Coffee Market Report February 28 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 11.37% over the week of trade leading up to Tuesday 12th. February; to register a new net short sold position of 54,725 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 3.76%, to register a net long position of 43,530 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 11.86%; to register a new net short sold position of 61,785 Lots. This net short-sold position which is the equivalent of 17,515,774 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 General Statistics Office in Vietnam have reported that foresee that with the month of February coming to a close, that the countries coffee exports for the first two months of this year shall be approximately 19.6% lower than the same period last year, at a approximately 4.73 million bags.  This dip they appropriate to what they foresee to be relatively modest coffee exports for this month of only around 1.66 million bags, which one would think would be related to the fact that the country was only open for business since Monday 11th. February, post the week-long Tet New Year holidays. 

The largest coffee cooperative in Brazil Cooxupé have forecast that due to the excessive hot spells that were experienced during December and January and the resulting acceleration of cherry development, that the new arabica crop harvest shall start a couple of weeks earlier than normal.   This would indicate that there shall be new crop arabica coffees starting to come to the market in some volume, by as early as June this year.  It would though have little impact upon market sentiment, as following last years bumper harvest, it is anticipated that there shall be significant volumes of carryover arabica coffee stocks into the start of the new crop. 

The May to May contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 28.73 usc/Lb., while this equates to 29.03% 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 6,019 bags yesterday; to register these stocks at 2,477,001 bags.  There was meanwhile, a smaller in number 4,217 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,020 bags. 

The commodity markets were mixed in trade yesterday and with the overall macro commodity index showing a degree of buoyancy, while taking a steady track for the day.   The Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton and Copper markets ended the day on a positive note, while the Orange Juice, Wheat, Corn, Soybean, 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 0.36% higher; to see this index registered at 403.78.   The day starts with the U.S. Dollar steady and trading at 1.330 to Sterling, at 1.137 to the Euro and with the US Dollar buying 3.728 Brazilian Real. 

The London market started the day yesterday trading around par and the New York market showing some modest early buoyancy and with the London market soon attracting support, to see the markets taking a modest positive stance into the early afternoon trade.  As the afternoon progressed and with the Brazil Real tending firmer and providing the perception for slow sales out of Brazil, the New York market started to attract support and the triggering of buy stops, to post gains that peaked at gains of 2.70 usc/Lb. for the day.   The London market meanwhile continued on steady sideways positive track, while the New York market attracted selling at the highs and to settle back a little in later trade. 

The London market ended the day on a positive note and with 90.9% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 79.6% of the earlier gains of the day intact.  This positive close and with the Brazil Real steady and along with the perception of a rising net short sold status for the New York market, is most likely to inspire some confidence and set the markets for a steady start for early trade today, against the prices set yesterday, as follows: 

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

MAR   1530 + 8                                              MAR     95.70 + 2.15

MAY   1548 + 10                                            MAY     98.95 + 2.15

JUL    1552 + 7                                               JUL    101.70 + 2.10

SEP    1563 + 7                                              SEP    104.50 + 2.10

NOV   1578 + 7                                              DEC    108.40 + 2.10

JAN    1595 + 8                                              MAR   112.20 + 2.15

MAR   1614 + 7                                              MAY   114.60 + 2.10

MAY   1633 + 6                                              JUL    116.90 + 2.10

JUL    1652 + 8                                              SEP    119.10 + 2.10

SEP    1670 + 9                                              DEC   122.40 + 2.20