Coffee Market Report July 11 2018

11th. July, 2018.

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 239,900 bags or 2.14% during the month of May, to register these stocks at the end of the month at 11,434,533 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.

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, could contribute as much as 2.5 million bags to the reported stocks.  Thus, indicating that as at the end of May, 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 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 increase their net short sold position within the market by 22.15% over the week of trade leading up to Tuesday 3rd July; to register a new net short sold position of 82,323 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 12.78%, to register a net long position of 43,486 Lots on the day.

To correct an error in yesterday’s report, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 20.42%, to register a new record net short sold position of 73,139 Lots.  This net short sold position which is the equivalent of 20,734,582 bags has most likely been trimmed, following the period of buoyant trade which has since followed.

The September 2018 to September 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 37.46 usc/Lb., while this equates to 32.63% 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 500 bags yesterday; to register these stocks at 2,045,307 bags.  There was an increase by 5,749 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,052 bags.

It was a mixed day on the commodity markets yesterday, the leading in influence Oil market posting positive gains on the day, while the US Dollar registered a firmer day. The Oil markets were overall positive, as was it a mildly positive day for Sugar, Soybean, Cotton and robusta Coffee and Cocoa firmer on the day.  The rest of the board registered a softer close, for Copper, arabica Coffee, Orange Juice, Gold, Silver, Platinum and Palladium, the largest losers in percentage terms on the day the Corn and Wheat markets. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets registered a lower day by 0.4826% to close at 417.56.   The day starts with the U.S. Dollar steady, trading at 1.325 to Sterling, at 1.172 to the Euro and with the Dollar buying 3.816 Brazilian Real, while North Sea Oil is near to steady in early trade and is selling at US$ 77.40 per barrel. 

The London market opened the day yesterday in mildly softer territory, New York following suite, to see the morning session treading below par in both markets in limited volume and narrowly negative territory.   The lows of midmorning found resistance to draw buying activity back to the floor, which in time for the opening of business in the Americas’, provided the boost necessary to lift New York back to positive territory.  The rest of the day registered incrementally positive moves to see both markets trading above par as the day drew to a close.  The London market held on to the gains of the day, to settle just below the high.  It was a softer turn for New York within the last hour of trade as seller pressure increased into a void of buyer support, to see this market slip back to the lows of the day, before registering a recovery to touch par once more and finally, settle in negative territory around the middle of the day’s trading range, to set the close yesterday in both markets after a fair volume day, as follows: 

London Robusta US$/MT                     New York Arabica Usc/Lb.                                                                                         

 JULY    1,790    +          10                    JULY    111.95              -           0.25
 SEPT    1,705    +          10                    SEPT   114.80              -           0.25
 NOV     1,692    +          11                    DEC     118.30              -           0.20
 JAN      1,690    +          10                    MAR     121.90              -           0.20
 MAR     1,696    +          10                    MAY     124.35              -           0.15
 MAY     1,708    +          11                    JULY    126.70              -           0.15
 JULY    1,721    +          12                    SEPT   129.00              -           0.10
 SEPT    1,733    +          12                    DEC     132.30              -           0.05
 NOV     1,745    +          12                    MAR     135.55              -           0.10
 JAN      1,756    +          12                    MAY     137.60              -           0.05