Coffee Market Report February 26 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 decrease their net short sold position within the market by 16.25% over the week of trade leading up to Tuesday 5th. February; to register a new net short sold position of 49,136 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.24%, to register a net long position of 41,954 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 11.07%; 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 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 new Peru fine washed arabica coffee crop is getting closer to maturity and with the forecast for a new crop this year to match last years crop, of approximately 4.3 million bags.   There are however fears being voiced by the country’s coffee association the Junta National del Cafe JNC, that many farmers in reaction to the low prices at which they were obliged to sell their previous crop coffees and the evidence of the prevailing soft prices ahead of the new crop, have been migrating to work on Coca plantations.   This making them fear that it shall impact negatively upon the country’s potential export volumes from the new crop, as they likewise fear the probable dip in the value of the forthcoming new crop coffee exports, which are due to start impacting upon global coffee supply from April onwards. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 29.54 usc/Lb., while this equates to 29.58% 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 1,026 bags yesterday; to register these stocks at 2,480,693 bags.  There was meanwhile, a larger in number 11,310 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 38,033 bags. 

The commodity markets were mixed in trade yesterday, but with many markets tending softer for the day and with the Oil markets under particular pressure, to see the overall macro commodity index taking a softer track for the day.   The Natural Gas, London robusta Coffee, Cotton, Copper and Soybean markets ended the day on a positive note and the New York arabica Coffee market on a near to steady note, while the Oil, Sugar, Cocoa, Orange Juice, Wheat, Corn, Gold 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 0.89% lower; to see this index registered at 403.60.   The day starts with the U.S. Dollar steady and trading at 1.312 to Sterling, at 1.136 to the Euro and with the US Dollar buying 3.752 Brazilian Real. 

The London market started the day yesterday trading on a positive note, while the New York market started the day trading close to par and with the markets maintaining this mixed stance, into the early afternoon trade.  As the afternoon progressed, the London market continued to hold on to its gains and positive stance, while the New York market was trading close to and either side of par.   With the markets taking something of a sideways track from thereon, through to the close. 

The London market ended the day on a positive note and with 78.6% of the earlier gains of the day intact, while the New York market ended the day on a near to steady note and with 21.4% of the earlier losses of the day intact.  This close provides little in the way of indication of direction and one might think that with such uncertainty, it shall set the markets for a cautious and hesitant near to steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1531 + 14                                            MAR     96.40 – 0.05

MAY   1550 + 11                                            MAY     99.85 – 0.15

JUL    1560 + 10                                             JUL   102.60 – 0.05

SEP    1574 + 8                                              SEP   105.35 – 0.05

NOV   1590 + 8                                              DEC   109.15 – 0.05

JAN    1607 + 8                                              MAR   112.90 unch

MAR   1626 + 9                                              MAY   115.25 unch

MAY   1646 + 10                                            JUL    117.45 unch

JUL    1663 + 11                                            SEP    119.55 – 0.05

SEP    1680 + 11                                            DEC   122.65 – 0.10