Coffee Market Report May 21 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 decrease their net short sold position within the market by 5.2% over the week of trade leading up to Tuesday 14th. May; to register a new net short sold position of 76,571 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.19%, to register a net long position of 38,551 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net short sold position within this market by 6.25%; to register a new net short sold position of 73,321 Lots. This net short-sold position which is the equivalent of 20,786 bags has most likely been marginally increased again, following the period of mixed but overall more negative trade that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The respected United States Department of Agriculture Foreign Agriculture Service USDA have come out with a host of coffee producer reports, which include Colombia, Guatemala, Costa Rica and Indonesia.  These reports though do not refer to the negative aspects of the prevailing soft reference prices of the coffee terminal markets and their negative financial impact upon coffee farmers, whom many have forecast that it shall result in lower farm inputs and subsequently, farm yields.  Thus, in terms of the reports not indicating any threat to forthcoming global coffee supply, they tend to support the prevailing bearish sentiment within the coffee markets. 

The USDA have in this respect, forecast that the coffee production for Colombia for the forthcoming October 2019 to September 2020 coffee year shall be unchanged from the previous coffee year, at a total of 14,300,000 bags. 

The have forecast that the coffee production for the coming coffee year for Guatemala, shall be 0.15% higher than the previous coffee year, at a total of 3,393,000 bags.  Likewise, the USDA have forecast that Costa Rica shall see coffee production for the coming coffee year to be 5.16% higher than the previous coffee year, at a total of 1,365,000 bags. 

The USDA have forecast that Indonesian coffee production for the forthcoming coffee year shall increase by a marginal 0.94%, to total 10,700,000 bags.   But they do also forecast that the domestic coffee consumption for Indonesia shall increase by close to 14% for the coming coffee year, to total approximately 4.9 million bags and to continue to limit the export potential for the coming coffee year. 

The July to July contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 29.39 usc/Lb., while this equates to 32.69% 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 3,500 bags yesterday; to register these stocks at 2,438,332 bags.  There was meanwhile a similar in number 3,211 change to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,489 bags. 

The commodity markets were mostly on a positive track yesterday, to see the overall macro commodity index showing a degree of buoyancy for the day.  The U.S. Oil, Natural Gas, Sugar, Cocoa, Coffee, Cotton, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets ended the day on a positive note, while the Brent Oil and Copper markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.85% higher, to see this index registered at 393.60.   The day starts with the U.S. Dollar steady and trading at 1.271 to Sterling, at 1.115 to the Euro and with the US Dollar buying 4.096 Brazilian Real. 

The London market ended the day on a positive note and with 89.2% of the earlier gains of the day intact, while the New York market likewise ended the day on a positive note and with 58.1% of the earlier gains of the day intact.  This corrective close might assist towards a degree of caution and towards a hesitant steady start for early trade today, against the prices set yesterday, as follows: 

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

MAY   1314 + 33                                            MAY     88.25 + 0.90

JUL    1334 + 33                                            JUL       89.90 + 0.90

SEP    1354 + 33                                            SEP      92.25 + 0.90

NOV   1377 + 35                                            DEC      95.80 + 0.95

JAN    1399 + 37                                            MAR     99.35 + 1.00

MAR   1419 + 37                                            MAY   101.70 + 1.00

MAY   1440 + 37                                            JUL     103.85 + 1.00

JUL    1461 + 37                                            SEP     105.90 + 1.00

SEP    1482 + 37                                            DEC    108.95 + 1.00

NOV   1501 + 37                                             MAR   112.00 + 1.00