Coffee Market Report June 18 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 20.34% over the week of trade leading up to Tuesday 11th. June; to register a new net short sold position of 32,441 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 3.04%, to register a net long position of 40,736 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 4.25%; to register a new net short sold position of 39,364 Lots. This net short-sold position which is the equivalent of 11,159,520 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 Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks increased by 264,518 bags or 4.17% during the month of May, to register these stocks at 6,609,868 bags at the end of the month.   The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 570,000 bags per week, would conservatively have been at least 1.1 million bags. 

Suggesting that if one is to consider the additional unreported stocks the end month stocks, this would equate to well in excess of thirteen weeks of roasting activity, which most would consider to be a very safe reserve.    Especially so ahead of the further deliveries due from large new Mexican and Central American crop and the new Peru crop, which are coming in over and above the steady deliveries from Colombia, Brazil and Vietnam. 

Evidence of the good volumes of coffee still flowing into the North American market, reasonable consumer market stock levels, a relatively large carry over stock into the new Brazil crop and the much-reduced net short sold status of the New York market, all contribute towards the prevailing bearish sentiment within the coffee markets.    While with the mainstream consumer markets now focusing on the pending summer holiday season and the traditionally slower coffee roasting activity, it does little to assist to buoy coffee market spirits. 

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 35.38 usc/Lb., while this equates to 36.01% 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 1,750 bags yesterday; to register these stocks at 2,381,409 bags.  There were meanwhile a larger in number 14,097 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 20,877 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking something of a sideways track for the day.   The Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets ended the day on a positive note and the New York arabica coffee market was steady for the day, while the Oil, Natural Gas, Sugar, Cocoa, London robusta Coffee and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.04% higher, to see this index registered at 393.49.   The day starts with the U.S. Dollar steady and trading at 1.253 to Sterling, at 1.123 to the Euro and with the US Dollar buying 3.888 Brazilian Real. 

The London and New York markets started the day yesterday trading around par, but with the New York market soon taking a modest softer track, but to recover and to join the London market in trading around par for the early afternoon trade.  As the afternoon progressed the London market took a dip into negative territory, but to soon recover and to see both markets trading mostly either side and close to par for the rest of the day’s trade. 

The London market ended the day on a modestly negative note and with 54.5% of the earlier losses of the day intact, while the New York market ended the day on a modestly positive note and with 23.5% of the earlier gains of the day intact.   This close provides little indication of direction and one would anticipate only a hesitant and slow steady start due for early trade today, against the prices set yesterday, as follows: 

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

JUL    1356 – 8                                              JUL      96.05 + 0.05

SEP    1386 – 6                                             SEP      98.25 + 0.20

NOV   1410 – 4                                             DEC    101.90 + 0.15

JAN    1433 – 3                                             MAR   105.50 + 0.15

MAR   1455 – 3                                             MAY   107.55 unch

MAY   1476 – 3                                              JUL    109.40 – 0.05

JUL    1496 – 2                                              SEP    111.20 – 0.10

SEP    1517 – 1                                              DEC   114.10 – 0.10

NOV   1535 unch                                          MAR   117.00 – 0.10

JAN    1552 + 2                                              MAY   118.70 – 0.10