Coffee Market Report June 24 2019

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market increase their net short sold position within this market by 2.04%; over the week of trade leading up to Tuesday 18th. June; to register a new net short sold position of 40,168 Lots. This net short-sold position which is the equivalent of 11,387,450 bags has most likely been marginally decreased again, 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 increase their net short sold position within the market by 15.01% over the week of trade leading up to Tuesday 18th. June; to register a short-sold position of 27,904 Lots. This net short sold position which is the equivalent of 4,650,667 bags has most likely been marginally decreased again, following the period of mixed but overall more positive trade that has since followed.

Friday with many players in Brazil having taken a bridge day holiday post Thursday’s Corpus Christi holiday, as a relatively quiet day of trade for the physical coffee market and likewise, for the New York arabica coffee market. While a steady to firmer Brazil Real, also contributed to somewhat subdued trade. Albeit that it did not counter some selling pressure coming to the fore, within the New York market.

The Coffee Institute in Honduras have reported that while the volume of coffee sales for the first eight months of the present October 2018 to September 2019 coffee year was only 1.9% lower than the same period in the previous coffee year, that the value of coffee exports was approximately 14% lower than the same period last year.

This lower value influenced by the lower reference prices of the New York market and an illustration of the financial stress that the relatively high cost washed arabica coffee farmers are presently experiencing, which is also resulting in the internal market price resistance within the Mexico and Central American producer bloc. A factor that manifests itself in terms of the lack of delivery of coffees at prices low enough, to be tendered to the slowly declining certified coffee stocks of the New York exchange.

The September to September contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 36.51 usc/Lb., while this equates to 36.27% 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 4,000 on Friday; to register these stocks at 2,377,107 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,012 bags.

The commodity markets encountered a softer U.S. Dollar on Friday, but trade was mixed and with many markets taking a softer track, to see the overall macro commodity index tending softer for the day. The Oil, Natural Gas, Cocoa, Orange Juice and Gold markets ended the day on a positive note, while the Sugar, Coffee, Cotton, Copper, Wheat, Corn, Soybean and Silver markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets, is 0.54% lower, to see this index registered at 392.82. The day starts with the U.S. Dollar steady and trading at 1.274 to Sterling, at 1.137 to the Euro and with the US Dollar buying 3.821 Brazilian Real.

The London market started the day on a positive note on Friday, with the New York market trading around par, but with the New York market soon coming under pressure and slipping back into negative territory, while the London market slipped back to trade around par, into the early afternoon trade. As the afternoon progressed, the New York market lost some more value and with the London market slipping back into modest negative territory.

The London market ended the day on a negative note and with 62.5% of the modest losses of the day intact, while the New York market ended the day on a negative note and with 71.9% of the earlier losses of the day intact. This close and the lack of supportive fundamental news does little to inspire confidence, but one might still expect to see a cautious and hesitant near to steady start for early trade today, against the prices set on Friday, as follows:

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

JUL 1381 – 4     JUL 99.80 – 1.25
SEP 1414 – 5     SEP 100.65 – 1.15
NOV 1442 – 4    DEC 104.25 – 1.10
JAN 1467 – 4     MAR 107.80 – 1.00
MAR 1491 – 4    MAY 109.90 – 1.00
MAY 1516 – 4    JUL 111.75 – 1.00
JUL 1534 – 4     SEP 113.60 – 1.00
SEP 1553 – 4     DEC 116.55 – 0.95
NOV 1568 – 4     MAR 119.50 – 0.90
JAN 1583 – 4     MAY 121.40 – 0.75