Coffee Market Report April 10 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 8.23% over the week of trade leading up to Tuesday 3rd. April; to register a new net short sold position of 64,493 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 3.38%, to register a net long position of 38,713 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 10.2%, to register a net short sold position of 61,685 Lots.  This net short sold position which is the equivalent of 17,487,424 bags has most likely been marginally decreased, following a period of mixed but overall more positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

The extensive net short sold status of the New York market did however attract some volumes of short covering buying yesterday, but the upside potential of this market remains limited for the present, but the overall bearish sentiment that prevails.   Sentiment that is being fuelled by the prospects of rising arabica coffee supply on the medium term, based on the forecast for a significantly larger new Brazil crop. 

Brazil aside the coffee markets are devoid of any striking news and with medium term weather forecasts indicating a normal start to the May to September rain season for the Vietnam coffee districts, there are presently no weather-related stories of concern coming to the fore.   This rain season being the short term factor that is seemingly not going to be a matter of concern, to be followed by the frost threat factor for the southern Brazil coffee districts over June and July, but with no significant incidences of frost for the last twenty three years, few would foresee this to be a threat. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 40.76 usc/Lb., while this equates to 33.81% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 1,117 bags yesterday; to register these stocks at 1,950,758 bags.  There were meanwhile a larger in number 7,667 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 17,612 bags. 

The commodity markets had a good start for the week yesterday and with most markets adding value, to see the overall macro commodity index on an upside track for the day.   The Oil, Sugar, Cocoa, Coffee, Cotton, Copper, Wheat, Corn and Soybean markets had a day of buoyancy, while the Natural Gas and Orange Juice markets were steady for the day.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.1% higher; to see this index registered at 424.85.  The day starts with the U.S. Dollar near to steady and trading at 1.413 to Sterling, at 1.231 to the Euro and with the dollar buying 3.422 Brazilian Real, while North Sea Oil is steady and is selling at US$ 68.70 per barrel. 

The London and New York markets started the day yesterday on a positive note and with both markets maintaining their buoyancy, into the early afternoon trade.   As the afternoon progressed and with added support coming from the positive nature of the overall macro commodity index, both markets managed to maintain their buoyancy and make added gains, before coming off their highs to head towards a nevertheless positive end to the day. 

The London market ended the day on positive note and with a very negative note and with 76% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 59% of the earlier gains of the day intact.   This close is likely to inspire some degree of confidence, but many shall be conscious of significant weight of producer price fixation selling that hangs over both markets and thus one might expect to see little better than a hesitantly steady to modestly buoyant start for early trade today, against the positive prices set yesterday, as follows: 

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

MAY   1743 + 13                                             MAY   118.65 + 1.20

JUL    1759 + 13                                              JUL    120.55 + 1.15 

SEP    1750 + 8                                               SEP    122.55 + 1.15

NOV   1754 + 7                                               DEC    125.90 + 1.10

JAN    1756 + 6                                               MAR   129.40 + 1.05

MAR   1764 + 5                                               MAY   131.80 + 1.05

MAY   1776 + 5                                                JUL    134.00 + 1.00

JUL    1789 + 5                                                SEP    135.90 + 0.95

SEP    1802 + 5                                                DEC   138.70 + 0.90

NOV   1807 + 5                                                MAR   141.50 + 0.90