Coffee Market Report April 22 2019

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within this market by 11.13%; over the week of trade leading up to Tuesday 16th. April; to register a new net short sold position of 79,067 Lots.  This net short-sold position which is the equivalent of 22,415,144 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed. 

Reports from Brazil indicate good rains so far this month for most of the main coffee districts in the country, which has assisted the maturing coffee cherries.   With many of the conilon robusta farms soon to start the new crop harvest and with the arabica coffee farms due to start harvesting in five to six weeks’ time, bringing with the harvest continued bearish sentiment within the market. 

Meanwhile with the drop in the reference prices of the coffee terminal markets, there is internal market price resistance within many producer countries, which has resulted in the prevailing lacklustre physical coffee trade and a quiet market.  

The Australian Governments Bureau of Meteorology has reported a 70% chance for a new El Niño phenomenon to develop in the coming months, but assess that if it does occur that it would be weak and short lived.  Thus the prospects for an El Niño would for the present, not indicate a significant weather threat for the Pacific Rim coffee producing countries and for coffee producers further afield.  

The London market shall remain closed for the Easter Bank Holiday today, while the New York market shall trade for a shortened day’s trade.   Most European markets shall also be on holiday today, but many coffee producers shall be returning to work today.   Albeit that under the circumstances of low reference prices, that one might not expect arabica coffee producers to be very active within the New York market for the day.  

The July to July contracts arbitrage between the London and New York markets broadened on Thursday, to register this at 28.67 usc/Lb., while this equates to 30.86% 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 578 bags on Thursday; to register these stocks at 2,478,758 bags.  There was meanwhile no change to the number of bags ending grading for this exchange; to register these pending grading stocks at 7,897 bags. 

The commodity markets were mixed in trade on Thursday ahead of the Easter Friday holiday, for the markets and with the overall macro commodity index showing some degree of buoyancy for the day.  The Oil, Sugar, Coffee, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Natural Gas, Cocoa, Cotton, Copper, Orange Juice and Wheat markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.13% higher; to see this index registered at 407.12.   The day starts with the U.S. Dollar steady and trading at 1.299 to Sterling, at 1.124 to the Euro and with the US Dollar buying 3.926 Brazilian Real. 

The London and New York markets started the day on Thursday trading close to par, with the London market tending marginally softer and the New York market marginally more positive and with the New York market adding a little more value into the early afternoon trade.   As the afternoon progressed and following the previous days rather dramatic collapse the New York market started to attract support and with buy stops being triggered, to accentuate the gains of the day and with the London market moving up into modest positive territory in a more sedate manner.   The markets maintained this positive stance for the rest of the day’s trade, to see the London market partially recover and the New York market making an almost complete recovery, from the previous day’s selloff.  

The London market ended the day on a modestly positive note and with 44.4% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 81.2% of the earlier gains of the day intact.  This while positive might only be seen to be corrective rather than a change in sentiment and one might expect to see only a hesitant steady start for the New York market trading solo for the day, against the prices set on Thursday, as follows: 

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

MAY   1389 + 3                                              MAY     90.20 + 3.15

JUL    1416 + 4                                              JUL       92.90 + 3.25

SEP    1436 + 5                                              SEP      95.40 + 3.15

NOV   1456 + 4                                              DEC      99.25 + 3.10

JAN    1475 + 4                                              MAR   102.95 + 3.00

MAR   1495 + 3                                              MAY   105.35 + 2.95

MAY   1517 + 4                                              JUL     107.60 + 2.85

JUL    1538 + 5                                              SEP     109.80 + 2.80

SEP    1557 + 5                                              DEC    112.95 + 2.70

NOV   1571 + 5                                               MAR   116.10 + 2.65