Coffee Market Report September 24 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 7.12% over the week of trade leading up to Tuesday 18th. September; to register a new net short sold position of 113,412 Lots. This net short-sold position which is the equivalent of 32,151,799 bags has most likely been reduced a bit, following the period of overall positive trade, which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market increase their net short sold position within this market by 0.08% during the week of trade leading up to Tuesday 18th. September; to register a net short sold position of 35,465 Lots on the day. This net short sold position which is the equivalent of 5,910,833 bags has most likely been little changed to marginally increased, following the period of mixed but overall softer trade, which has since followed.

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 72,250 bags or 0.63% during the month of July, to register these stocks at the end of the month at 11,589,533 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 plus 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 Ministry of Agriculture and Land Development of Colombia and in cooperation with the National Land Agency of Colombia, have announced a plan to promote access to land for up to twenty thousand rural youth, so as to assist them to become new coffee farmers. This program to forward both finance and technical assistance for these prospective coffee farmers, which would further add to the already relatively impressive Colombian coffee crop in the coming years.

The November 2018 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 32.36 usc/Lb., while this equates to 32.39% 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 11,238 bags on Friday; to register these stocks at 2,363,383 bags. There were meanwhile a smaller in number 7,876 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 112,564 bags.

The commodity markets were mixed in trade on Friday, to see the overall macro commodity index taking a steady to positive track for the day. The Oil, Natural Gas, Sugar, New York arabica Coffee, Cotton, Copper, Corn and Silver markets ended the day on a positive note, while the Cocoa, London robusta Coffee, Orange Juice, Wheat, Soybean and Gold markets ended the day on negative note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.17% higher; to see this index registered at 404.88. The day starts with the U.S. Dollar steady and trading at 1.307 to Sterling, at 1.174 to the Euro and the US Dollar buying 4.05 Brazilian Real, while North Sea Oil is steady and is selling at US$ 79.73 per barrel.

The London market started the day on Friday on a modestly negative note, while the New York market started the day on a steady note and with the London market recovering, to see both markets trading around par for the early afternoon trade. As the afternoon progressed the London market started to come under pressure and dipped back into negative territory, while the New York market attracted support and showed some healthy buoyancy, but to soon hit a ceiling and to fall back into negative territory. The London market continued to take a softer track, while the New York market recovered to move into modest positive territory in late trade.

The London market ended the day on a negative note and with very positive note and with 70.4% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 15% of the earlier gains of the day intact. This close does little to inspire confidence, but with the evidence of the extensive net short sold status of the New York market their might be a degree of caution, to set the markets for a steady start for early trade today, against the prices set on Friday, as follows:

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

SEP  1596 + 28
NOV  1489 – 19   DEC   99.90 + 0.15
JAN   1493 – 16   MAR 103.30 + 0.20
MAR  1511 – 15   MAY 105.75 + 0.30
MAY   1528 – 14   JUL 108.10 + 0.30
JUL   1545 – 15    SEP 110.50 + 0.35
SEP   1562 – 14   DEC 113.90 + 0.35
NOV   1576 – 14   MAR 117.25 + 0.35
JAN   1590 – 14   MAY 119.30 + 0.35
MAR  1607 – 14   JUL 121.15 + 0.35