Coffee Market Report May 27 2019

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within this market by 3.92%; over the week of trade leading up to Tuesday 21st. May; to register a new net short sold position of 70,449 Lots.  This net short-sold position which is the equivalent of 19,971,979 bags has most likely been marginally decreased, following the period of mixed but overall more 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 decrease their net short sold position within the market by 3.9% over the week of trade leading up to Tuesday 21st. May; to register a short-sold position of 36,159 Lots.  This net short sold position which is the equivalent of 6,026,500 bags has most likely been little changed, following the period of mixed but overall sideways trade that has since followed. 

The respected United States Department of Agriculture Foreign Agriculture Service USDA have reported that due to some adverse weather conditions, that the coffee production in Uganda for the coming October 2019 to September 2020 coffee year shall be 550,000 bags or 11.46% lower than the present coffee year, at a total of 4,250,000 bags.   This crop to be made up by 3,500,000 bags of robusta coffees and 750,000 bags of robusta coffees. 

The USDA have also reported that they forecast that due to the combination of adverse weather conditions and low prices, that the coffee production in Kenya for the coming October 2019 to September 2020 coffee year shall be 100,000 bags or 13.3% lower, to total only 650,000 bags.   Noting that this shall be for a country that historically used to produce in excess of 2 million bags per annum, the lowest production in 50 years. 

Today shall see the USA celebrate their Memorial Day holiday and the UK their Spring Bank Holiday, which provides for a long weekend for these countries and the coffee markets.   

The July to July contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 31.25 usc/Lb., while this equates to 33.49% 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 21,605 bags on Friday; to register these stocks at 2,407,962 bags.  There was meanwhile a smaller in number 960 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,449 bags. 

The commodity markets were mostly showing some degree of buoyancy on Friday, to see the overall macro commodity index taking a positive track for the day.   The Oil, Natural Gas, Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn and Soybean markets ended the day on a positive note and the Coffee and Gold markets were near to steady for the day, while the Silver market ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.71% higher, to see this index registered at 391.41.   The day starts with the U.S. Dollar near to steady and trading at 1.274 to Sterling, at 1.121 to the Euro and with the US Dollar buying 4.021 Brazilian Real. 

The London and New York markets started the day on Friday on a near to steady note and trading modestly south of par, but with both markets attracting support and moving up into positive territory for the afternoon trade and to see the New York market hitting a seven-week high.   The markets did however start to attract selling pressure and to see the markets despite the support of the positive nature of the overall macro commodity index, falling back to trade close to par for late trade. 

The London market ended the day on a near to steady note and with 11.1% of the earlier losses of the day intact, while the New York market likewise ended the day on a near to steady note and with 22.2% of the earlier losses of the day intact.  The markets shall now have to wait out the holiday and to see what tomorrow shall bring in the way of direction, but one might suspect that tomorrow shall bring little better than a near to steady start against the prices set yesterday, as follows: 

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

MAY   1352 unch

JUL    1368 – 1                                              JUL       93.30 – 0.20

SEP    1388 – 1                                              SEP      95.60 – 0.20

NOV   1411 – 1                                              DEC      99.10 – 0.20

JAN    1431 unch                                          MAR   102.55 – 0.20

MAR   1450 unch                                          MAY   104.75 – 0.20

MAY   1469 unch                                          JUL     106.70 – 0.25

JUL    1487 unch                                          SEP     108.65 – 0.30

SEP    1507 unch                                          DEC    111.50 – 0.35

NOV   1426 unch                                           MAR   114.45 – 0.40