Coffee Market Report July 30 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 3.01% over the week of trade leading up to Tuesday 24th. July; to register a new net short sold position of 89,014 Lots.   This net short-sold position which is the equivalent of 25,235,075 bags has most likely been little changed, following the period of mixed but overall sideways 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 decrease their net short sold position within this market by 14.79% during the week of trade leading up to Tuesday 24th. July; to register a net short sold position of 33,074 Lots on the day.  This net short sold position which is the equivalent of 5,512,333 bags has most likely been increased again, following the period of mixed but overall more negative trade, which has since followed. 

The General Statistical office in Vietnam and with most of the export registrations for the month in hand, have forecast that the countries coffee exports for the month shall be 16.7% lower than the previous month, at a total of approximately 2.17 million bags.   This they say will contribute to the countries cumulative exports for the first seven months of this year to be 12.2% higher than the same period last year, at a total of 19.5 million bags. 

The do however note that despite the impressive 12.2% increase in the volume of Vietnam’s coffee exports over these seven months, that the revenue from these exports would be 4.5% lower than the value of the coffee exports over the same period last year, at a total of 2.25 billion U.S. dollars.   This dip in revenue from coffee exports common to most coffee producers and proving something of a problem within many producer countries, albeit that Brazilian farmers have gained some relief from the weakening currency this year. 

A heavy monsoon season for the main coffee growing regions in India has brought to the fore reports of damage and forecasts from the Indian coffee planters associations in Karnataka and Kerala, for a smaller new crop for the forthcoming October 2018 to September 2019 coffee year.  But these forecasts and many might suspect that some of them might be seen to be somewhat market manipulative in nature are so far, not being supported by a similar negative crop forecast from the Coffee Board of India.  Thus, it is unlikely that these reports to the Indian press from the farmers, shall have any influence upon the bearish sentiment that prevails within the international coffee markets. 

The September 2018 to September 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 35.47 usc/Lb., while this equates to 32.11% 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 2,257 bags on Friday; to register these stocks at 2,051,232 bags.  There were meanwhile a smaller in number 1,058 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 45,901 bags. 

The commodity markets were mixed in trade on Friday but with many markets tending softer, the overall macro commodity index took a softer track for the day.   The Natural Gas, New York arabica Coffee, Cotton and Soybean markets ended the day on a positive note and the London robusta Coffee and Silver markets ended the day on a steady note, while the Oil, Sugar, Cocoa, Copper, Orange Juice, Wheat, Corn and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.45% lower; to see this index registered at 408.89.  The day starts with the U.S. Dollar steady and trading at 1.311 to Sterling, at 1.166 to the Euro and with the dollar buying 3.714 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 74.65 per barrel. 

The London market started the day on Friday with a degree of buoyancy, while the New York market started the day on a softer note.   The London market did however soon come under some pressure and slipped back to par, while the New York market remained on a softer track, into the early afternoon trade.  As the afternoon progressed the New York market bounced back from the lows and to see both markets trading on something of an erratic sideways track and close to par, but with the New York market finally attracting support and regaining some muscle for late trade. 

The London market ended the day on a steady note and with 7.7% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 69.2% of the earlier gains of the day intact.   This close and with the evidence of the significantly short sold nature of the New York market might assist towards some degree of caution and it is possible that the markets shall be due for a follow through steady start for early trade today, against the prices set on Friday, as follows: 

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

JUL    1787 unch 

SEP    1653 + 1                                               SEP    110.45 + 0.90

NOV   1645 + 2                                               DEC    113.60 + 0.75

JAN    1648 + 3                                               MAR   117.15 + 0.80

MAR   1660 + 5                                               MAY   119.55 + 0.75

MAY   1673 + 5                                                JUL    121.95 + 0.75

JUL    1685 + 4                                                SEP    124.30 + 0.75

SEP    1697 + 5                                                DEC   127.60 + 0.65

NOV   1710 + 6                                                MAR   130.85 + 0.65

JAN    1721 + 5                                                MAY   132.85 + 0.65