Coffee Market Report May 13 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 10.39%; over the week of trade leading up to Tuesday 7th. May; to register a new net short sold position of 78,206 Lots.  This net short-sold position which is the equivalent of 22,171,054 bags has most likely been marginally decreased, following the period of mixed but overall positive trade that 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 5.87% over the week of trade leading up to Tuesday 7th. May; to register a short-sold position of 41,366 Lots.  This net short sold position which is the equivalent of 6,894,333 bags has most likely been marginally decreased, following the period of mixed but overall more positive trade that has since followed. 

The Coffee Exporters Council in Brazil Cecafé have reported that the countries green coffee exports for the month of April were 30.3% higher than the same month last year, at a total of 2.717 million bags.  This contributing to the country’s total coffee exports for the past ten months being registered at approximately 34 million bags and setting the country on track for possible historic export figure, by the end of June this year. 

This news and along with the evidence of the start of the new Brazil coffee harvest, assisting to maintain the prevailing bearish sentiment within the coffee markets.  But with perhaps the news of the increase in the speculative net short sold positions within the coffee terminal markets due to dampen selling spirits for the markets, for the start of this week. 

The July to July contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 28.93 usc/Lb., while this equates to 31.86% 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 190 bags on Friday; to register these stocks at 2,435,957 bags.  There was meanwhile a larger in number 3,990 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 4,700 bags. 

The commodity markets were mixed in trade on Friday and with uncertainty being fuelled by the stumbling U.S. and China trade talks, to see the overall macro commodity index on something of a sideways track for the day.  The Brent Oil, Natural Gas, London robusta Coffee, Copper, Orange Juice, Gold and Silver markets ended the day on a positive note and the New York arabica Coffee market on a steady note, while the U.S. Oil, Sugar, Cocoa, Cotton, Wheat, Corn and Soybean markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.01% lower; to see this index registered at 387.93.   The day starts with the U.S. Dollar steady and trading at 1.301 to Sterling, at 1.123 to the Euro and with the US Dollar buying 3.957 Brazilian Real. 

The London and New York markets started the day on Friday trading mostly marginally south of par, but with the London market coming under pressure, to see the market fall into negative territory and while the New York market remained close to par, into the early afternoon trade.   As the afternoon progressed, the London market experienced a recovery and bounced back up into positive territory, while the New York market continued on its erratic sideways track and close to par, to set the markets an overall steady close for the day. 

The London market ended the day on a positive note and with 70.4% of the earlier gains of the day intact, while the New York market likewise ended the day on a steady note and with only 6.2% of the earlier losses of the day intact.  This steady close and with the evidence of the extensive speculative net short sold position of the funds within the coffee markets might well stall the bears within the market and to set the markets for a follow through steady start for early trade today, against the prices set on Friday, as follows: 

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

MAY   1337 + 15                                            MAY     89.45 – 0.05

JUL    1364 + 19                                            JUL       90.80 – 0.05

SEP    1381 + 17                                            SEP      93.10 unch

NOV   1400 + 16                                            DEC      96.60 + 0.05

JAN    1418 + 15                                            MAR   100.20 + 0.10

MAR   1437 + 15                                            MAY   102.50 + 0.15

MAY   1457 + 16                                            JUL     104.60 + 0.10

JUL    1477 + 17                                            SEP     106.55 + 0.05

SEP    1498 + 17                                            DEC    109.50 unch

NOV   1517 + 17                                             MAR   112.50 – 0.05