Coffee Market Report June 12 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 15.75% over the week of trade leading up to Tuesday 5th. June; to register a new net short sold position of 38,009 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.01%, to register a net long position of 34,906 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 17.38%, to register a net short sold position of 37,372 Lots.  This net short sold position which is the equivalent of 10,594,796 bags has most likely been further decreased, following the period of mixed by overall more positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

Reuters report that the European Coffee Federation ECF have reported that the port warehouse stocks held within reporting warehouses in the ports in Belgium, Germany, France and Italy increased by 345,567 bags or 3.19% during the month of April, to register these stocks at the end of the month at 11,194,633 bags.   These stocks do not however include the unreported stocks from the industry on site inventory stocks, the transit bulk container stocks and stocks being held within non-reporting warehouses throughout Western and Eastern Europe. 

This said and with the combination of West and East Europe consuming approximately 1.05 million bags of coffee a week, one might guess that the additional stocks that were not included in the report, might contribute to as much as 2.5 million bags to the reported stocks.   Thus, indicating that as at the end of April, the European coffee stocks might have been close to the equivalent of close to a relatively safe, thirteen weeks of Western and Eastern European roasting demand.   A factor that supports the prevailing bearish sentiment, on the part of the speculative sector of the coffee markets and likewise, contributes to complacency on the part of the consumer market industries. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.05 usc/Lb., while this equates to 34.44% 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 5,057 bags yesterday; to register these stocks at 2,038,150 bags.  There was meanwhile a smaller in number 4,045 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,948 bags. 

The commodity markets had another mixed day yesterday, but to see the overall macro commodity index tending softer for the day.  The Oil, Natural Gas, Sugar, London robusta Coffee, Gold and Silver markets ended the day on a positive note, while the Cocoa, New York arabica Coffee, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.47% lower; to see this index registered at 433.54.  The day starts with the U.S. Dollar steady and trading at 1.336 to Sterling, at 1.177 to the Euro and with the dollar buying 3.710 Brazilian Real, while North Sea Oil is tending softer in early trade and is selling at US$ 74.75 per barrel. 

The London and New York markets started the day yesterday marginally south of par, but with both markets soon picking up support and moving up to trade on a modestly positive note, but this was a brief recovery and while the London market slipped back to par, the New York market moved back into negative territory for the early afternoon trade.   As the afternoon progressed the London market picked up support and moved into positive territory while the New York market moved back to trade close to par, to see the markets moving towards a close of mixed fortunes for the day. 

The London market ended the day on a positive note and with 78.6% of the earlier gains of the day intact, while the New York market ended the day on a modestly negative note and having recovered 71.4% of the earlier losses of the day by the close.   This close provides no indicator of direction, but is likely only to inspire a cautious and hesitant close to steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1735 + 14                                              JUL    117.10 – 0.15 

SEP    1723 + 11                                             SEP    119.20 – 0.30

NOV   1726 + 9                                               DEC    122.75 – 0.25

JAN    1734 + 9                                               MAR   126.15 – 0.30

MAR   1745 + 9                                               MAY   128.45 – 0.35

MAY   1758 + 9                                               JUL    130.60 – 0.30

JUL    1771 + 9                                               SEP    132.50 – 0.30

SEP    1784 + 9                                               DEC   135.05 – 0.30

NOV   1798 + 9                                               MAR   137.60 – 0.30

JAN    1814 + 8                                               MAY   139.25 – 0.30