Coffee Market Report May 21 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 19.03% during the week of trade leading up to Tuesday 15th. May; to register a net short sold position of 49,735 Lots on the day. This net short-sold position which is the equivalent of 14,099,652 bags has most likely been little changed to perhaps marginally decreased again, following the period of mixed but overall modestly buoyant 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 increase their net short sold position within this market by 268.43% during the week of trade leading up to Tuesday 15th. May; to register a net short sold position of 10,211 Lots on the day.  This net short sold position which is the equivalent of 2,335,833 bags has most likely been decreased again, following the period of mixed but overall more positive trade, which has since followed. 

The respected U.S. Department of Agriculture Global Agricultural Network USDA have reported that they had reduced their earlier coffee production forecast for Colombia for the present October 2017 to September 2018 coffee year by 3.4%, to now assess the crop for the present coffee year at 14.2 million bags.  They do however so long as there are no unforeseen climatic issues developing to the fore, forecast that the country’s coffee production for the forthcoming October 2018 to September 2019 coffee year shall increase by 2.11%, to total 14.5 million bags of mostly fine washed arabica coffees.   

The USDA have likewise reported that they have reduced their earlier coffee production forecast for India for the present October 2017 to September 2018 coffee year by 3.21%, to now assess the crop for the present coffee year at 5.42 million bags.  They do however so long as there are no unforeseen climatic issues developing to the fore, forecast that the country’s coffee production for the forthcoming October 2018 to September 2019 coffee year shall increase by 1.48%, to total 5.5 million bags.   This production made up by an approximate 74.9 to 25.1 ratio of robusta and arabica coffees. 

The USDA have increased their earlier coffee production forecast for Mexico for the present October 2017 to September 2018 coffee by 5.26% to now assess the crop for the present coffee year at 4 million bags.  They furthermore and so long as there are no unforeseen climatic issues developing to the fore, forecast that the country’s coffee production for the forthcoming October 2018 to September 2019 coffee year shall increase by 12.5%, to total 4.5 million bags.   This production made up by an approximate 95.5 to 4.5 ratio of arabica and robusta coffees. 

The USDA have increased their earlier coffee production forecast for Kenya for the present October 2017 to September 2018 coffee by 6.25% to now assess the crop for the present coffee year at 850,000 bags.  They furthermore have and so long as there are no unforeseen climatic issues developing to the fore, forecast that the country’s coffee production for the forthcoming October 2018 to September 2019 coffee year shall remain unchanged at 850,000 bags of mostly fine washed arabica coffees. 

The July 2018 to July 2018 contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 38.08 usc/Lb., while this equates to 32.27% 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 4,868 bags on Friday; to register these stocks at 2,015,278 bags.  There was meanwhile a smaller in number 4,405 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,552 bags. 

The commodity markets were mixed in trade on Friday, but with the overall macro commodity index taking a modestly positive track for the day.  The Natural Gas, Sugar, Cocoa, Coffee, Cotton, Wheat, Corn, Soybean and Gold markets ended the day with some degree of buoyancy, while the Oil, Copper, Orange Juice and Silver market ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% higher; to see this index registered at 434.20.  The day starts with the U.S. Dollar showing some more muscle and trading at 1.353 to Sterling, at 1.174 to the Euro and with the dollar buying 3.737 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 78.25 per barrel. 

The London and New York markets started the day on Friday with immediate buoyancy and with both markets maintaining this positive stance, into the early afternoon trade.    As the afternoon progressed the markets started to falter and to head back to par and on through into modest negative territory, but with the markets managing to bounce back from the lows in late trade and towards a steady end to the day. 

The London market ended the day on a positive note and with 75% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note but with only 15.5% of the earlier modest gains of the day intact.   This modestly positive overall close might assist to inspire a degree of confidence, but one might suspect that the bearish factors of the large new Brazil crop and the conducive to selling softer value of the Brazil Real shall have and influence towards little better than a near to steady start for early trade today, against the prices set on Friday, as follows: 

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

MAY   1750 + 10                                             MAY   113.95 + 0.10

JUL    1762 + 12                                              JUL    118.00 + 0.10 

SEP    1748 + 11                                             SEP    120.25 + 0.15

NOV   1752 + 10                                             DEC    123.75 + 0.10

JAN    1755 + 10                                             MAR   127.20 + 0.10

MAR   1764 + 9                                               MAY   129.55 + 0.15

MAY   1774 + 7                                                JUL    131.75 + 0.15

JUL    1780 unch                                            SEP    133.70 + 0.15

SEP    1791 – 1                                                DEC   136.35 + 0.10

NOV   1802 – 2                                                MAR   139.05 + 0.15