Coffee Market Report August 14 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 4.75% over the week of trade leading up to Tuesday 7th. August; to register a new net short sold position of 94,521 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.62%, to register a net long position of 48,006 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 9.56%, to register a net short sold position of 97,098 Lots.  This net short sold position which is the equivalent of 27,526,853 bags has most likely been further increased, following the period of mixed but overall softer trade that has since followed and likewise, that of the managed money fund sector of the market. 

The Association of Planters Kerala in the south west of India and a leading coffee producing state, have voiced their concerns over the bout of excessive rains that the state has experienced, which they fear shall have a negative impact upon the production of many crops and including coffee.   They note though that there are no numbers as of yet, as it shall take a couple of weeks to assess the damage done to plantations over the period.   But this report as against the perception for a significant surplus coffee supply for the forthcoming October 2018 to September 2019 coffee year, has little impact upon the prevailing bearish sentiment within the coffee markets. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 35.64 usc/Lb., while this equates to 32.61% 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 6,215 bags yesterday; to register these stocks at 2,085,756 bags.  There were meanwhile a larger in number 60,236 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 247,773 bags. 

The commodity markets encountered further muscle for the U.S. dollar and were mostly on the downside yesterday, to see the overall macro commodity index taking a softer track for the day.   The Cocoa, and Soybean markets nevertheless ended the day on a positive note, while the Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets ended the day on a negative note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.96% lower; to see this index registered at 400.46.  The day starts with the U.S. Dollar tending a little softer and trading at 1.277 to Sterling, at 1.141 to the Euro and with the dollar buying 3.883 Brazilian Real, while North Sea Oil is steady and is selling at US$ 71.00 per barrel. 

The London and New York markets started the day yesterday on a marginally softer note, to see the markets taking a softer track into the early afternoon trade.   As the afternoon progressed and very much in line with the softer nature of the overall macro commodity index, both markets remained within negative territory and started to extend their losses, but with the New York market managing to bounce back from the lows and to a lesser extent, the London market as well.  

The London market ended the day on a negative note and with 70% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note, but having recovered 71.2% of the earlier losses of the day by the close.   This close does little to inspire confidence, but with the speculative and fund sectors already well sold and the producer’s reluctant sellers into the soft price range that prevails, one might expect to see another near to steady start for early trade today, against the prices set yesterday, as follows: 

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

SEP    1667 – 7                                               SEP    106.25 – 0.75

NOV   1624 – 14                                             DEC    109.30 – 0.75

JAN    1611 – 19                                             MAR   112.55 – 0.75

MAR   1618 – 20                                             MAY   114.90 – 0.75

MAY   1631 – 19                                              JUL    117.30 – 0.75

JUL    1645 – 18                                              SEP    119.70 – 0.75

SEP    1658 – 18                                              DEC   123.15 – 0.70

NOV   1671 – 18                                              MAR   126.50 – 0.65

JAN    1683 – 18                                              MAY   128.60 – 0.60

MAR   1694 – 18                                              JUL    130.65 – 0.60