Coffee Market Report October 04 2016

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 long position within the market by 4.34% over the week of trade leading up to Tuesday 27th. September; to register a net long position of 44,682 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 4.22%, to register a net long position of 38,122 Lots on the day. 

Over the same week the Non Commercial Speculative sector of this market decreased their long position within the market by 6.14%, to register net long position of 37,498 Lots.   This net long position which is the equivalent of 10,630,517 bags is most likely to have been further eroded, following the period of mixed but overall more negative trade that 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 decrease their net long position within this market by 5.57% during the week of trade leading up to Tuesday 27th. September; to register a long position of 35,009 Lots.  This net long position which is the equivalent of 5,834,833 bags has most likely been since marginally decreased, following the period of mixed but overall slightly softer trade that has since followed. 

The National Coffee Institute in Costa Rica have reported that the country’s coffee exports for the month of September were 11,815 bags or 31.2% lower than the same month last year, at a total of 49,679 bags.   This has contributed to the countries cumulative coffee exports for the October 2015 to September 2016 coffee year to have been 82,892 bags or 7.13% higher than the previous coffee year, at a total of 1,244,963 bags. 

The preliminary coffee exports for the month of September have been announced by Brazil to report that the country’s coffee exports for the month were 163,110 bags or 5.59% lower than the same month last year, at a total of 2,755,438 bags.    This lower September export number that is 4.98% higher than the previous month of August is however not significant in terms of Brazil arabica coffee supply as at this time last year there was a significant contribution of exports of conilon robusta coffees, which following this year’s lower conilon crop, is no longer the case.  Therefore, the September exports would indicate a free flow of Brazil new crop arabica coffees, are presently coming to the consumer markets. 

The Coffee Board of India have reported that the country’s coffee exports for the eight and three quarter month period from the 1st. January to the 23rd. September were 499,550 bags or 15.58% higher than the same period in the previous year, at a total of 3,705,933 bags.  

The Ivory Coast have reported that the country’s coffee exports that are made up by robusta coffees for the first eight months of this year were 25% higher than the same period last year, at a total of 874,733 bags.  This number with expectations for exports for the year being due to exceed 1.4 million bags, would indicate that there are some good volumes still due to come to the consumer markets for the rest of the year.    

Meanwhile aside from generally good export volumes from the producers, the markets are in receipt of rainfall reports from Brazil and this along with evidence of significant long position still being held within the New York market, has had some modest negative impact upon sentiment within the volatile New York market yesterday.   There are however while there are seemingly no fears over medium to longer term arabica coffee supply, still concerns over the robusta coffee supply for the next nine to ten months.  

The November to December contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 57.87 usc/Lb., while this equates to a 39.22% price discount for the London robusta coffee market.  This arbitrage is perhaps becoming a less attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends. 

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange were seen to increase by 405 bags yesterday; to register these stocks at 1,258,758 bags.  There was meanwhile a larger in number 6,985 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,855 bags. 

The commodity markets had a mixed day yesterday, but with the overall macro commodity index taking a modestly buoyant track for the day.   The Oil, Natural Gas, Cocoa, Cotton, Corn and Soybean markets had a day of buoyancy, while the Sugar, Coffee, Copper, Orange Juice, Wheat, 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 0.07% higher; to see this Index registered at 418.75.   The day starts with the U.S. dollar showing a degree of buoyancy in early trade and trading at 1.284 to Sterling and 1.119 to the Euro, while North Sea Oil is steady in early trade and trading at 48.75 per barrel. 

The London market started the day yesterday on a marginally softer note, while the New York market started with hesitant buoyancy, but this was short lived and the New York market soon slipped back into modest negative territory.   This was the start to the slide and with both markets losing weight into the afternoon trade, but while the London market soon stabilised to take a softer sideways track for the rest of the day’s trade, the New York market remained under pressure and continued on a downside track for the day.   The London market ended the day on a soft note and with 75% of the earlier losses of the day intact, the New York market ended the day on a very soft note and with 90.9% of the earlier losses of the day intact.    This close does little to inspire and assists to paint something of a negative picture for the market charts, but one might expect to see a degree of caution coming into play and perhaps a hesitant near to steady start due for early trade today against the prices set yesterday, as follows: 

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

NOV     1977 – 27                                               DEC   147.55 – 4.00

JAN      2004 – 23                                              MAR   150.90 – 4.00

MAR     2014 – 22                                              MAY   152.80 – 3.90

MAY     2021 – 22                                               JUL   154.55 – 3.90

JUL      2028 – 22                                               SEP   156.15 – 3.90

SEP      2035 – 24                                              DEC   158.25 – 3.85

NOV     2043 – 24                                              MAR   160.00 – 3.80

JAN      2053 – 24                                              MAY   161.05 – 3.80

MAR     2060 – 24                                               JUL   162.05 – 3.80

MAY     2063 – 24                                               SEP   163.00 – 3.80