Coffee Market Report November 13 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 14.2% over the week of trade leading up to Tuesday 6th. November; to register a new net short sold position of 22,201 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.73%, to register a net long position of 45,822 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 11.29%; to register a new net short sold position of 39,372 Lots. This net short-sold position which is the equivalent of 11,161,788 bags has most likely been increased a little, following the period of mixed but overall more negative trade, that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The evidence of the much reduced speculative and managed money net short sold positions within the New York market and the negative nature of the medium to longer term surplus coffee supply, contributes to the bearish sentiment within the coffee markets.  While with the Brazil Real weakening against the presently robust U.S. dollar, the perspective of increased price fixation hedge selling coming to the markets further adds to the negative sentiment within the markets. 

There are though, reports of increasing internal market price resistance coming to the fore within many leading coffee producing countries, but with rising global coffee supply coming from the new crops in Vietnam, Colombia, Mexico and Central America, one might think that it shall be difficult for coffee farmers within most producer countries, to show long term resistance to the negative price dictates of the coffee terminal markets.  

The March 2019 to March 2019 contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.52 usc/Lb., while this equates to 33.79% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decline by 600 bags yesterday; to register these stocks at 2,456,356 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,873 bags. 

The commodity markets encountered follow through firmness of the U.S. dollar, which saw many markets on the back foot for the day and a day of mixed trade, with the overall macro commodity index taking an erratic sideways track for most of the day.  The Natural Gas, Sugar, Wheat and Corn markets ended the day on a positive note, while the Oil, Cocoa, Coffee, Cotton, Copper, Orange Juice, Soybean, Gold and Silver markets ended the day on a negative note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.11% lower; to see this index registered at 408.75.   The day starts with the U.S. Dollar steady and trading at 1.288 to Sterling, at 1.124 to the Euro and with the dollar buying 3.767 Brazilian Real, while North Sea Oil is steady and selling at US$ 68.20 per barrel. 

The London and New York markets started the day yesterday on a very soft note and to see both markets taking a softer track, into the early afternoon trade.   As the afternoon progressed and with the Americas entering the field of play, the New York market attracted increased selling pressure and with sell stops being triggered, to extend its losses and with the London market following suit, in a more sedate manner.  Both markets continued on their downside track in late trade, towards a soft start for the week. 

The London market ended the day on a negative note and with 88.6% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 87.5% of the losses of the day intact.   This close does little to inspire confidence and paints a rather dismal picture for the charts, which is more than likely to set the markets for a follow through unsteady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1631 – 30                                             DEC    110.15 – 3.70

JAN    1654 – 31                                             MAR   114.00 – 3.50

MAR   1664 – 29                                             MAY   116.90 – 3.50

MAY   1678 – 26                                              JUL    119.65 – 3.50

JUL    1689 – 23                                              SEP    122.20 – 3.50

SEP    1702 – 18                                              DEC   125.75 – 3.40

NOV   1712 – 16                                              MAR   129.20 – 3.35

JAN    1722 – 16                                              MAY   131.30 – 3.35

MAR   1732 – 17                                              JUL    133.20 – 3.35

MAY   1749 – 17                                              SEP    134.95 – 3.35