Coffee Market Report July 17 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 increase their net short sold position within the market by 0.68% over the week of trade leading up to Tuesday 10th. July; to register a new net short sold position of 82,885 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.71%, to register a net long position of 44,230 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 1.79%, to register a net short sold position of 74,448 Lots.  This net short sold position which is the equivalent of 21,105,678 bags has most likely been further increased, following the period of negative trade that has since followed and likewise, that of the managed money fund sector of the market. 

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 23,366 bags or 0.34% during the month of June, to register these stocks at 6,844,229 bags at the end of the month.   The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 570,000 bags per week, would conservatively have been at least 1.1 million bags.   If one is to consider the additional unreported stocks the end month stocks, this would equate to more than thirteen and half weeks of roasting activity, which most would consider to be a safe reserve. 

While this is anyhow ahead of the traditionally slower summer roasting season in North America, which would further extend the apparent North American stock cover and contribute towards only limited short term industry demand for new coffees from the producer countries.  Contributing to the prevailing lacklustre nature of the physical coffee trade and doing little to inspire support, from the speculative and fund sectors of the market.   Bearish sentiment that is further being fuelled with the advent of the larger new Brazil crop that is anticipated to soon start impacting upon consumer market supply and ahead of what is now being forecast, to be another large Vietnam crop to come to the fore at the end of the year. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 34.55 usc/Lb., while this equates to 31.32% 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 571 bags yesterday; to register these stocks at 2,047,453 bags.  There were meanwhile a larger in number 2,329 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 40,669 bags. 

The commodity markets were mixed in trade yesterday, but with the influential oil markets coming off the boil, the overall macro commodity index had a softer day’s trade.   The Natural Gas, Sugar, Coffee, Cotton, Orange Juice, Corn and Soybean markets ended the day on a positive note, while the Oil, Cocoa, Copper, Wheat, 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 0.61% lower; to see this index registered at 408.88.  The day starts with the U.S. Dollar steady and trading at 1.324 to Sterling, at 1.171 to the Euro and with the dollar buying 3.859 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 70.25 per barrel. 

The London market started the day yesterday on a steady note and trading mostly marginally north of par, while the New York market started the day on a near to steady note and trading mostly marginally south of par, to maintain this mixed stance into the early afternoon trade.  As the afternoon progressed both markets started to attract support and to see the New York market join the London market within positive territory and adding more value, but with the markets coming off the boil and losing some weight in late trade. 

The London market ended the day on a positive note and with 28.6% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 29.6% of the earlier gains of the day intact.   This close and with the markets having only ended the day with modest gains does little to inspire any degree of confidence, albeit that many might consider that the New York market is somewhat over sold at present.  Thus one might expect to see the markets due for little better than a steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1769 + 3                                               JUL    107.45 + 0.40 

SEP    1670 + 4                                               SEP    110.30 + 0.40

NOV   1659 + 6                                               DEC    113.80 + 0.40

JAN    1659 + 7                                               MAR   117.40 + 0.40

MAR   1669 + 8                                               MAY   119.90 + 0.45

MAY   1681 + 9                                                JUL    122.30 + 0.40

JUL    1693 + 6                                                SEP    124.65 + 0.45

SEP    1702 + 2                                                DEC   128.05 + 0.50

NOV   1714 + 2                                                MAR   131.35 + 0.50

JAN    1725 + 2                                                MAY   133.40 + 0.50