Coffee Market Report November 19 2018

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within the market by 7.22% over the week of trade leading up to Tuesday 13th. November; to register a new net short sold position of 42,214 Lots.   This net short-sold position which is the equivalent of 11,967,482 bags has most likely been decreased marginally, following the period of mixed but overall more positive trade, that has since followed. 

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 92.29% during the week of trade leading up to Tuesday 13th. November; to register a net short sold position of 276 Lots on the day.  This net short sold position which is the equivalent of 46,000 bags has most likely been little changed to perhaps marginally increased, following the period of mixed but overall more sideways trade, which has since followed. 

These Commitment of Traders reports and with the net short position within the New York market sharply lower than a few weeks ago and the recent couple of weeks of short covering are a little bit confusing, as it is not related to any supportive fundamental news.   But is rather most likely related to the shifting of focus from speculation within the relatively flat coffee markets, to investments in alternative mediums. 

Albeit that with the Green Coffee Association of the U.S.A. reporting the end October 2018 port warehouse coffee stocks at their lowest since May 2016, that this could be seen to be some modestly supportive news for the market.  But a market that is soon due to encounter not only the present deliveries out of a bumper new Brazil coffee crop, but also the surge of new crop coffee supply that is coming from Colombia and Vietnam and shortly to be followed, by a delayed new Mexican and Central American coffee crop.   Thus, it is difficult to believe that this matter of reduced port warehouse stocks could be seen to be in anyway a realistic supportive factor for sentiment, for the presently depressed coffee terminal markets.  

The March 2019 to March 2019 contracts arbitrage between the London and New York markets broadened on Friday, to register this at 41.09 usc/Lb., while this equates to 35.33% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 2 bags on Friday; to register these stocks at 2,459,349 bags.  There were meanwhile a larger in number 2,618 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 28,903 bags. 

The commodity markets encountered a softening of the U.S. dollar on Friday and to see most markets showing a degree of buoyancy for the day, to see the overall macro commodity index taking an upside track for the day.   The Oil, Natural Gas, Sugar, Cocoa, New York arabica Coffee, copper, Orange Juice, Wheat, Soybean, Gold and Silver markets ended the day on a positive note and the Cotton market steady for the day, while the London robusta Coffee and Corn markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.19% higher; to see this index registered at 412.47.   The day starts with the U.S. Dollar steady and trading at 1.282 to Sterling, at 1.140 to the Euro and with the dollar buying 3.743 Brazilian Real. 

The London market started the day on Friday on a softer note and the New York market taking a steady track and trading around par, to see the markets maintaining this stance, into the early afternoon trade.   As the afternoon progressed, the London market maintained a sideways softer stance, while the New York market started to attract support and to add value and start on an upside track for the rest of the day’s trade, with the London market taking the opposite direction and losing more value for late in the day’s trade. 

The London market ended the day on a very negative note and with 95.5% of the earlier losses of the day intact, while the New York market ended the day on a very positive note and with 89.3% of the earlier gains of the day intact.   It was though, a day that lacked much in the way of participation out of Brazil, where many had taken an extended long weekend, following Thursday’s Republic Day holiday celebrations.  Thus, one might think to see some degree of catch up buoyancy on the part of the London market and only a cautious steady start for the New York market for early trade today, as players might fear some catch up price fixation hedge selling due out of Brazil a little later in the day, for the New York market.   Against the prices set on Friday, as follows: 

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

NOV   1628 – 14                                             DEC    112.60 + 2.55

JAN    1646 – 21                                             MAR   116.30 + 2.50

MAR   1658 – 20                                             MAY   119.10 + 2.50

MAY   1672 – 20                                              JUL    121.75 + 2.50

JUL    1686 – 18                                              SEP    124.30 + 2.50

SEP    1700 – 16                                              DEC   127.85 + 2.50

NOV   1711 – 14                                              MAR   131.30 + 2.50

JAN    1723 – 13                                              MAY   133.70 + 2.55

MAR   1734 – 13                                              JUL    136.00 + 2.55

MAY   1751 – 13                                              SEP    138.05 + 2.55