Coffee Market Report July 24 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 8.59% over the week of trade leading up to Tuesday 17th. July; to register a new net short sold position of 90,009 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 7.78%, to register a net long position of 47,669 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 16.07%, to register a net short sold position of 86,413 Lots.  This net short sold position which is the equivalent of 24,497,703 bags has most likely been reduced a bit, following the period of mixed but overall more positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

The Council of Coffee Exporters of Brazil Cecafé have forecast that the country shall export approximately 2 million bags of green coffee during the month of July, which would if it proves to be true be in excess of 25% more than the country exported during the same month last year.   While Cecafé have speculated that with new crop coffees now coming to the market, that they expect to see green coffee exports for the month of August rise significantly during the month of August.  As was the case last year, when Brazil exported 2,304,907 bags for the month. 

One would think that despite the issues of price that are impacting negatively upon the coffee producers at present, that there would be reality to foresee a sharp rise in the Brazil coffee exports in August, as these coffees would be required to fuel the post summer holiday rise in consumer market roasting activity.   For the main northern hemisphere consumer markets, which dominate consumer market consumption.  

The September 2018 to September 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.17 usc/Lb., while this equates to 31.5% 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 1,120 bags on Friday; to register these stocks at 2,059,164 bags.  There were meanwhile a larger in number 2,570 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 41,880 bags. 

The commodity markets and despite the U.S. dollar showing a degree of buoyancy during the day, were mixed in trade but mostly softer for the day, to see the overall macro commodity index on a softer track for the day.   The Coffee, Wheat and Corn markets ended the day on a positive note, while the Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, 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 0.19% lower; to see this index registered at 407.31.  The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.309 to Sterling, at 1.168 to the Euro and with the dollar buying 3.782 Brazilian Real, while North Sea Oil is near to steady and is selling at US$ 72.50 per barrel. 

The London market started the day yesterday on a steady note and trading sideways either side of par, while the New York market started the day with immediate buoyancy and to see the markets maintain this stance, into the early afternoon trade.  As the afternoon progressed the New York market with buy stops in play increased its gains, but to soon hit a ceiling and to fall back into more modest positive territory, while the London market moved south into negative territory.   The London market did however bounce of the lows and to recover in late trade and to move back up to modest positive territory, while the New York market took something of an erratic positive sideways track through to the close. 

The London market ended the day on a modestly positive note and with 50% of the earlier gains of the day intact, while the New York market ended the day on a likewise modestly positive note and with 42.6% of the earlier gains of the day intact.   This close and with the markets struggling to hold on to little more than modest gains and with many players on holiday at present, might well bring to the fore a degree of caution and contribute to little better than a hesitantly steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1785 + 3 

SEP    1686 + 3                                               SEP    111.65 + 1.00

NOV   1676 + 3                                               DEC    115.05 + 1.00

JAN    1678 + 3                                               MAR   118.65 + 0.95

MAR   1687 + 3                                               MAY   121.10 + 0.95

MAY   1699 + 3                                                JUL    123.50 + 0.95

JUL    1712 + 4                                                SEP    125.85 + 1.00

SEP    1723 + 4                                                DEC   129.20 + 1.00

NOV   1735 + 4                                                MAR   132.40 + 0.95

JAN    1747 + 4                                                MAY   134.45 + 0.95