Coffee Market Report October 22 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 21.05% over the week of trade leading up to Tuesday 16th. October; to register a new net short sold position of 68,110 Lots.   This net short-sold position which is the equivalent of 19,308,883 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 35.75% during the week of trade leading up to Tuesday 16th. October; to register a net short sold position of 12,212 Lots on the day.  This net short sold position which is the equivalent of 2,035,333 bags has most likely been increased a bit, following the period of mixed but overall softer trade, which has since followed. 

The evidence of the much-reduced speculative net short sold position within the New York market which has likely to have been further reduced and while the coffee fundamentals point towards and approximate 5% surplus global coffee supply, is likely to be a factor of concern for producers and might well bring to the market some volumes of producer price fixation selling.   Perhaps further inspired in terms of the arabica coffee producers, by the evidence of the rising levels of certified arabica coffee stocks that are held against the New York market. 

The January 2019 to December 2018 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 46.62 usc/Lb., while this equates to 37.15% 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 2,165 bags on Friday; to register these stocks at 2,426,508 bags.  There were meanwhile a larger in number 8,787 bags increase in the number of bags pending grading for this exchange; to register these pending grading stocks at 76,656 bags. 

The commodity markets experienced some degree of buoyancy in trade on Friday, to see the overall commodity index having a steady day.  The Oil, Sugar, Cocoa and Copper markets ended the day on a positive note and the New York arabica coffee and Gold markets ended the day on a steady note, while the London robusta Coffee and Cotton markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% higher; to see this index registered at 416.27.  The day starts with the U.S. Dollar steady and trading at 1.307 to Sterling, at 1.151 to the Euro and with the dollar buying 3.714 Brazilian Real, while North Sea Oil is steady and is selling at US$ 80.35 per barrel. 

The London and New York markets both started the day on Friday trading on a softer note, but with the New York market soon moving up to trade around par, to see the markets entering the afternoon trade with a softer London market and a steady New York market.   As the afternoon progressed the New York market moved up into positive territory, while the London market started to move deeper into negative territory.  The London market continued to come under pressure and towards a soft close, while the New York market remained mostly steady for the day. 

The London market ended the day on a very negative note and with 83.7% of the earlier losses of the day intact, while the New York market ended the day on a steady note and with only 1.4% of the earlier gains of the day intact.   This close and with a softer London and along with the evidence of a more modest net short sold scenario within the New York market is unlikely to inspire confidence and thus, to set the markets for little better than a steady start for early trade today.   Against the prices set on Friday, as follows: 

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

NOV   1717 – 39                                             DEC    122.10 + 0.05

JAN    1739 – 36                                             MAR   125.90 + 0.05

MAR   1754 – 35                                             MAY   128.40 + 0.05

MAY   1769 – 34                                              JUL    130.75 + 0.05

JUL    1783 – 35                                              SEP    133.00 + 0.05

SEP    1797 – 36                                              DEC   136.35 + 0.10

NOV   1811 – 37                                              MAR   139.60 + 0.10

JAN    1823 – 38                                              MAY   141.55 + 0.05

MAR   1837 – 38                                              JUL    143.20 unch

MAY   1849 – 38                                              SEP    144.85 + 0.05