Coffee Market Report May 15 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 10.02% over the week of trade leading up to Tuesday 9th. May; to register a new net short sold position of 40,725 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.7%, to register a net long position of 35,890 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 8.14%, to register a net short sold position of 41,785 Lots. This net short sold position which is the equivalent of 11,845,862 bags has most likely been increased again, following the period of mixed by overall more negative trade that has since followed and likewise, that of the managed money fund sector of the market.
The evidence of the reduction of the net short sold position of the speculative and fund sectors of the New York market and to a lesser extent the London market, has proved to be negative for sentiment for the start of the weeks trade within the markets. With the funds and lacking any supportive fundamental news, seemingly once again sellers of the coffee markets. Despite being still relatively well short sold into the New York market and ahead of the risk period, that comes with the generally side-lined Brazil frost season.
The United States Department of Agriculture have reported that Ecuador once an exporter of both arabica and robusta coffees but over the past couple of decades an importer of green coffee and exporter of value added soluble coffees, is experiencing some degree of growth in coffee production. In this respect they foresee that the countries green coffee production for the October 2018 to September 2019 coffee year shall increase by 50,000 bags or 24.39%, to total 255,000 bags. This made up from an approximate 53 to 47 ratio, of arabica and robusta coffees.
However, with an estimated domestic coffee consumption of 217,000 bags per annum and with exports of mostly soluble coffees which account for close to 81% of total coffee exports of the equivalent of 742,000 bags of coffee, the country remains very much a consumer rather than producer country. While in terms of the prevailing soft prices of green coffee, it is really only Ecuador and with its value add of green coffee imports and within this very significant coffee producer regions of South America and surrounded by leading producers, who is presently making reasonable profits out of being in the coffee industry.
The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.58 usc/Lb., while this equates to 32.81% 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 275 bags on yesterday; to register these stocks at 1,998,890 bags. There was meanwhile a larger in number 3,595 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 63,139 bags.
The commodity markets have started the week on a mixed and lacklustre flat note, with the overall macro commodity index moving either side of par through the day yesterday. The Oil, Sugar and Cotton markets ended the day on a positive note, while the Cocoa, Coffee, Gold and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.16% lower; to see this index registered at 435.65. The day starts with the U.S. Dollar showing some degree of muscle and trading at 1.354 to Sterling, at 1.192 to the Euro and with the dollar buying 3.621 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 78.40 per barrel.
The London and New York markets started the day on a softer note yesterday and with both markets remaining soft, into the early afternoon trade. As the afternoon progressed and with the combination of the negative influences of a weakening Brazil Real and the evidence of the reduced net short sold position of the funds, the New York market started to attract more selling pressure and to trigger sell stops that accentuated the markets losses. Meanwhile the London market remained in likewise but more modest negative territory, through to the close of trade for the day.
The London market ended the day on a negative note and with 69.6% of losses of the day intact, while the New York market ended the day on a very negative note and with 81.8% of the earlier losses of the day intact. This close contributes to a negative picture for the charts and does little to inspire confidence, but one might nevertheless expect that with the prevailing soft prices that there might be some degree of caution and hesitancy coming into play, to contribute towards a near to steady start for early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1735 – 16 MAY 113.65 – 1.60
JUL 1742 – 16 JUL 117.60 – 1.80
SEP 1735 – 10 SEP 119.90 – 1.80
NOV 1740 – 9 DEC 123.45 – 1.75
JAN 1745 – 9 MAR 127.00 – 1.75
MAR 1754 – 10 MAY 129.30 – 1.75
MAY 1765 – 12 JUL 131.50 – 1.75
JUL 1777 – 14 SEP 133.50 – 1.70
SEP 1790 – 14 DEC 136.25 – 1.65
NOV 1804 – 14 MAR 138.90 – 1.65