Coffee Market Report March 25 2019

The latest 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 4.66% over the week of trade leading up to Tuesday 19th. March; to register a new net short sold position of 74,939 Lots.   This net short-sold position which is the equivalent of 21,244,874 bags has most likely been increased again, following the overall more negative 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 20.62% during the week of trade leading up to Tuesday 19th. March; to register a short-sold position of 32,527 Lots on the day.  This net short position which is the equivalent of 5,421,167 bags has most likely been further increased, following the overall softer trade that has since followed. 

The news of good rains for all of the main coffee districts in Brazil and the perception that this is going to be good for the development of cherries for the new crop that is soon due to start being harvested, continued to dampen speculative spirits within the coffee markets on Friday.  As was the weaker nature of the Brazil Real a factor, that further assisted to encourage speculative selling within the New York market.  

There is a perception that there are still substantial volumes of new crop Vietnam robusta coffees that are still to be price fixed and along with, some volumes of 2018 Brazil conilon robusta coffees that remain unsold.  This and with the arbitrage between the London and New York markets relatively narrow at the present, is inspiring speculation that the London market might be soon due to come under increased selling pressure. 

The May to May contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 26.13 usc/Lb., while this equates to 27.82% 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 5,772 bags on Friday; to register these stocks at 2,503,286 bags.  There was meanwhile, a larger in number 3,025 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,872 bags. 

The commodity markets were mixed in trade on Friday, but with many markets tending softer, to see the overall macro commodity index tending softer for the day.  The Sugar and Cocoa markets experienced a degree of buoyancy and ended the day on a positive note, while the Coffee markets ended the day on a negative note.   The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.37% lower; to see this index registered at 410.21.   The day starts with the U.S. Dollar near to steady and trading at 1.319 to Sterling, at 1.130 to the Euro and with the US Dollar buying 3.907 Brazilian Real. 

The London and New York markets did experience some buoyancy earlier in the day on Friday, but with both markets coming under pressure from the negative sentiment that prevails within the coffee markets for the present.   The London market ended the day on a negative note and with 60% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 78.3% of the earlier losses of the day intact.   This close does not paint a pretty picture for the charts and does not inspire confidence, which is likely to set the markets for at best a near to steady and hesitant start for early trade today, against the prices set on Friday, as follows: 

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

MAR   1480 – 9

MAY   1494 – 9                                              MAY     93.90 – 0.90

JUL    1500 – 8                                              JUL      96.65 – 0.90

SEP    1512 – 8                                              SEP     99.40 – 0.90

NOV   1528 – 8                                              DEC    103.25 – 0.90

JAN    1545 – 8                                              MAR   107.10 – 0.90

MAR   1561 – 8                                              MAY   109.50 – 0.90

MAY   1580 – 8                                              JUL    111.85 – 0.85

JUL    1598 – 8                                              SEP    114.10 – 0.85

SEP    1616 – 8                                              DEC   117.35 – 0.85