Coffee Market Report October 02 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 3.34% over the week of trade leading up to Tuesday 25th. September; to register a new net short sold position of 105,512 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.78%, to register a net long position of 44,038 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 3.8%, to register a 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 further reduced, following the period of mixed but overall positive trade that has since followed and likewise, that of the managed money fund sector of the market. 

The International Coffee Organisation ICO have reported that the global coffee exports for the month of August were 6.3% higher than the same month last year, to total approximately 11.1 million bags.   These exports having contributed to the cumulative global coffee exports for the first eleven months of the present October 2017 to September 2018 coffee year to being 1.6% higher than the same period in the previous coffee year, at a total of 112.52 million 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 268,517 bags or 2.34% during the month of August, to register these stocks at the end of the month at 11,758,050 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 August, the European coffee stocks might have been close to the equivalent of in excess of a relatively safe, thirteen and half weeks of Western and Eastern European roasting demand.   

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 September were 174,192 bags or 50.96% lower than the same month last year, at a total of 167,641 bags.   This number and following a similarly modest export performance for the previous months has contributed to the cumulative coffee exports for the October 2017 to September 2018 coffee year to be 3,007,755 bags or 65.24% lower than the same period in the previous coffee year, at a total of 1,602,292 bags. 

The Trade Ministry in Brazil have announced their preliminary coffee export figure for the month of September, to register the countries coffee exports for the month to be 815,124 bags or 37.44% higher than the same month last year, at a total of 2,992,294 bags.  These export volumes no doubt being inflated this year, following the inclusion of the surplus conilon robusta coffee crop within the export numbers. 

The National Coffee Institute in Costa Rica has reported that the countries coffee exports for the just completed October 2017 to September 2018 coffee year were 9.7% higher than the previous coffee year, at a total of approximately 1.22 million bags.    While the National Coffee Institute in Honduras have reported that the countries coffee exports for the just completed coffee year were a modest 1% lower than the previous coffee year, at a total of approximately 7.21 million bags. 

Meanwhile the Honduras National Coffee Institute have forecast that with new coffee trees coming into maturity, they forecast that coffee exports for this new October 2018 to September 2019 coffee year might well exceed 8 million bags.   This forecast and along with the prevailing global surplus coffee supply, contributing towards the prevailing bearish sentiment within the coffee markets. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 31.80 usc/Lb., while this equates to 31.12% 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 5,578 bags yesterday; to register these stocks at 2,383,447 bags.  There were meanwhile a larger in number 13,667 bags decrease in the number of bags pending grading for this exchange; to register these pending grading stocks at 64,110 bags. 

The commodity markets were mixed in trade yesterday, ut with many markets showing some degree of buoyancy, to see the overall macro commodity index taking an upside track for the day.    The Oil, Natural Gas, Sugar, London robusta Coffee, Wheat, Corn and Soybean markets ended the day on a positive note, while the Cocoa, New York arabica Coffee, cotton, Copper, Orange Juice, 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 1.22% higher; to see this index registered at 409.46.   The day starts with the U.S. Dollar showing some degree of buoyancy and trading at 1.300 to Sterling, at 1.154 to the Euro and with the dollar buying 4.018 Brazilian Real, while North Sea Oil is showing a degree of early buoyancy and is selling at US$ 85.55 per barrel. 

The London and New York market started the day yesterday trading close to par and with both markets proceeding to trade close to par, into the early afternoon trade.   As the afternoon progressed the London market picked up some modest support and moved into positive territory, while the New York market slipped back into modest negative territory. 

The London market ended the day on a positive note and with 85.7% of the earlier gains of the day intact, while the New York market ended the day on a negative note but having recovered 76.2% of the earlier losses of the day.   This close provides mixed signals and is likely to inspire little better than a near to steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1572 + 18                                             DEC    102.20 – 0.25

JAN    1552 + 11                                             MAR   105.60 – 0.25

MAR   1562 + 7                                               MAY   107.95 – 0.30

MAY   1575 + 5                                                JUL    110.35 – 0.25

JUL    1589 + 4                                                SEP    112.70 – 0.20

SEP    1604 + 4                                                DEC   116.10 – 0.25

NOV   1618 + 4                                                MAR   119.45 – 0.20

JAN    1633 + 4                                                MAY   121.50 – 0.20

MAR   1650 + 4                                                JUL    123.25 – 0.20

MAY   1660 + 4                                                SEP    124.95 – 0.20