Coffee Market Report October 01 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 3.8% over the week of trade leading up to Tuesday 25th. September; to register a new net short sold position of 109,097 Lots.   This net short-sold position which is the equivalent of 30,928,516 bags has most likely been reduced further, following the sharp positive correction for the market at the end of last week. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money sector of this market decrease their net short sold position within this market by 1.26% during the week of trade leading up to Tuesday 25th. September; to register a net short sold position of 35,017 Lots on the day.  This net short sold position which is the equivalent of 5,836.167 bags has most likely been reduced further, following the period of more positive trade, which has since followed. 

With the new crop cherries presently ripening in El Salvador, the Ministry of Agriculture have forecast that the countries new crop shall be the countries largest crop since the devastating Roya or Leaf Rust affected 2013/2014 crop, with an estimate that the new crop shall be 72,749 bags or 10.48% larger than the previous crop.   With this somewhat official new crop forecast, indicating a crop of 766,666 bags and somewhat larger than many private trade and industry forecasts. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 32.55 usc/Lb., while this equates to 31.77% 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 4,918 bags on Friday; to register these stocks at 2,377,869 bags.  There were meanwhile a larger in number 9,575 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 77,777 bags. 

The commodity markets were mixed in trade on Friday but with many markets showing some degree of buoyancy, to see the overall macro commodity index taking an upside track for the day.    The Oil, Sugar, Coffee, Copper, Orange Juice, Gold and Silver markets ended the day on a positive note, while the Natural Gas, Cocoa, Cotton, Wheat and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.53% higher; to see this index registered at 404.50.  The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.302 to Sterling, at 1.159 to the Euro and with the dollar buying 4.048 Brazilian Real, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 83.70 per barrel. 

The London and New York market started the day on Friday with modest buoyancy but with both markets moving back to trade around par, for the early afternoon trade.   As the afternoon progressed and with the New York market leading the way, both markets started to attract support and to move back up into positive territory which brought with it the triggering of short covering buy stops for the New York market.   This came with a relatively high volume of trade for the prompt month in the New York market and assisted to accelerate the gains, with the London market following suit and setting both markets for a strong close for the week. 

The London market ended the day on a positive note and with 80.6% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 75.9% of the earlier gains of the day intact.   This sharply positive corrective close does assist to inspire a degree of confidence and one might think that the markets could be due for a follow through steady start, against the prices set on Friday, as follows: 

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

NOV   1554 + 38                                             DEC    102.45 + 3.15

JAN    1541 + 29                                             MAR   105.85 + 3.20

MAR   1555 + 26                                             MAY   108.25 + 3.25

MAY   1570 + 26                                              JUL    110.60 + 3.20

JUL    1585 + 27                                              SEP    112.90 + 3.20

SEP    1600 + 26                                              DEC   116.35 + 3.25

NOV   1614 + 24                                              MAR   119.65 + 3.20

JAN    1629 + 24                                              MAY   121.70 + 3.15

MAR   1646 + 24                                              JUL    123.45 + 3.10

MAY   1656 + 32                                              SEP    125.15 + 3.05