Coffee Market Report September 03 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 3.98% over the week of trade leading up to Tuesday 28th. August; to register a new net short sold position of 101,878 Lots.   This net short-sold position which is the equivalent of 28,881,962 bags has most likely been marginally increased, following the period of negative 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 5.82% during the week of trade leading up to Tuesday 28th. August; to register a net short sold position of 34,106 Lots on the day.  This net short sold position which is the equivalent of 5,684,333 bags has most likely been further increased, following the period of softer trade, which has since followed. 

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of August were 398,150 bags or 67.25% lower than the same month last year, at a total of 193,897 bags.   This number and following a similarly modest export performance for the previous months has contributed to the cumulative coffee exports for the first eleven months of the present October 2017 to September 2018 coffee year to be 2,859,819 bags or 67% lower than the same period in the previous coffee year, at a total of 1,408,395 bags. 

The European Coffee Federation ECF have reported that the port warehouse stocks held within reporting warehouses in the ports in Belgium, Germany, France and Italy increased by 82,750 bags or 0.72% during the month of June, to register these stocks at the end of the month at 11,517,283 bags.   These stocks do not however include the unreported stocks from the industry on site inventory stocks, the transit bulk container stocks and stocks being held within non-reporting warehouses throughout Western and Eastern Europe. 

The combination of West and East Europe consuming approximately 1.05 million bags of coffee a week, one might guess that the additional stocks that were not included in the report, could contribute as much as 2.5 million bags to the reported stocks.  Thus, indicating that as at the end of June, the European coffee stocks might have been close to the equivalent of in excess of a relatively safe, thirteen weeks of Western and Eastern European roasting demand.   This is a contributing factor which supports the prevailing bearish sentiment on the part of the speculative sector of the coffee markets and likewise, contributes to a degree of complacency on the part of the consumer market industries. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 33.72 usc/Lb., while this equates to 33.12% 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 7,391 bags on Friday; to register these stocks at 2,212,789 bags.  There were meanwhile a larger in number 16,516 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 209,611 bags. 

The commodity markets encountered a more robust U.S. dollar and were mixed in trade on Friday and ahead of the forthcoming Labour Day long weekend for the U.S. markets, but with the overall macro commodity index nevertheless showing some degree of buoyancy for the day.   The Natural Gas, Sugar, Cocoa, Orange Juice, Wheat, Corn, Soybean and Gold markets ended the day on a positive note, while the Oil, Coffee, Cotton, Copper 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 0.99% higher; to see this index registered at 403.83.  The day starts with the U.S. Dollar steady and trading at 1.291 to Sterling, at 1.161 to the Euro and with the dollar buying 4.054 Brazilian Real, while North Sea Oil is tending softer and is selling at US$ 76.05 per barrel. 

The London and New York markets started the day on Friday with a degree of buoyancy and with both markets taking a positive track, into the early afternoon trade.  As the afternoon progressed and with the increased trade that came from the Americas, the markets started to falter and once again move south, into negative territory.   Setting the course for both markets, to head onwards towards another soft close. 

The London market ended the day on a negative note and with 84% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 60.7% of the earlier losses of the day intact.   This close does little to inspire, but with the New York market closed today for the Labour Day holiday and the London market trading solo for the day, it is likely to see London trading on a hesitantly steady note for early trade today.  Against the prices set on Friday, as follows: 

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

SEP    1583 – 23                                             SEP      98.10 – 0.85

NOV   1501 – 21                                             DEC    101.80 – 0.85

JAN    1500 – 18                                             MAR   105.10 – 0.90

MAR   1510 – 17                                             MAY   107.45 – 0.90

MAY   1527 – 15                                              JUL    109.75 – 0.95

JUL    1543 – 14                                              SEP    112.10 – 1.00

SEP    1560 – 13                                              DEC   115.55 – 0.95

NOV   1574 – 14                                              MAR   118.85 – 1.00

JAN    1587 – 13                                              MAY   120.95 – 1.00

MAR   1601 – 13                                              JUL    122.80 – 1.00