Coffee Market Report October 15 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 11.23% over the week of trade leading up to Tuesday 9th. October; to register a new net short sold position of 86,266 Lots.   This net short-sold position which is the equivalent of 24,456,029 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 39.55% during the week of trade leading up to Tuesday 9th. October; to register a net short sold position of 19,007 Lots on the day.  This net short sold position which is the equivalent of 3,167,833 bags has most likely been reduced further, following the period of more positive trade, which has since followed. 

The World Coffee Producers Forum that includes over thirty coffee producing countries, is reported to have sent a letter to a number of leading consumer market industries, to voice their concern over the soft nature of the international coffee prices.   The World Coffee Producers Form note that in excess of twenty-five million families globally are suffering from the negative effects of the soft coffee prices, but one would comment that there really noting that the industries can do to control the activities of the speculative funds, who are the main cause for the softer coffee market prices. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 38.31 usc/Lb., while this equates to 32.87% 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 3,645 bags on Friday; to register these stocks at 2,424,249 bags.  There were meanwhile a larger in number 8,047 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 65,624 bags. 

The commodity markets experienced an overall positive day on Friday, to see the overall macro commodity index on an upside track for the day.  The Oil, Sugar, Cocoa, Coffee, Cotton and Copper markets ended the day on a positive note, while the Gold market ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.61% higher; to see this index registered at 417.54.   The day starts with the U.S. Dollar steady and trading at 1.313 to Sterling, at 1.155 to the Euro and with the dollar buying 3.782 Brazilian Real, while North Sea Oil is steady and is selling at US$ 81.00 per barrel. 

The London and New York markets started the day on Friday on a positive note and with both markets maintaining a positive track, into the early afternoon trade.  As the afternoon progressed the New York market started to attract short covering buying from the speculative fund sector of the market, with buy stops being triggered, to accentuate the losses.  With the lack of Brazil selling pressure that came with Friday’s Nossa Senhora de Aparecida public holiday, most likely assisting to allow the New York market to maintain its buoyancy and followed in a less dramatic manner by the London market.   To set both markets for firm end to the weeks trade. 

The London market ended the day on a positive note and with 81.2% of the earlier gains of the day intact, while the New York market started the day on a very positive note and with 93.6% of the earlier gains of the day intact.   This close does much to point a more positive picture for the charts but the reality is that the oversupply scenario still exists and that Brazil shall return to the field of play today, which with the evidence of a relatively sharp drop in the short-sold positions within both markets, might also bring to the fore a degree of caution and attract some producer price fixation selling activity.   Factors that might hinder the chances of follow through buoyancy during early trade today, against the prices set on Friday, as follows: 

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

NOV   1713 + 22                                             DEC    116.55 + 3.65

JAN    1725 + 26                                             MAR   120.10 + 3.60

MAR   1741 + 27                                             MAY   122.50 + 3.55

MAY   1754 + 27                                              JUL    124.85 + 3.60

JUL    1766 + 27                                              SEP    127.20 + 3.60

SEP    1779 + 28                                              DEC   130.50 + 3.60

NOV   1792 + 28                                              MAR   133.75 + 3.60

JAN    1806 + 28                                              MAY   135.80 + 3.60

MAR   1822 + 28                                              JUL    137.60 + 3.65

MAY   1834 + 28                                              SEP    139.35 + 3.65