Coffee Market Report June 11 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 17.38% during the week of trade leading up to Tuesday 5th. June; to register a net short sold position of 37,372 Lots on the day. This net short-sold position which is the equivalent of 10,594 bags has most likely been increased again, following the period of mixed but overall more negative 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 23.97% during the week of trade leading up to Tuesday 5th. June; to register a net short sold position of 17,497 Lots on the day.  This net short sold position which is the equivalent of 2,916,167 bags has most likely been increased further, following the period of mixed but overall more negative trade, which has since followed. 

The Customs authorities in Vietnam have reported that the countries coffee exports of mostly robusta coffees for the month of May were marginally higher than had been forecast earlier in the month, to total 2,496,217 bags.   These exports they say have contributed to the countries cumulative coffee exports for the first five months of this year to be 8.4% higher than the same period last year, at a total of 14,630,067 bags. 

The Vietnam Customs authorities within the same report do however make note that while the volume of coffee exports for the first five months of this year were 8.4% higher than the same period last year, that the revenue from these exports was 6.8% lower than the same period last year.   This data further illustrating the falling revenue for coffee producers globally, as the strive to profit from their coffees that they are obliged to sell against the prevailing soft reference prices of the international coffee terminal markets. 

It is unlikely thought that the reduced income for coffee farmers shall impact very negatively upon the relatively low cost robusta coffee farmers in terms of production volumes, but the prices are perhaps going to prove to be a negative factor in terms of affordability of farm inputs for many arabica coffee producers.  Albeit that for Brazil’s arabica coffee farmers, they have received some relief from the countries relatively low interest rate and the declining value of their currency relative to the U.S. dollar. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 41.84 usc/Lb., while this equates to 35.01% 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 840 bags on Friday; to register these stocks at 2,033,093 bags.  There was meanwhile a larger in number 4,318 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 34,993 bags. 

The commodity markets had a mixed day on Friday, to see the overall macro commodity index taking a mostly sideways track for the day.   The Sugar, Cocoa, New York arabica Coffee, Copper and Corn markets ended the day on a positive note, while the Oil, Natural Gas, Cotton, Orange Juice, Wheat, Soybean, 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 0.37% higher; to see this index registered at 435.58.  The day starts with the U.S. Dollar steady and trading at 1.340 to Sterling, at 1.179 to the Euro and with the dollar buying 3.709 Brazilian Real, while North Sea Oil is tending softer in early trade and is selling at US$ 74.85 per barrel. 

The London market started the day on Friday on a softer note, while the New York market started the day with early buoyancy and to see the markets taking this mixed stance, into the early afternoon trade.  As the afternoon progressed the London market continued to trade within negative territory, while the New York market gaining some degree of supportive sentiment from the marginally firmer nature of the Brazil currency, remained within positive territory.    To see the markets maintaining their mixed stance, through to the close.   

The London market ended the day on a negative note and with 61.1% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 90.9% of the earlier gains of the day intact.   This close while positive for the New York market does come to the fore post significant losses the previous day and might be seen to be corrective rather than very positive in nature and one might guess the with the evidence of the reduced speculative short sold nature of the New York market, that the markets might be set for little better than a steady start for early trade today, against the prices set on Friday, as follows: 

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

JUL    1721 – 12                                              JUL    117.25 + 1.55 

SEP    1712 – 11                                             SEP    119.50 + 1.50

NOV   1717 – 12                                             DEC    123.00 + 1.50

JAN    1725 – 9                                               MAR   126.45 + 1.45

MAR   1736 – 6                                               MAY   128.80 + 1.45

MAY   1749 – 4                                               JUL    130.90 + 1.40

JUL    1762 – 4                                               SEP    132.80 + 1.40

SEP    1775 – 2                                               DEC   135.35 + 1.35

NOV   1789 – 2                                               MAR   137.90 + 1.30

JAN    1806 – 2                                               MAY   139.55 + 1.30