Coffee Market Report April 24 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 18.18% over the week of trade leading up to Tuesday 17th. April; to register a new net short sold position of 70,771 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 4.67%, to register a net long position of 41,287 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 22.86%, to register a net short sold position of 70,557 Lots.  This net short sold position which is the equivalent of 20,008,267 bags has most likely been since reduced, following the period of mixed by overall more positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

The evidence of the extensive net short sold position of the speculative and fund sectors of the New York market has brought into play some degree of short covering buying for the market, but with the renewed muscle of the U.S. dollar and with emerging market currencies having lost some value for the start of the week, it brings with it the potential for increased volumes of producer price fixation hedge selling pressure for the markets.   This with the prevailing bearish news of the forthcoming new and larger Brazil crop that dominates market sentiment, is likely to create something of a nearby ceiling for both markets. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 38.71 usc/Lb., while this equates to 32.54% 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 11,310 bags yesterday; to register these stocks at 1,990,502 bags.  There were meanwhile a smaller in number 8,497 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 52,592 bags. 

The commodity markets were mixed in trade yesterday but with many markets taking a softer track for the day and assisted by the renewed muscle shown by the U.S. dollar, the overall macro commodity index likewise was softer for the day.  The Brent Oil, Coffee, Cotton, Orange Juice and Corn markets had a day of buoyancy and the Cocoa market was steady for the day, while the U.S. Oil, Natural Gas, Sugar, Copper, Wheat, 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 0.64% lower; to see this index registered at 428.66.  The day starts with the U.S. Dollar steady and trading at 1.394 to Sterling, at 1.221 to the Euro and with the dollar buying 3.452 Brazilian Real, while North Sea Oil is showing a degree of buoyancy and is selling at US$ 75.35 per barrel. 

The London and New York markets started the day yesterday with a degree of buoyancy and holding on to these gains, into the early afternoon trade.  As the afternoon progressed the New York market added some more value and the London market maintained its relatively more modest gains of the day, to see both market then proceed on something of a steady and positive sideways track for most of the rest of the day’s trade. 

The London market ended the day on a positive note and with 71.4% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 80.6% of the earlier gains of the day intact.  This close is likely to inspire some degree of hesitant confidence but with the weight of producer price fixation selling pressure still hanging over the market, one might expect to see little better than a 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   1736 + 14                                             MAY   117.00 + 1.25

JUL    1769 + 10                                              JUL    118.95 + 1.25 

SEP    1748 + 9                                               SEP    121.00 + 1.20

NOV   1748 + 9                                               DEC    124.50 + 1.20

JAN    1750 + 8                                               MAR   128.00 + 1.20

MAR   1760 + 7                                               MAY   130.30 + 1.15

MAY   1772 + 7                                                JUL    132.50 + 1.15

JUL    1785 + 7                                                SEP    134.40 + 1.10

SEP    1797 + 7                                                DEC   137.20 + 1.05

NOV   1814 + 7                                                MAR   140.00 + 1.05