Coffee Market Report September 10 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 3.4% over the week of trade leading up to Tuesday 4th. September; to register a new net short sold position of 105,336 Lots.   This net short-sold position which is the equivalent of 29,862,289 bags has most likely been marginally decreased again, following the period of mixed but overall more positive trade, which has since followed. 

Last week was yet another week devoid of striking fundamental news for the coffee market, with continued complacency on the part of the industries and while the week ended off, with the leading producer Brazil taking their Independence Day long weekend holiday.    The Brazilians returning to the field of play today, to encounter a marginally firmer Real to the dollar exchange rate, which would be seen to be a factor that shall suppresses internal market selling aggression. 

This factor might prove to be market supportive for the markets on their opening, as would the evidence of an increase in the net short sold position of the speculative non-commercial sector of the New York market, which is hovering close to the recent record highs.  Albeit that the steadily rising certified stocks of the New York market, does contribute towards negative sentiment. 

The November 2018 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 34.82 usc/Lb., while this equates to 33.99% 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 8,193 bags on Friday; to register these stocks at 2,250,153 bags.  There were meanwhile a larger in number 31,220 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 203,020 bags. 

Many of the commodity markets encountered more robust U.S. dollar on Friday and with many markets trading relatively close to par through the day, to see the overall macro commodity index taking a sideways track through the day.    The Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Orange Juice, Corn and Soybean markets ended the day on a positive note and the London robusta Coffee ended the day on a steady note, while the Cocoa, Copper, Wheat, Gold 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 0.23% higher; to see this index registered at 401.28.  The day starts with the U.S. Dollar steady and trading at 1.291 to Sterling, at 1.154 to the Euro and with the dollar buying 4.059 Brazilian Real, while North Sea Oil is steady and is selling at US$ 76.45 per barrel. 

The London and New York markets started the day on a positive note on Friday and with both markets maintaining a positive stance, into the early afternoon trade.   As the afternoon progressed both markets came under some pressure and slipped back to trade around par and with the markets nevertheless remaining overall steady, to see them heading towards a steady close for the day. 

The London market ended the day on a near to steady note and having recovered 75% of the earlier modest losses of the day, while the New York market ended the day on a modestly positive note and with 16.7% of the earlier gains of the day intact.  This close does little to inspire confidence, but with the evidence of the firmer Brazil Real and the increased short sold nature of the New York market, one might expect to see a cautiously hesitant 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    1536 – 4                                               SEP      98.80 + 0.85

NOV   1491 – 1                                               DEC    102.45 + 0.25

JAN    1494 + 1                                               MAR   105.80 + 0.25

MAR   1508 + 2                                               MAY   108.20 + 0.30

MAY   1526 + 3                                                JUL    110.55 + 0.25

JUL    1543 + 3                                                SEP    112.95 + 0.30

SEP    1560 + 3                                                DEC   116.40 + 0.35

NOV   1574 + 1                                                MAR   119.65 + 0.30

JAN    1586 unch                                            MAY   121.60 + 0.30

MAR   1603 + 1                                                JUL    123.30 + 0.30