Coffee Market Report September 04 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 decrease their net short sold position within the market by 5.33% over the week of trade leading up to Tuesday 28th. August; to register a new net short sold position of 98,777 Lots.   Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 4.75%, to register a net long position of 44,471 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 3.98%, to register a 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 that has since followed and likewise, that of the managed money fund sector of the market. 

The National Coffee Growers Federation in Colombia have reported that the country’s coffee production for the month of August was 36,000 bags or 2.78% lower than the same month last year, at a total of 1,258,000 bags.   This has contributed to the countries cumulative production for the first eleven months of the present October 2017 to September 2018 coffee year to be 466,000 bags or 3.48% lower than the same period in the previous coffee year, at a total of 12,940,000 bags. 

The National Coffee Growers Federation in Colombia have also reported that the country’s coffee exports for the month of August were 87,000 bags or 7.45% lower than the same month last year, at a total of 1,080,000 bags.   This has contributed to the countries cumulative coffee exports for the first eleven months of the present October 2017 to September 2018 coffee year to be 495,000 bags or 4.01% lower than the same period in the previous coffee year, at a total of 11,852,000 bags. 

This evidence of a relatively modest dip in Colombian coffee production over the past eleven months and likewise that of the country’s coffee exports was however, very much anticipated.   In fact, it is a dip that is much less than many had forecasted at the end of last year, when weather issues were expected to have some negative impact upon production in the coming months and thus is a factor that really cannot be seen to be supportive for market sentiment. 

The National Coffee Institute in Honduras have reported that the countries coffee exports for the month of August were 97,812 bags or 22.63% higher than the same month last year, at a total of 530,019 bags.  This the Institute report contributes to the countries cumulative coffee exports for the first eleven months of the present October 2017 to September 2018 coffee year to be 1% lower than the same period in the previous coffee year, at a total of approximately 6.97 million bags. 

The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of August were 15,488 bags or 20.66% lower than the same month last year, at a total of 59,463 bags.  This the Institute report contributes to the countries cumulative coffee exports for the first eleven months of the present October 2017 to September 2018 coffee year to be approximately 10% higher than the same period in the previous coffee year, at a total of approximately 1.18 million bags. 

The Ministry of Trade in Brazil have reported that the countries coffee exports for the month of August were 119,867 bags or 5.05% lower than the same month last year, at a total of 2,255,585 bags.   This is a much-improved number over the previous months exports, but it is noted that new crop export numbers have suffered a little during august, due to the shortage of container freight space out of Brazil and aside from prices, might have contributed to the modest year on year dip in volume. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 34.26 usc/Lb., while this equates to 33.65% 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. 

Many of the commodity markets were closed for the day yesterday, to eliminate any influence from the overall macro commodity index for the remaining markets. 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 1.285 to Sterling, at 1.162 to the Euro and with the dollar buying 4.156 Brazilian Real, while North Sea Oil is showing some degree of buoyancy and is selling at US$ 77.60 per barrel. 

The London market trading solo started the day yesterday with early buoyancy, but to move back to par for the early afternoon trade.   As the afternoon progressed the market came under increased pressure and slipped back into negative territory, to take a softer track for the rest of the day and to end the day with 70.6% of the earlier losses of the day intact.   This close does little to inspire and one might think that with the combination of a steady dollar and a weak Brazil Real, that the markets shall only be due for a near to steady start for early trade today.    Against the prices set in New York on Friday and in London yesterday, as follows: 

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

SEP    1566 – 17                                             SEP      98.10 – 0.85

NOV   1489 – 12                                             DEC    101.80 – 0.85

JAN    1487 – 13                                             MAR   105.10 – 0.90

MAR   1499 – 11                                             MAY   107.45 – 0.90

MAY   1516 – 11                                              JUL    109.75 – 0.95

JUL    1534 – 9                                                SEP    112.10 – 1.00

SEP    1551 – 9                                                DEC   115.55 – 0.95

NOV   1564 – 10                                              MAR   118.85 – 1.00

JAN    1576 – 11                                              MAY   120.95 – 1.00

MAR   1592 – 9                                                JUL    122.80 – 1.00