Coffee Market Report July 09 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 34.21%; over the week of trade leading up to Tuesday 2nd. July; to register a new net short sold position of 23,405 Lots.  This net short-sold position which is the equivalent of 6,635,214 bags has most likely been marginally increased again, following the period of mixed but overall more negative 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 1.76% over the week of trade leading up to Tuesday 2nd. July; to register a short-sold position of 27,413 Lots.  This net short sold position which is the equivalent of 4,568,833 bags has most likely been marginally increased again, following the period of mixed but overall more negative trade that has since followed. 

The Coffee Exporters Association in Brazil Cecafé have reported that the countries coffee exports for the month of June were 13.6% higher than the same month last year, to total 2.58 million bags.   This they say has contributed to the country’s cumulative coffee exports for the twelve-month period from July 2018 to June 2019 to be 38.1% higher than the previous twelve months, at a total of 37.12 million bags. 

Cecafé do however concede that in terms of the smaller new arabica coffee crop that is presently being harvested, that the country shall most likely not be able to maintain the impressive volumes of exports for the coming twelve months.   Albeit for the short term, exporters have been taking advantage of carryover stocks to maintain relatively high volumes of exports for the past couple of months. 

There have been some reports of patches of frost experienced for some coffee farms in South East Brazil over the weekend, but so far there have not been any indications of severe damage coming to the fore.   Thus, while the frost is not so far being seen to be a severe problem, it shall take a couple of more days before there is some more defining news on the matter. 

Meanwhile with much of the Brazil coffee trade operating from within São Paulo State and with this state taking a public holiday today to honour the anniversary of the Constitutional Revolution of 1932, one can expect muted physical coffee trade for the day from Brazil.  While most of the leading players are now focused upon the forthcoming World Coffee Producer Forum, which shall take place over Wednesday and Thursday in Campinas City, in São Paulo State.  These meetings foreseen to address the past year of soft global coffee prices, which have been accentuated by the short selling activities of the speculative sector of the market.  

The September to September contracts arbitrage between the London and New York markets narrowed yesterday, to register this at 41.72 usc/Lb., while this equates to 39.21% price discount for the London Robusta coffee market.   

The Certified washed Arabica coffee stocks held against the New York exchange with the exchange were seen to decrease by 9,391 bags yesterday; to register these stocks at 2,363,450 bags.  There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 0 bags. 

The commodity markets had a mixed day yesterday, to see the overall macro commodity index taking an erratic track for the day.   The Sugar, Cocoa, Orange Juice, Corn, Soybean and Silver markets ended the day on a positive note, while the Oil, Natural Gas, Coffee, Cotton, Copper, Wheat and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.01% higher; to see this index registered at 398.04.   The day starts with the U.S. Dollar steady and trading at 1.250 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.802 Brazilian Real. 

The London and New York markets started the day yesterday with follow through buoyancy and taking a positive track, into the early afternoon trade.  As the afternoon progressed and with early reports of only minimal frost damage in Brazil, the London market slipped back into modest negative territory and the New York market with sell stops being triggered, fell back in a more aggressive manner.   This brought to the fore additional selling pressure for the New York market, while the London market declined further, but in a more sedate manner. 

The London market ended the day on a negative note and with 90% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 81% of the earlier losses of the day intact.   This reversal of fortunes for the markets is unlikely to inspire much in the way of confidence, but with pending frost reports still to come, it might assist towards a hesitant and cautious near to steady start due for the markets for early trade today, against the prices set yesterday, as follows: 

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

JUL    1390 – 24                                            JUL    104.75 – 4.70

SEP    1426 – 18                                           SEP    106.40 – 4.70

NOV   1456 – 17                                           DEC    110.20 – 4.60

JAN    1483 – 13                                           MAR   113.80 – 4.50

MAR   1508 – 13                                           MAY   116.00 – 4.30

MAY   1533 – 11                                            JUL    117.85 – 4.15

JUL    1553 – 10                                            SEP    119.70 – 3.90

SEP    1571 – 9                                              DEC   122.50 – 3.65

NOV   1586 – 9                                              MAR   125.30 – 3.45

JAN    1602 – 9                                              MAY   127.10 – 3.35