Coffee Market Report August 20 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 increase their net short sold position within the market by 17.41% over the week of trade leading up to Tuesday 13th. August; to register a new net short sold position of 39,566 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.14%, to register a net long position of 42,159 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market increased their net short sold position within this market by 15%; to register a new net short sold position of 42,071 Lots. This net short-sold position which is the equivalent of 11,926,942 bags has most likely been further increased, following the period of mixed but overall softer trade that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Managed Money Sector of this market increased their net short sold position within the market by 3.66% over the week of trade leading up to Tuesday 13th. August; to register a short-sold position of 45,419 Lots.  This net short sold position which is the equivalent of 7,569,833 bags has most likely been marginally increased, following the period of mixed but overall negative trade that has since followed. 

Evidence of ample coffee stocks continues to fuel negative speculative sentiment within the coffee markets, which is being compounded by the perspective for a biennially larger new Brazil crop being due for 2020. Albeit that a larger new crop can only be determined by the quality of the forthcoming spring and summer Brazil rain season, which is due to start in approximately five to six weeks’ time. 

Meanwhile in reaction to the soft nature of the coffee terminal markets most coffee producing countries continue to encounter stiff internal market price resistance, which is being reflected in the form of hardening asking price differentials from the exporters. 

The November to December contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 34.97 usc/Lb.   This equates to 36.88% price discount for the London Robusta coffee market. 

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decreased by 2,342 bags yesterday; to register these stocks at 2,363,532 bags.  There was meanwhile a smaller in number increase by 1,211 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 6,617 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a softer track for the day. The Cocoa market ended the day on a positive note, while the Sugar and Coffee markets ended the day on a softer note.  The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.31% lower; to see this index registered at 376.63.   The day starts with the U.S. Dollar steady and trading at 1.212 to Sterling, at 1.108 to the Euro and with the US Dollar buying 4.075 Brazilian Real. 

The London and New York markets started the day yesterday trading close to par and with both markets remaining on a sideways track around par, into the early afternoon trade. As the afternoon progressed and with the Brazil Real starting to weaken further, both markets started to come under pressure and move into negative territory, with sell stops coming into play, to accentuate the losses. 

The London market ended the day on a negative note and with 70% of the earlier losses of the day intact, while the New York market ended the day on a very negative note and with 94.4% of the earlier losses of the day intact.  This close does little to inspire confidence but there might nevertheless be some degree of caution in terms of an oversold perspective, to set the markets for another low volume hesitant steady start for early trade today, against the prices set yesterday, as follows:   

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

SEP    1288 – 16                                              SEP      91.15 – 1.70

NOV   1319 – 14                                              DEC      94.80 – 1.55 

JAN    1345 – 12                                              MAR     98.40 – 1.50 

MAR   1372 – 11                                              MAY   100.80 – 1.50

MAY   1401 – 10                                              JUL    103.10 – 1.40

JUL    1424 – 9                                                SEP    105.20 – 1.45

SEP    1449 – 7                                                DEC   108.25 – 1.45

NOV   1474 – 7                                                MAR   111.35 – 1.45

JAN    1496 – 6                                                MAY   113.40 – 1.45

MAR   1516 – 7                                                JUL    115.40 – 1.35