Coffee Market Report May 29 2018

28th May, 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 6.47% during the week of trade leading up to Tuesday 22nd May; to register a net short sold position of 46,710 Lots on the day. This net short-sold position which is the equivalent of 13,242,078 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. 

Following on from fifteen days of protest action by the country’s truckers, news arrived over the weekend via the President’s office in Brazil, that new measures would be taken to reduce the operating costs of the country’s truckers.  The Reuters report confirmed the President’s televised speech on Sunday, informing the nation that three decrees were being signed into action and a further a confirmation that the measures both address and comply to main demands of the striking truckers.  

This latest development and news from Brazil is a little early still in their business week, to ascertain whether there has been an overall acceptance by the various representative trucker groups, although reports suggest that highway blockades were cleared away and so too, the entrances to key ports including Santos, where a volume of containers are immobile and a considerable backlog of flow in and out of the key ports, has developed over these few disruptive weeks.  The estimate meanwhile is that the strike has prospectively already cost the economy an estimated US$ 2.7 billion US Dollars. These decrees, if accepted by the majority of striking trucker groups, will go some way to alleviate the looming problems of a lack of supply of not only transit goods but internally, commercial produce, fuel and food across 330 important transit routes.

The USA is observing their Memorial Day long weekend and the New York arabica market is closed on Monday 28th. May, as is the London robusta market closed to enjoy a Spring Day Bank holiday today.  Both markets will start the trading week tomorrow, Tuesday 29th May, as will our next market report follow on 30th May, Wednesday.

Subsequent to the relatively subdued trade in the markets on Friday, the July 2018 to July 2018 contracts arbitrage between the London and New York markets were unchanged on Friday, to register this at 40.94 usc/Lb., while this equates to 33.99% 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 2,885 bags on Friday; to register these stocks at 2,013,571 bags.  There was an increase by 1,547 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 50,167 bags.

The commodity markets were mixed in trade on Friday, in general a lower to flat day was registered across the commodities platform.  It was a softer day for the Oil markets, as well as Cocoa, Coffee, Copper, Gold, Silver, Platinum and Palladium markets which ended the day on a negative note. It was a positive day for Wheat and Cotton, with Corn, Soybean and Sugar markets mildly positive on the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets finished  0.24% lower; to see this index registered at 439.94.  The day starts with the U.S. Dollar steady and trading at 1.332 to Sterling, at 1.169 to the Euro and with the US Dollar buying 3.651 Brazilian Real, while North Sea Oil is mildly softer and selling at US$ 76.60 per barrel.

The London and New York markets started the day on a positive track on Friday, in low opening volumes, with both markets moving below par as the session picked up pace as the morning progressed.  The London market spent much of the morning just below par and in a muted session managed to post a recovery in the early afternoon to trade in positive territory although volume remained thin.  It was a more buoyant day for New York which attracted sufficient support at the lows of the morning, to alter the course and move into positive territory for a brief spell, before slipping back to below par in the afternoon. It was a fair volume day in New York, and the latter half of the day tracked upward toward par once more. A subdued volume day in London, which slipped back into negative territory toward the end of the day and a narrow range for the day in both markets, to see the markets finish the day on a softer note, in the middle of the narrow day’s range for London and closer to the days’ high in New York, as follows:

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

MAY   1720 – 10
JUL    1752 – 3                                                JUL    120.40 – 0.15 
SEP    1738 – 6                                               SEP    122.65 – 0.15
NOV   1742 – 7                                               DEC    126.20 – 0.15
JAN    1744 – 7                                               MAR   129.65 – 0.20
MAR   1752 – 7                                               MAY   131.85 – 0.20
MAY   1760 – 7                                                JUL   133.80 – 0.25
JUL    1765 – 5                                               SEP    135.60 – 0.30
SEP    1777 – 5                                               DEC   138.25 – 0.30
NOV   1788 – 3                                               MAR   140.85 – 0.35