Coffee Market Report November 20 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 increase their net short sold position within the market by 23.23% over the week of trade leading up to Tuesday 13th. November; to register a new net short sold position of 27,358 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 4.55%, to register a net long position of 43,738 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 7.22%; 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 a little, following the period of mixed but overall more positive trade, that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The delay in the new crop out of Mexico and Central America and some degree of internal market price resistance for the lower grown coffees that are now in harvest, has seemingly assisted to interrupt the steady flow of coffees into the certified coffee stocks held against the New York exchange.   This new crop is though on the horizon and by the first quarter of next year, is due to fuel a steady stream of new crop coffees towards both the mainstream consumer market industries and to the certified stocks of the New York exchange.  

The producer bloc of Mexico and Central America presently accounting for 78.35% of the certified stocks of the New York exchange and followed by Peru, who account for 12.23% of the stocks.   The new crop from Peru, only due to start to impact upon the market from May next year. 

The March 2019 to March 2019 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 42.08 usc/Lb., while this equates to 36.07% 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 515 bags yesterday; to register these stocks at 2,458,834 bags.  There were meanwhile a larger in number 5,966 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 22,937 bags. 

The commodity markets encountered a further softening of the U.S. dollar yesterday and to see many markets showing a degree of buoyancy for the day, which assisted the overall macro commodity index to remain on an upside track for the day.   The Oil, Natural Gas, Sugar, New York arabica Coffee, Orange Juice, Gold and Silver ended the day on a positive note, while the Cocoa, London robusta Coffee, Cotton, Wheat, Corn and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.69% higher; to see this index registered at 415.32.   The day starts with the U.S. Dollar steady and trading at 1.286 to Sterling, at 1.145 to the Euro and with the dollar buying 3.756 Brazilian Real. 

The London market started the day yesterday on a positive note, while the New York market started the day on a marginally negative note and with the markets maintaining this mixed stance, into the early afternoon trade.  As the afternoon progressed the New York market started to come under pressure and to extend the losses and with the London market following suit, to move back into negative territory.  The New York market started to trigger sell stops and the losses were accentuated to post losses for the day of 3.15 usc/Lb., with the London market likewise losing some more weight.   The London market bounced of the lows towards a nevertheless negative track for the rest of the day, while the New York market made a late in the day recovery and towards a modestly positive close for the day. 

The London market ended the day on a negative note and with 60.9% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with 50% of the gains of the day intact.   It was a day though of mixed signals and despite the ability of the New York market to bounce back from the significant lows of the day, one might think that there shall be a degree of indecision and caution due for early trade today, to see the markets taking only a hesitantly steady start for early trade today, against the prices set yesterday, as follows: 

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

NOV   1609 – 19                                             DEC    112.35 – 0.25

JAN    1632 – 14                                             MAR   116.65 + 0.35

MAR   1644 – 14                                             MAY   119.45 + 0.35

MAY   1657 – 15                                              JUL    122.10 + 0.35

JUL    1670 – 16                                              SEP    124.65 + 0.35

SEP    1682 – 18                                              DEC   128.25 + 0.40

NOV   1695 – 16                                              MAR   131.80 + 0.50

JAN    1708 – 15                                              MAY   134.20 + 0.50

MAR   1721 – 13                                              JUL    136.50 + 0.50

MAY   1738 – 13                                              SEP    138.55 + 0.50