Coffee Market Report January 14 2019

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 the market by 8.27% during the week of trade leading up to Tuesday 8th. January; to register a short-sold position of 23,651 Lots on the day.  This net short position which is the equivalent of 3,941,833 bags has most likely been little changed to perhaps marginally decreased further, following the period of mixed but overall marginally more positive trade that has since followed. 

The markets remain devoid of any striking news to provide for direction for the present, with the perception of global surplus coffee supply remaining above the market.   With perhaps on the short term only the weather watch in South East Brazil in terms of the prospects for the forthcoming new 2019 Brazil coffee crop, due to be dictated by the quality of the rainfall for the first quarter of this year, being a matter that shall have some impact upon sentiment. 

Particularly so in terms of the waning belief in a significant El Niño phenomenon within the Pacific Ocean for this year, which might indicate the prospects for some dry weather spells due for Brazil.    Albeit that with good rains for the last couple of months of last year, that there are generally good ground water retention levels for the majority of the Brazil coffee districts. 

The March to March contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 33.86 usc/Lb., while this equates to 32.6% 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 4,615 bags on Friday; to register these stocks at 2,470,146 bags.  There was meanwhile a smaller in number 2,280 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 35,375 bags. 

The commodity markets had a mixed but with many markets softer for the day on Friday, to see the overall macro commodity index taking a modestly softer track for the day.   The Natural Gas, Sugar, London robusta Coffee, Copper, Wheat, Corn and Soybean markets ended the day on a positive note and the Gold market was steady for the day, while the Oil, Cocoa, New York arabica Coffee, Cotton, Orange Juice and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.1% lower; to see this index registered at 402.62.   The day starts with the U.S. Dollar steady and trading at 1.284 to Sterling, at 1.147 to the Euro and with the dollar buying 3.711 Brazilian Real. 

The London and New York markets started the day on Friday trading around par, but with both markets adding some modest value into the early afternoon trade.  As the afternoon progressed the New York market started to come under some selling pressure and slipped back into negative territory and with the London market falling back to trade modestly below par, but with the New York market bouncing back from the lows and to limit its losses and the London market moving back into positive territory for later trade. 

The London market ended the day on a positive note and with 77.8% of the earlier gains of the day intact, while the New York market ended the day on a negative note but having recovered 77.1% of the earlier losses of the day.    This mixed close and with the ability of the New York market to have bounced back from the lows of the day might inspire some degree of caution and set the markets for a hesitant steady start for early trade today, against the prices set on Friday, as follows: 

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

JAN    1522 + 7                                               MAR   103.85 – 0.40

MAR   1543 + 7                                               MAY   107.20 – 0.45

MAY   1566 + 9                                                JUL    110.10 – 0.50

JUL    1585 + 9                                                SEP    113.05 – 0.45

SEP    1603 + 10                                              DEC   116.90 – 0.45

NOV   1622 + 10                                              MAR   120.65 – 0.50

JAN    1640 + 10                                              MAY   122.95 – 0.60

MAR   1660 + 10                                              JUL    125.10 – 0.65

MAY   1680 + 10                                              SEP    127.15 – 0.70

JUL    1697 + 10                                              DEC    130.15 – 0.75