Coffee Market Report August 06 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 0.44% over the week of trade leading up to Tuesday 31st. July; to register a new net short sold position of 88,624 Lots.   This net short-sold position which is the equivalent of 25,124,511 bags has most likely been little changed to perhaps marginally increased again, following the period of mixed but overall softer 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 increase their net short sold position within this market by 2.71% during the week of trade leading up to Tuesday 31st. July; to register a net short sold position of 33,969 Lots on the day.  This net short sold position which is the equivalent of 5,661,500 bags has most likely been little changed, following the period of mixed but overall sideways trade, which has since followed. 

Reuters have held a poll with 11 leading commodity traders and commodity analysts and reported on Friday that the results of the poll point to the global coffee supply surplus for the forthcoming October 2018 to September 2019 Coffee Year, at 5 million bags.  The Poll did however indicate that the next 2019 Brazil crop shall be 5.5 million bags lower, which would indicate tightening supply and a recover for the coffee markets during the coming year. 

In terms of prices the same Reuters Poll indicated that the New York Arabica coffee market shall recover late in the year, to see prices around 130 usc/Lb., by the end of the year.   The results of the Poll were to a lesser extent but nevertheless positive in terms of the London Robusta coffee markets, with a year end price lever of $ 1,738.00 per Metric ton foreseen. 

Meanwhile in terms of the coffee markets at the end of last week, there was a degree of support coming to the fore, with the Brazil Real showing some renewed muscle.   Thus, providing for the perspective of reduced price fixation hedge selling activity out of Brazil for the day and most likely, with some degree of reality to this perception. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 36.62 usc/Lb., while this equates to 32.96% 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 3,260 bags on Friday; to register these stocks at 2,057,136 bags.  There were meanwhile a smaller in number 2,380 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 103,409 bags. 

The commodity markets were mixed in trade on Friday, but with the overall macro commodity index taking an upside track for the day.   The Sugar, Coffee, Copper, and Gold markets ended the day on a positive note, while the Oil, Cocoa, and Cotton markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.55% higher; to see this index registered at 409.41.  The day starts with the U.S. Dollar showing some degree of follow through muscle` and trading at 1.299 to Sterling, at 1.155 to the Euro and with the dollar buying 3.706 Brazilian Real, while North Sea Oil is steady and is selling at US$ 73.25 per barrel. 

The London market started the day on Friday on a softer note, while the New York market started the day with immediate buoyancy and soon followed by a recovery within the London market, to see both markets taking a positive track into the early afternoon trade.    The markets and with the added influences of the positive nature of the overall macro commodity index and the stronger Brazil currency, continued towards a positive end for the day and week. 

The London market ended the day on a positive note and with 50% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 54.1% of the earlier gains of the day intact. This close while positive does indicate that the markets seemingly have a nearby ceiling at least for the short term and with a strong dollar in play, one might expect to see little better than a steady start due for early trade today, against the prices set on Friday, as follows: 

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

SEP    1662 + 18                                             SEP    107.75 + 1.05

NOV   1642 + 9                                               DEC    111.10 + 1.00

JAN    1638 + 6                                               MAR   114.60 + 0.95

MAR   1646 + 3                                               MAY   117.00 + 0.90

MAY   1659 + 3                                                JUL    119.40 + 0.90

JUL    1673 + 3                                                SEP    121.75 + 0.90

SEP    1685 + 3                                                DEC   125.15 + 0.90

NOV   1699 + 4                                                MAR   128.45 + 0.95

JAN    1709 + 3                                                MAY   130.50 + 1.00

MAR   1720 + 3                                                JUL    132.55 + 1.05