.18% higher than the same period in the previous coffee year, at a total of 50.98 million bags. 

The free flow of coffee towards the already relatively well stocked mainstream consumer markets and despite the relatively modest volumes coming to the fore from Brazil at present, contributes to the bearish sentiment within the coffee terminal markets and with the reference prices of these markets making it difficult for many producers to profit from their new crop sales.  This is well illustrated by the request from the Coffee Federation in Colombia to their government to meet today, to try to formulate a plan to assist to finance their struggling coffee farmers.   A request that most likely shall bring to the fore some form of assistance, as the Colombian government has a history of stepping in to assist their coffee farming industry at times of low prices. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.86 usc/Lb., while this equates to 32.75% 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 3,175 bags yesterday; to register these stocks at 1,944,009 bags.  There were meanwhile a smaller in number 2,382 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 33,758 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to be unchanged over the week of trade leading up to Monday 2nd. April, to see these stocks registered at 1,341,167 bags, on the day. 

The commodity markets encountered some renewed muscle for the U.S. dollar yesterday, with impacted negatively within several markets and to see the overall macro commodity index tending softer for the day.  The Oil, Natural Gas, Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a day of buoyancy, while the Sugar, Cocoa, Orange Juice, 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 0.32% lower; to see this index registered at 420.66.  The day starts with the U.S. Dollar steady and trading at 1.408 to Sterling, at 1.227 to the Euro and with the dollar buying 3.341 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 66.60 per barrel. 

The London market started the day yesterday of a softer note, while the New York market started the day with modest buoyancy and with the markets maintaining this mixed stance into the early afternoon trade.  As the afternoon progressed the London market started to recover and finally moved back to join the New York market in positive territory and to post some reasonable gains for the day, within late trade.  

The London market ended the day on a positive note and with 75% of the earlier gains of the day intact, while the New York market ended the day on a modestly positive note and with only 20% of the earlier gains of the day intact.   This close would tend to indicate that there is some degree of consolidation in play and might assist along with the evidence of the significant net short sold positions within the markets, to inspire as follow through steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1739 + 14                                              MAY    116.60 + 0.20

JUL    1759 + 9                                                 JUL    118.65 + 0.15 

SEP    1756 + 5                                                SEP    120.80 + 0.10

NOV   1760 + 5                                                DEC    124.25 + 0.15

JAN    1765 + 5                                                MAR   127.75 + 0.10

MAR   1776 + 5                                                MAY   130.15 + 0.15

MAY   1789 + 5                                                 JUL    132.35 + 0.20

JUL    1803 + 5                                                 SEP    134.30 + 0.25

SEP    1816 + 5                                                 DEC   137.15 + 0.35

NOV   1782 open                                             MAR   139.90 + 0.45