Coffee Market Report December 04 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 6.62% over the week of trade leading up to Tuesday 27th. November; to register a new net short sold position of 27,999 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 1.55%, to register a net long position of 43,376 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 0.37%; to register a new net short sold position of 38,971 Lots. This net short-sold position which is the equivalent of 11,048,106 bags has most likely been further increased, following the period of mixed but overall softer trade that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The International Coffee Organisation ICO have reported that the global coffee exports for the month of October were 17% higher than the same month last year, at a total of 10.41 million bags.  These exports related to a 13.1% increase in arabica coffee exports and a 25.3% increase in robusta coffee exports, with the ratio of 65 to 35 of arabica and robusta coffee exports. 

The Indonesian government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month of November were 96,085 bags or 43.19% lower than the same month last year, at a total of 126,375 bags.   This has contributed to the islands cumulative robusta coffee exports for the first two months of the present October 2018 to September 2019 coffee year to be 119,768 bags or 21.6% lower than the same period in the previous coffee year, at a total of 434,715 bags. 

The Ministry of Trade in Brazil have reported that the countries coffee exports for the month of November were 1,196,961 bags or 44.4% higher than the same month last year, at a total of 3,892,710 bags.  This surge in exports which includes good volumes of conilon robusta coffees that were not available for export at this time last year, underpins the view that Brazil has just experienced a bumper surplus coffee crop this year. 

The March 2019 to March 2019 contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.68 usc/Lb., while this equates to 33.1% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen increase by 1,680 bags yesterday; to register these stocks at 2,450,456 bags.  There was meanwhile a larger in number 4,040 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 41,102 bags. 

The commodity markets had a mixed day yesterday but with many markets post the weekend agreement between the U.S.A. and China to delay a decision on increased import tariffs experiencing a day of buoyancy, to see the overall macro commodity index taking an upside track for the day.  The Oil, Sugar, New York arabica Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note and the Cocoa market was near to steady for the day, while the Natural Gas, London robusta Coffee and Orange Juice markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.07% higher; to see this index registered at 409.2.   The day starts with the U.S. Dollar near to steady and trading at 1.275 to Sterling, at 1.138 to the Euro and with the dollar buying 3.841 Brazilian Real. 

The London and New York markets started the day yesterday with immediate buoyancy and with the New York market soon adding further value, following the sharp losses of Friday.  The markets maintained this positive structure and with particularly good gains for the New York market into the early afternoon trade and with the New York market attracting buy stops and adding further value and peaking at gains of 3.30 usc/Lb., before starting to attract stronger selling pressure.   Both the markets floundered in late trade and with the London market falling back into negative territory and the New York market to par, with the latter market managing to add back some modest gains by the close. 

The London market ended the day on a negative note and with 100% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with only 7.6% of the earlier gains of the day intact.   This close and with the markets having been unable to hold on to the earlier positive stance of the day is unlikely to inspire confidence, but one might think that there shall nevertheless be some hesitancy and that the markets be due for a cautious steady start for early trade today.  Against the prices set yesterday, as follows: 

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

                                                                        DEC    103.50 + 0.25

JAN    1566 – 14                                             MAR   107.80 + 0.25

MAR   1590 – 9                                               MAY   110.70 + 0.25

MAY   1605 – 7                                                JUL    113.35 + 0.20

JUL    1619 – 6                                                SEP    116.00 + 0.25

SEP    1633 – 5                                                DEC   119.70 + 0.25

NOV   1646 – 5                                                MAR   123.25 + 0.25

JAN    1658 – 5                                                MAY   125.65 + 0.25

MAR   1669 – 7                                                JUL    128.00 + 0.25

MAY   1687 – 6                                                SEP    130.15 + 0.25

JUL    1699 – 6                                                DEC    133.05 + 0.20