Coffee Market Report February 25 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 11.07% over the week of trade leading up to Tuesday 5th. February; to register a new net short sold position of 55,235 Lots.   This net short-sold position which is the equivalent of 15,658,878 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 2.93% during the week of trade leading up to Tuesday 19th. February; to register a short-sold position of 24,625 Lots on the day.  This net short position which is the equivalent of 4,104,167 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed. 

The Coffee Exporters Association of India are reported to have forecast that the countries coffee exports for the year are due to fall, as a result of the damaging excessive monsoon rains that were experienced last year.  This follows earlier reports from the Indian Coffee Board, which had reduced their new crop forecast by approximately 1 million bags or 15.81%, to now foresee a new crop of approximately 5,325,000 bags.   This crop made up from an approximate 70.3 to 29.7 split, between robusta and arabica coffees. 

This approximate 1 million bags dip in Indian coffee supply for the present October 2018 to September 2019 coffee year is however countered by the approximate 14 million bags sharp rise in Brazil coffee supply that came with their last crop, which is a factor that has been dampening speculative spirits within the international coffee markets for quite some months.   And is likely to continue to do so, for some months to come. 

The May to May contracts arbitrage between the London and New York markets broadened on Friday, to register this at 30.19 usc/Lb., while this equates to 30.19% 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 5,383 bags on Friday; to register these stocks at 2,481,719 bags.  There was meanwhile, a smaller in number 470 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 26,723 bags. 

The commodity markets were mixed in trade on Friday, but with many markets taking a positive track and the overall macro commodity index showing a degree of buoyancy for the day.  The U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Copper, Orange Juice, Wheat, Corn, Gold and Silver markets ended the day on a positive note, while Brent Oil, Cotton and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.54% higher; to see this index registered at 407.21.   The day starts with the U.S. Dollar steady and trading at 1.307 to Sterling, at 1.134 to the Euro and with the US Dollar buying 3.747 Brazilian Real. 

The London and New York markets started the day on Friday trading to the positive side of par and with the New York market adding value into the early afternoon trade, while the London market remained on a sideways track and close to par.   As the afternoon progressed the New York market maintained its modest positive stance and with the London market remaining mostly to the positive side of par, to set the markets on track for a steady to positive close for the day. 

The London market ended the day on a positive note and with 75% 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 steady close for the end of the week and the ability of the volatile New York market to once again bounce back from the lows of the previous day, might assist to bring some confidence to the fore.   A factor that might set the markets for a slow and steady start for early trade today against the prices set on Friday, as follows: 

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

MAR   1517 + 12                                            MAR    96.45 + 0.35

MAY   1539 + 6                                              MAY   100.00 + 0.55

JUL    1550 + 5                                               JUL   102.65 + 0.50

SEP    1566 + 5                                              SEP   105.40 + 0.50

NOV   1582 + 5                                              DEC   109.20 + 0.50

JAN    1599 + 5                                             MAR   112.90 + 0.45

MAR   1617 + 4                                             MAY   115.25 + 0.40

MAY   1636 + 4                                              JUL    117.45 + 0.35

JUL    1652 + 4                                              SEP    119.60 + 0.35

SEP    1669 + 4                                              DEC   122.75 + 0.35