Coffee Market Report May 29 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 2.5% over the week of trade leading up to Tuesday 21st. May; to register a new net short sold position of 74,659 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.3%, to register a net long position of 38,436 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 3.92%; 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 decreased further, 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 export registrations for the month in hand the preliminary state data indicates that coffee exports for the month of May shall be approximately 2.25 million bags. 

This they say, shall contribute to Vietnam’s coffee exports for the first five months of this year to be 13.1% lower than the same period last year, at a total of 12.78 million bags.  They further report that while export volumes for the five-month period shall be 13.1% lower than the same period last year, the income from these exports shall be approximately 23% lower for the period, at a total of 1.31 billion US dollars.  

This indication of the dip in value of coffee exports from Vietnam is a factor that is common to most coffee producers, with only the producers who have encountered weakening domestic currency, being able to find some support to counter the negative influences of the soft nature of the coffee terminal markets. 

Meanwhile there remains internal market price resistance within many coffee producing countries, which is retarding export selling volumes and with a lack of volume coming to fore to be tendered to the certified coffee stocks of the terminal markets.  A factor that is quite evident in terms of New York arabica coffee market, where stocks have been declining and with very little in the way of volume pending grading for the exchange. 

The July to July contracts arbitrage between the London and New York markets broadened yesterday, to register this at 33.82 usc/Lb., while this equates to 35.21% 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 737 bags yesterday; to register these stocks at 2,407,225 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 2,499 bags. 

The commodity markets were mixed in trade yesterday and with the US dollar showing some degree of muscle, but with many markets encountering buoyancy and with the overall macro commodity index taking a positive track for the day.  The US Oil, Sugar, Coffee, Cotton, Orange Juice, Wheat, Corn and Soybean markets ended the day on a positive note, while the Brent Oil, Natural Gas, Cocoa, Copper, Gold and Silver markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.8% higher, to see this index registered at 394.56.   The day starts with the U.S. Dollar steady and trading at 1.266 to Sterling, at 1.117 to the Euro and with the US Dollar buying 4.025 Brazilian Real. 

The London market started the day yesterday on a negative note, while the New York market started the day trading close to par and with the markets taking this mixed stance into the early afternoon trade.   As the afternoon progressed the New York market moved up into positive territory and with the London market remaining within in negative territory, but with the London market moving up to trade around par, as the New York market started to add more value.    The New York market started to trigger short covering buy stops and with the gains being accentuated and with the market hitting a seven-week high and with the London market following suit in a more sedate manner and moving into modest negative territory. 

The London market ended the day on a modestly positive note and with 50% of the gains of the day intact, while the New York market ended the day on a very positive note and with 87.3% of the earlier gains of the day intact.  This positive close might inspire some degree of confidence, but with the buoyancy not being related to any form of supportive fundamental news, there might be some degree of caution.  To perhaps set the markets for only a hesitant near to steady start for early trade today, against the prices set yesterday, as follows: 

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

JUL    1372 + 4                                              JUL       96.05 + 2.75

SEP    1392 + 4                                              SEP      98.30 + 2.70

NOV   1416 + 5                                              DEC    101.80 + 2.70

JAN    1436 + 5                                              MAR   105.25 + 2.70

MAR   1456 + 6                                              MAY   107.40 + 2.65

MAY   1476 + 7                                              JUL     109.20 + 2.50

JUL    1495 + 8                                              SEP     110.90 + 2.30

SEP    1516 + 9                                              DEC    113.60 + 2.10

NOV   1536 + 10                                             MAR   116.40 + 1.95

JAN    1556 opening                                      MAY   118.25 + 1.80