Coffee Market Report June 04 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 13.72% over the week of trade leading up to Tuesday 28th. May; to register a new net short sold position of 64,418 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 3.04%, to register a net long position of 39,606 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 11.36%; to register a new net short sold position of 62,441 Lots. This net short-sold position which is the equivalent of 17,701,747 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. 

The Brazil Government export data for the month of May has reported that the countries coffee exports for the month were 1,743,553 bags or 123.33% higher than the same month last year, at a total of 3,157,270 bags.   This impressive performance was also 472,890 bags or 17.62% higher than the previous month of April, to indicate the surge of Brazil coffees that has been impacting upon the still relatively well stocked consumer markets. 

The National Coffee Institute in Costa Rica have reported that the countries coffee exports for the month of May were 19,459 bags or 10.55% lower than the same month last year, at a total of 164,917 bags.   This they say has contributed to the country’s cumulative coffee exports for the first eight months of the present October 2018 to September 2019 coffee year to be 11.5% lower than the same period in the previous coffee year, at a total of 722,096 bags. 

This dip in coffee exports for the present coffee year from Costa Rica might not be seen to be a reflection on the size of the last crop, but is more likely to be related to the internal market price resistance to the soft prices that have been dictated by the related New York market, which has been retarding sales and exports.   A factor that is mirrored by their neighbours in the producer bloc of Mexico and Central America, as farmers struggle to make profit from their new crop coffee stocks and is noticeable in terms of the lack of washed arabica coffee stocks that are presently available, to be tendered to the certified coffee stocks of the New York market. 

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 38.26 usc/Lb., while this equates to 35.99% 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 525 bags yesterday; to register these stocks at 2,392,620 bags.  There was meanwhile a smaller in number 320 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 1,913 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking an erratic track for the day.  The Sugar, Cotton, Copper, Orange Juice, Wheat, Soybean, Gold and Silver markets ended the day on a positive note and the London robusta Coffee market was steady for the day, while the Oil, Natural Gas, Cocoa, New York arabica Coffee and Corn markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.42% higher, to see this index registered at 393.87.   The day starts with the U.S. Dollar near to steady and trading at 1.267 to Sterling, at 1.125 to the Euro and with the US Dollar buying 3.885 Brazilian Real. 

The London and New York markets started the day yesterday trading close to par, but while the London market continued to trade around par, the New York market soon slipped into negative territory and with the markets taking this mixed track, into the early afternoon trade.   As the afternoon progressed the New York market recovered and both markets moved up into positive territory, but the upside track was short lived and the market moved back to trade around par and with the New York market moving back into negative territory for later in the day trade. 

The London market ended the day on a steady note and with 15.4% of the earlier gains of the day intact, while the New York market ended the day on a negative note and with 51.6% of the earlier losses of the day intact.  This close and with some corrective losses for the volatile New York market provides little in the way of indication for direction, albeit that the markets do gain some degree of support from the firmer nature of the Brazil Real.  Making one think that the markets shall be due for an indecisive 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    1480 + 2                                             JUL     103.75 – 0.85

SEP    1500 + 2                                             SEP    106.30 – 0.80

NOV   1520 unch                                          DEC    109.95 – 0.70

JAN    1540 – 1                                              MAR   113.45 – 0.65

MAR   1460 – 1                                              MAY   115.45 – 0.60

MAY   1580 – 1                                              JUL    117.20 – 0.50

JUL    1599 – 2                                              SEP    118.80 – 0.45

SEP    1619 – 2                                              DEC   121.35 – 0.30

NOV   1636 – 1                                              MAR   123.90 – 0.20

JAN    1653 unch                                          MAY   125.45 – 0.15