Coffee Market Report February 18 2019

The delayed Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 9.11% over the week of trade leading up to Tuesday 22nd. January; to register a new net short sold position of 61,650 Lots.   This net short-sold position which is the equivalent of 17,477,502 bags has most likely been increased again, following the mixed but overall softer trade which 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 increase their net short sold position within the market by 7.55% during the week of trade leading up to Tuesday 12th. February; to register a short-sold position of 23,924 Lots on the day.  This net short position which is the equivalent of 3,987,333 bags has most likely been decreased again, following the period of more positive trade that has since followed. 

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 78,053 bags or 1.27% during the month of January, to register these stocks at 6,054,938 bags at the end of the month.   The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 570,000 bags per week, would conservatively have been at least 1.1 million bags. 

Suggesting that if one is to consider the additional unreported stocks the end month stocks, this would equate to more than twelve weeks of roasting activity, which most would consider to be a very safe reserve.    Especially so ahead of the pending deliveries from large new Mexican and Central American crop, which shall join the steady deliveries from Colombia, Brazil and Vietnam. 

The Vietnam customs authorities have reported that the countries coffee exports of mostly robusta coffees for the month of January were 19.4% higher than the previous month, at a total of 3,061,550 bags.   There was however with the first week of February closed for the Tet New Year celebrations that brought in the new Year of the Pig, a surge of late January exports, ahead of the holiday and the rise in exports, was very much expected.  Albeit that the number exceeded the earlier governments forecast, for exports to total approximately 2.92 million bags. 

The May to May contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 31.12 usc/Lb., while this equates to 30.61% 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 2,649 bags on Friday; to register these stocks at 2,477,441 bags.  There was meanwhile a larger in number 7,684 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 31,910 bags. 

The commodity markets were mixed in trade on Friday, but with many markets taking showing buoyancy for the day, to see the overall macro commodity index taking an upside track for the day.   The Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Copper, Soybean, Gold and Silver markets ended the day on a positive note, while the Orange Juice, Wheat 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 1.29% higher; to see this index registered at 401.93.   The day starts with the U.S. Dollar tending a little softer and trading at 1.291 to Sterling, at 1.131 to the Euro and with the US Dollar buying 3.701 Brazilian Real. 

The London and New York markets started the day on Friday trading close to par, but with both markets moving up into positive territory, into the early afternoon trade.  As the afternoon progressed both markets added some more value and with the London market taking on a stronger positive stance, but to see the New York market falter and head back towards par.   The London market continued on its positive track and towards a relatively firm close for the day and the week, while the New York market struggled to stay around par and towards a steady but modestly positive close for the day. 

The London market ended the day on a positive note and with 81.8% of the earlier gains of the day intact, while the New York market ended the day on only a modestly positive note and with only 20% of the earlier gains of the day intact.  The New York market is closed today for the U.S.A. Presidents Day holiday, which is celebrated in not all but many of the states, which shall leave the London market trading solo for the day.   One might think that this shall slow trade within the London market for the day, but with a slightly weaker U.S. dollar in play, that it shall assist the market to encounter some follow through buoyancy and for a steady start for early trade today, against the prices set on Friday, as follows: 

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

MAR   1529 + 17                                            MAR    97.95 + 0.10

MAY   1555 + 18                                            MAY   101.65 + 0.20

JUL    1565 + 15                                             JUL   104.30 + 0.25

SEP    1581 + 13                                            SEP   107.00 + 0.25

NOV   1599 + 12                                             DEC   110.80 + 0.30

JAN    1617 + 12                                            MAR   114.55 + 0.25

MAR   1637 + 12                                            MAY   117.00 + 0.30

MAY   1657 + 12                                             JUL    119.25 + 0.25

JUL    1673 + 12                                             SEP    121.40 + 0.20

SEP    1690 + 12                                             DEC   124.55 + 0.20