Coffee Market Report August 12 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 12.32%; over the week of trade leading up to Tuesday 6th. August; to register a new net short sold position of 36,583 Lots.  This net short-sold position which is the equivalent of 10,371,118 bags has most likely been further increased, following the period of mixed but overall more negative trade that has since followed. 

Brazil’s coffee exports are reported to have increased by 28.2% from the same period last year, to equate to 3.2 million bags in the month of July.  Of the total, arabica coffee exports accounted for 71.4% of the total exports in July, while robusta Conilon coffee exports accounted for 18.2%, with the balance soluble coffee and value-added products.  Thus, for the first six months of this calendar year to July, Brazil has registered exports of 23.5 million bags of coffee, an increase of 37.6% on the same period last year.  The new crop July 2019 to June 2020 harvest is meanwhile, close to completion as climatic conditions remain conducive subsequent to the comparatively early start to the harvest season this year. 

The November to December contracts arbitrage between the London and New York markets broadened on Friday; to register this at 40.78 usc/Lb.   This equates to 40.50% price discount for the London Robusta coffee market. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 4,853 bags on Friday; to register these stocks at 2,362,191 bags.  There was meanwhile a smaller in number 1,332 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 21,518 bags. 

The commodity markets were mixed in trade on Friday, but with most markets tending to experience buoyancy, to see the overall macro commodity index taking a firmer track for the day.  The Oil, Sugar, Orange Juice, Wheat, Soybean and Silver markets ended the day of a firmer note, while the Natural Gas, Cocoa, Coffee, Cotton, Copper, Corn and Gold markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.41% higher; to see this index registered at 387.13.   The day starts with the U.S. Dollar steady and trading at 1.204 to Sterling, at 1.121 to the Euro and with the US Dollar buying 3.939 Brazilian Real. 

The London market started the day on Friday trading near to par, while the New York market started the day on a modest negative note, to see both markets taking a modest negative track into the early afternoon trade.  As the afternoon progressed the markets briefly dipped back to trade around par, but to see the markets remain on a softer track for the day. 

The London market ended the day on a negative note and with 89.5% of the earlier losses of the day intact, while the New York market ended the day on a likewise negative note and with 21.4% of the earlier losses of the day intact.  This softer close for the markets is unlikely to inspire confidence and one would expect the markets are only due for a near to steady start to early trade today, against the prices set on Friday, as follows: 

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

SEP    1296 – 16                                            SEP      97.30 – 0.10

NOV   1321 – 17                                             DEC    100.70 – 0.15 

JAN    1346 – 17                                             MAR   104.25 – 0.10 

MAR   1374 – 16                                             MAY   106.60 – 0.10

MAY   1403 – 15                                              JUL    108.75 – 0.05

JUL    1432 – 14                                              SEP    110.75 – 0.10

SEP    1460 – 14                                              DEC   113.75 – 0.10

NOV   1488 – 14                                              MAR   116.70 – 0.10

JAN    1515 – 14                                              MAY   118.70 – 0.10

MAR   1542 – 14                                              JUL    120.55 – 0.10