Coffee Market Report February 21 2019

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 2.92% over the week of trade leading up to Tuesday 29th. January; to register a new net short sold position of 58,6739 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 0.24%, to register a net long position of 41,036 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 0.74%; to register a new net short sold position of 62,109 Lots. This net short-sold position which is the equivalent of 17,607,626 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 Colombian Coffee Federation and representing approximately half a million families who make a living out of coffee farming have once again approached the countries government yesterday, to come to the fore with further financial assistance for their cash strapped farmers.   Stating that with the soft and often loss-making prices that are being dictated by the relatively low value of the reference prices of the New York market, that farmers require further assistance for not only the costs of replacement of aged trees that has been happening over the past few years, but also for subsidies to finance inputs such as fertilisers. 

The Australian Government Bureau of Meteorology have reported that conditions remain neutral within the Pacific Ocean, but that they foresee a 50% chance for a weak El Niño phenomenon to develop during the second quarter of this year.   This report and in terms of the reference to the fact that if it is to come about that it would most likely only be a weak one, does not really infer so far, that there shall be medium term threatening weather conditions for the Pacific Rim coffee producing countries. 

The May to May contracts arbitrage between the London and New York markets broadened yesterday, to register this at 31.37 usc/Lb., while this equates to 30.94% 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 5,240 bags yesterday; to register these stocks at 2,487,102 bags.  There was meanwhile a smaller in number 1,164 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 30,813 bags. 

Many commodity markets were mixed in trade yesterday and trading against a steady U.S. Dollar, with the overall macro commodity index taking a degree of buoyancy for the day.  The Oil, Sugar, Coffee, Copper, Orange Juice, Corn, Soybean and Silver markets ended the day on a positive note, while the Natural Gas, Cocoa, Cotton, Wheat and Gold markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.34% higher; to see this index registered at 404.51.   The day starts with the U.S. Dollar steady and trading at 1.303 to Sterling, at 1.134 to the Euro and with the US Dollar buying 3.725 Brazilian Real. 

The London and New York markets started the day yesterday trading on a positive note and with the markets taking this positive stance, into the early afternoon trade.   As the afternoon progressed the New York market started to attract some selling pressure and moved back into modest negative territory and followed by a similar move south for the London market, but with both markets bouncing off the lows in late trade and heading towards a modestly positive close for the day. 

The London market ended the day on a positive note and with 54.5% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 61.1% of the earlier gains of the day intact.  This close and with both markets having been able to resist the downside and end the day with a degree of buoyancy, might well assist towards some degree of confidence and set the markets for a follow through steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1517 + 4                                              MAR    97.55 + 0.35

MAY   1544 + 6                                              MAY   101.40 + 0.55

JUL    1556 + 6                                               JUL   104.15 + 0.60

SEP    1572 + 5                                              SEP   106.90 + 0.60

NOV   1588 + 3                                              DEC   110.75 + 0.65

JAN    1605 + 3                                             MAR   114.45 + 0.55

MAR   1623 + 3                                             MAY   116.85 + 0.50

MAY   1642 + 3                                              JUL    119.10 + 0.50

JUL    1658 + 3                                              SEP    121.25 + 0.45

SEP    1675 + 3                                              DEC   124.40 + 0.40