Coffee Market Report December 20 2016

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 long position within the market by 24.02% over the week of trade leading up to Tuesday 13th. December; to register a net long position of 22,103 Lots.   Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 7.36%, to register a net long position of 35,739 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their long position within the market by 28.88%, to register net long position of 16,966 Lots.   This net long position which is the equivalent of 4,809,786 bags is most likely to be little increased again, following the period of mixed but with yesterday’s corrective rally more positive trade and likewise, that of the Managed Money fund sector of the market. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market decrease their net long position within this market by 1.76% during the week of trade leading up to Tuesday 13th. December; to register a long position of 28,695 Lots.  This net long position which is the equivalent of 4,782,500 bags has most likely been increased again, following the period of mixed but overall more positive trade that has since followed. 

There was no real striking fundamental news coming to the coffee markets yesterday, but the close to even supply and demand numbers for the coming year has seemingly dampened bearish spirits and underpinned corrective trade, following the past couple of weeks of softening terminal market prices.   The London market in particular picked up late in the day support, with the perspective that while there shall be surplus arabica coffee supply for the coming year, the first half of next year shall experience tightening robusta coffee supply and this factor is very much reflected by the narrowing of the arbitrage between the New York and London markets. 

The March to March contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 47.68 usc/Lb., while this equates to a 33.05% price discount for the London robusta coffee market.  This narrowing arbitrage is now becoming less of an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 214 bags yesterday; to register these stocks at 1,253,736 bags.  There was meanwhile a larger in number 646 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 37,560 bags. 

Mexico and the Central American producers account for a less dominant 34.16% of these stocks and followed by Colombia with a 27.12% share of the stocks, Peru with a 19.39% share of the stocks, the African producers Burundi, Rwanda, Tanzania and Uganda with 16.04% of the stocks, India with 2.52% of the stocks and the balance accounted for by Brazil and Papua New Guinea.   While the European based certified warehouses of the New York exchange in Antwerp, Barcelona, Bremen and Hamburg account for a dominant 69.88% of the holding of these stocks, as against the modest share held within the U.S.A. based warehouses of the exchange in Houston, Miami, New Orleans and New York. 

The commodity markets had a mixed and mostly lacklustre day for most markets yesterday, with the exception of the strong positive track taken within the Cocoa, London robusta Coffee and Orange Juice markets and the significant losses within the Copper market, to see the overall macro commodity index taking a modestly softer track for the day.   The U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Orange Juice and Gold markets had a day of buoyancy, while the Brent Oil, Cotton, Copper, Wheat, Corn, Soybean and Silver markets had a softer day’s trade.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.18% lower; to see this Index registered at 420.32.   The day starts with the U.S. dollar close showing a degree of buoyancy and trading at 1.239 to Sterling and 1.038 to the Euro, while North Sea Oil is tending softer and is selling at $ 53.40 per barrel. 

The markets started the day yesterday with the New York market taking a near to steady stance and the London market a modestly positive stance, but with both markets taking a modestly positive track into the early afternoon trade.   As the afternoon progressed the New York market added some more value and followed by the London market and while the New York market took a steady upside track for the day, the London market attracted late in the day support and with buy stops being triggered and a lack of producer selling pressure in play, to become something of a positive feature for the day.   The London market ended the day on a very positive note and with 88.5% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 72% of the earlier gains of the day intact.  This close does much to inspire confidence and with the accompanying positive nature of the charts, one might expect to see something of a steady start for the markets for early trade today against the prices set yesterday, as follows: 

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

JAN      2158 + 61                                               DEC    141.20 + 3.00

MAR     2129 + 46                                               MAR   144.25 + 1.80

MAY     2136 + 48                                               MAY   146.55 + 1.75

JUL      2142 + 49                                               JUL     148.80 + 1.80

SEP      2142 + 48                                              SEP     150.65 + 1.85

NOV     2144 + 48                                               DEC    153.55 + 1.90

JAN      2148 + 48                                               MAR   156.20 + 1.95

MAR     2156 + 48                                               MAY   157.80 + 1.90

MAY     2168 + 48                                               JUL    159.35 + 1.85

JUL      2186 + 48                                               SEP    161.00 + 1.85