Coffee Market Report April 24 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 10.2% over the week of trade leading up to Tuesday 16th. April; to register a new net short sold position of 81,667 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 5.13%, to register a net long position of 37,339 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 11.13%; 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 marginally decreased, following the period of mixed but overall more positive trade that has since followed and likewise, that of the Managed Money Fund sector of the market. 

With the larger new Brazil conilon robusta coffee crop starting and with this crop expected to exceed domestic market demand by approximately six to seven million bags and with these coffees not the preferred taste profile for many European roasters, it is potentially going to bring new crop coffees to the London market to be certified for this market’s stocks.   This factor is likely to weigh upon the minds of the speculative sector of the London market and with the arbitrage between the London and New York markets relatively narrow at present, could be seen to be a longer-term bearish factor for the London market. 

The New York market meanwhile and with the evidence of the increase in the speculative net short sold status within this market has attracted some short covering support over the past few days, but one might suspect that with the prevailing bearish fundamentals of short to medium term over supply, that this is really only a modest corrective factor.   

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 29.79 usc/Lb., while this equates to 31.95% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange were seen to be unchanged yesterday; to register these stocks at 2,483,207 bags.  There were meanwhile 5,130 bags increase to the number of bags ending grading for this exchange; to register these pending grading stocks at 8,328 bags. 

The Certified Robusta coffee stocks held against the London exchange were seen to increase by 6,000 bags or 0.31% over the week of trade leading up to Monday 22nd. April, to see these stocks registered at 1,943,167 bags, on the day. 

The commodity markets were mostly on the softer side in trade yesterday against some degree of muscle being shown by the U.S. dollar, to see the overall macro commodity index taking a softer track for the day.  The Oil, Sugar, New York arabica Coffee and Wheat markets ended the day on a positive note, while the Natural Gas, Cocoa, London robusta Coffee, Cotton, Copper, Orange Juice, 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 0.73% lower; to see this index registered at 403.13.   The day starts with the U.S. Dollar steady and trading at 1.292 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.919 Brazilian Real. 

The London market started the day yesterday trading around par and with the New York market trading marginally south of par and with both markets soon coming under pressure and moving down into negative territory and taking a softer track, into the early afternoon trade.  As the afternoon progressed both markets suffered further losses but with the New York market soon attracting short covering support and moving back up into positive territory, while the London market remained under pressure and setting the markets on track for a mixed close for the day. 

The London market ended the day on a very negative note and with 85% of the earlier losses of the day intact, while the New York market ended the day on a positive note and with 32% of the earlier gains of the day intact.  This mixed close provides little reason for confidence, but with the Brazil Real relatively steady it might indicate subdued selling activity out of the leading producer, to assist towards a possible steady start for early trade today.  Against the prices set yesterday, as follows: 

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

MAY   1369 – 20                                            MAY     91.50 + 0.40

JUL    1399 – 17                                            JUL       93.25 + 0.40

SEP    1418 – 18                                            SEP      95.70 + 0.35

NOV   1438 – 18                                            DEC      99.45 + 0.35

JAN    1458 – 17                                            MAR   103.05 + 0.30

MAR   1478 – 17                                            MAY   105.40 + 0.35

MAY   1500 – 17                                            JUL     107.65 + 0.40

JUL    1521 – 17                                            SEP     109.80 + 0.40

SEP    1540 – 17                                            DEC    112.90 + 0.40

NOV   1554 – 17                                             MAR   116.00 + 0.40