Coffee Market Report April 30 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 16.21% during the week of trade leading up to Tuesday 24th. April; to register a net short sold position of 59,134 Lots on the day. This net short-sold position which is the equivalent of 16,764.227 bags has most likely been further reduced, following the period of mixed but overall more positive trade, which 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 short sold position within this market by 21.8% during the week of trade leading up to Tuesday 24th. April; to register a net short sold position of 14,328 Lots on the day.  This net short sold position which is the equivalent of 2,388,000 bags has most likely been once again increased, following the period of mixed but overall more negative trade, which has since followed. 

With the months export registrations in hand, the General Statistics Office in Vietnam have estimated that the countries coffee exports for the month of April shall total close to 2.67 million bags of mostly robusta coffees.  This they say would contribute to the countries cumulative exports for the first four months of this year to be 17.7% higher than the same period last year, at a total of approximately 11.48 million bags.  

These Vietnam coffee exports while significantly higher in volume for the first four months of this year the report notes, were only 0.2% higher in value, at US$ 1,306,600,000.  While to put it in perspective and while in global coffee terms the Vietnam coffee supply is very significant, the value of coffee exports only contributed to 1.8% of the total value of the countries exports for the first four months of this year.   The country having reported total exports of more than 73.76 billion U.S. dollars for the period, which resulted in a 3.39 billion U.S. dollar trade surplus for the period. 

This significant dip in the value of the Vietnam coffee exports out of Vietnam in terms of unit income for the farmers and while in terms of Vietnam is countered by the improved volume of sales, is common to all producers and for those who have not benefitted from improve crop volumes but nevertheless have steady overall costs of production, it is a significant problem at present.  This is further illustrated by Uganda who have reported 3.63% increase in the volume of the country’s coffee exports for the first six months of the present October 2017 to September 2018 coffee year, but a corresponding 6.25% decrease in the value of coffee exports for the same period. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 42.48 usc/Lb., while this equates to 34.71% 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 353 bags on Friday; to register these stocks at 1,991,543 bags.  There were meanwhile a larger in number 7,843 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,971 bags. 

The commodity markets were mixed in trade on Friday but with many markets experiencing a day of steady to buoyant trade, to see the overall macro commodity index taking a modestly buoyant track for the day.  The Oil, Sugar, Cocoa, New York arabica Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean and Gold markets had a day of buoyancy, while the Natural Gas, London robusta Coffee, Copper and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.39% higher; to see this index registered at 432.09.  The day starts with the U.S. Dollar steady and trading at 1.378 to Sterling, at 1.213 to the Euro and with the dollar buying 3.456 Brazilian Real, while North Sea Oil is steady and is selling at US$ 75.20 per barrel. 

The London and New York markets started the day on Friday trading mostly marginally south of par, but while the New York market retained this stance into the early afternoon trade, the London market had slipped deeper into negative territory.   As the afternoon progressed the New York market started to attract support and moved into positive territory and with buy stops being triggered, the market added more value, while the London market moved back into modest positive territory.   The London market soon encountered selling pressure though and moved back into negative territory, while the New York market maintained a steady positive track for the rest of the day’s trade. 

The London market ended the day on a negative note and with 81.8% of the earlier losses of the day intact, while the New York market ended the day on a very positive note and with 96.5% of the earlier gains of the day intact.  This close provides mixed signals and but with many producers on their May Day (Workers) holiday tomorrow and many perhaps taking a bridging holiday, it might lessen he volumes of producer price fixation selling for both markets and one might thus suspect that the markets are due for a steady start for early trade today, against the prices set on Friday, as follows: 

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

MAY   1726 – 12                                             MAY   120.35 + 2.75

JUL    1762 – 9                                                JUL    122.40 + 2.75 

SEP    1746 – 6                                               SEP    124.45 + 2.70

NOV   1747 – 6                                               DEC    127.90 + 2.65

JAN    1749 – 6                                               MAR   131.40 + 2.60

MAR   1759 – 6                                               MAY   133.65 + 2.65

MAY   1771 – 6                                                JUL    135.75 + 2.65

JUL    1784 – 6                                                SEP    137.60 + 2.65

SEP    1796 – 6                                                DEC   140.24 + 2.65

NOV   1811 – 8                                                MAR   142.90 + 2.65