Coffee Market Report July 10 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 50.23% over the week of trade leading up to Tuesday 2nd. July; to register a new net short sold position of 15,356 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.18%, to register a net long position of 43,299 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 34.21%; 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 and likewise, that of the Managed Money Fund sector of the market. 

With the Brazil coffee trade dominated by trade houses centred within São Paulo State and with the State taking a regional public holiday yesterday to honour the Constitutional Revolution of 1932, there was only limited coffee news emanating from Brazil yesterday.  This includes little in the way of possible frost related damage to the prospects of the next 2020 Brazil crop, which so far has indicated only minimal spot damage to what many forecasts have indicated to be large crop.   So long as the country is in receipt of a good spring and summer rain season, which is due to start in the second half of September. 

Today shall see the start of the two days of World Coffee Producers Forum in Campinas City, within São Paulo State, with the main focus being upon what can the producers do to counter the negative influences of the speculative sectors of the market, within the coffee terminal markets.  These meetings already having been preceded by suggestions for some form of minimum price legislation, which would divorce the physical coffee trade from the influences of the international coffee terminal markets.   But with no defining solution having so far been suggested, as it would seem and within an environment of global free trade, to be an impossible problem to solve.   

The September to September contracts arbitrage between the London and New York markets broadened yesterday, to register this at 42.31 usc/Lb., while this equates to 39.38% 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 increase by 6,751 bags yesterday; to register these stocks at 2,370,201 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 Certified Robusta coffee stocks held against the London exchange were seen to decrease by 3,500 bags or 0.16% over the week of trade leading up to Monday 8th. July, to see these stocks registered at 2,162,833 bags, on the day. 

The commodity markets had a mixed day yesterday, to see the overall macro commodity index taking an erratic and marginally softer sideways track for the day.   The Oil, Natural Gas, Coffee, Soybean and Silver markets ended the day on a positive note, while the Sugar, Cocoa, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Gold markets ended the day on a softer note.   The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.16% lower; to see this index registered at 397.39.   The day starts with the U.S. Dollar steady and trading at 1.246 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.800 Brazilian Real. 

The London and New York markets started the day yesterday trading erratically around par, with the markets taking a relatively steady track into the early afternoon trade.   As the afternoon progressed the London market started to show some degree of buoyancy and followed by the New York market, to see both markets taking on a modest positive track for late trade, but with the New York market coming under pressure to limit the gains of the day. 

The London market ended the day on a positive note and with 71.4% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note and with 55.3% of the earlier gains of the day intact.   This close and with some uncertainty in terms of the 2020 crop damage reports that might still be forthcoming from Brazil, provides little in the way of an indication for direction.  Thus, one might expect to see a hesitant and cautious steady start due for early trade today, against the prices set yesterday, as follows: 

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

JUL    1400 + 10                                            JUL    105.90 + 1.15

SEP    1436 + 10                                           SEP    107.45 + 1.05

NOV   1467 + 11                                           DEC    111.30 + 1.10

JAN    1494 + 11                                           MAR   114.90 + 1.10

MAR   1519 + 11                                           MAY   117.20 + 1.20

MAY   1543 + 10                                            JUL    119.10 + 1.25

JUL    1563 + 10                                            SEP    120.95 + 1.25

SEP    1581 + 10                                            DEC   123.70 + 1.20

NOV   1597 + 11                                            MAR   126.50 + 1.20

JAN    1614 + 12                                            MAY   128.30 + 1.20