Coffee Market Report May 14 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 10.19% over the week of trade leading up to Tuesday 7th. May; to register a new net short sold position of 80,772 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 2.17%, to register a net long position of 38,096 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 10.39%; 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 decreased again, 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. 

The Brazil Real came under pressure yesterday, to add to negative sentiment within the coffee markets, which foresee that Brazil shall see the new crop that is now starting, to be joined by carryover stocks from the past crop, which inspired the perception that there shall be steady selling coming to the fore from Brazil for the coming months.  This along with pressure upon commodity markets in general in reaction to the threat of a significant trade war between the U.S.A. and China, assisting to set the coffee markets on a downside track for the day. 

Meanwhile most coffee producer countries continue to experience internal market price resistance, which is resulting in the hardening of asking export differentials from many coffee producers.   But with the meanwhile restrained demand from the consumer markets where many industry players are holding off for new market lows, the prevailing lacklustre physical coffee trade continues. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 28.55 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 register no change yesterday; to register these stocks at 2,435,957 bags.  There was meanwhile also no change 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 yesterday, to see the overall macro commodity index taking an erratic track for the day.  The Natural Gas, Sugar, Orange Juice, Wheat, Corn and Gold markets ended the day on a positive note, while the Oil, Cocoa, Coffee, Cotton, Copper, Soybean and Silver markets ended the day on a softer note.   Reuters is experiencing some issues early today, which does not allow us to report the Reuters Equal Weight Continuous Commodity Index.   The day starts with the U.S. Dollar steady and trading at 1.296 to Sterling, at 1.124 to the Euro and with the US Dollar buying 3.990 Brazilian Real. 

The London and New York markets started the day yesterday on a softer note, to see the markets take this softer track into the early afternoon trade.   As the afternoon progressed both markets attracted increased selling pressure and adding to the losses, which were accentuated by sell stops being triggered.  Trade was however not high in volume and the markets bounced back from the lows but to nevertheless, set a course for a soft close for the day. 

The London market ended the day on a negative note and with 69.2% of the earlier losses of the day intact, while the New York market likewise ended the day on a negative note and with 60% of the earlier losses of the day intact.  This close and with a weak Brazil Real in play, does little to inspire confidence and one can expect to see little better than a near to steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1320 – 17                                            MAY     88.25 – 1.20

JUL    1346 – 18                                            JUL       89.60 – 1.20

SEP    1360 – 21                                            SEP      92.00 – 1.10

NOV   1379 – 21                                            DEC      95.50 – 1.10

JAN    1398 – 20                                            MAR     99.10 – 1.10

MAR   1417 – 20                                            MAY   101.40 – 1.10

MAY   1438 – 19                                            JUL     103.40 – 1.20

JUL    1457 – 20                                            SEP     105.35 – 1.20

SEP    1478 – 20                                            DEC    108.25 – 1.25

NOV   1497 – 20                                             MAR   111.20 – 1.30