Coffee Market Report December 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 increase their net long position within the market by 319.55% over the week of trade leading up to Tuesday 3rd December; to register a new net long position of 13,908 Lots.  Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 8.82%, to register a net long position of 62,291 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 87.41%; to register a new net short sold position of 956 Lots. This net short-sold position which is the equivalent of 271,022 bags has most likely been further decreased, following the period of mixed but overall firmer trade that has since followed and likewise, that of the Managed Money Fund sector of the market. 

The March Arabica coffee KCc2 settled up 2.9% at 128.40 Usc/Lb, its highest level since October last year. ICE-certified stocks have fallen from 2.5 million bags in March to around 2.1 million bags in December boosting coffee prices. The international Coffee Organisation (ICO) forecast a deficit of 502,000 bags, while not large considering last seasons 3.7 million bag surplus, has likely also been a driving factor in the recent price rally. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday; to register this at 64.85 usc/Lb.  This equates to 50.51% 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 4,944 bags yesterday; to register these stocks at 2,060,819 bags, with 87.4% of these certified stocks being held in Europe at a total of 1,801,131 bags and the remaining 12.6% being held in the USA at a total of 259,688 bags.  There was no change to the number decrease to the number of bags pending grade to this exchange; to register these pending grading stocks at 34,313 bags. 

The commodity markets were mixed in trade yesterday, to see overall macro commodity index taking a soft sideways track for the day. The Sugar, Arabica Coffee, Copper, Orange Juice, Soybean and Silver markets ended the day on a positive note, the Gold market remained unchanged on the day, while the Oil, Natural Gas, Cocoa, Robusta Coffee, Cotton, Wheat and Corn markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.1808% higher; to see this index registered at 405.8998.   The day starts with the U.S. Dollar showing some degree of buoyancy and steady, trading at 1.316 to Sterling, at 1.107 to the Euro and with the US Dollar buying 4.143 Brazilian Real. 

The London and New York markets started the day yesterday trading just south of par, both markets maintained this modest soft stance into the early afternoon trade. As the afternoon progressed the New York market started to buying support to move into positive territory for the day, the New York market continued on its upward trend for the remainder of the day’s trade only to hit a ceiling and drop back from the highs of the day, while the London market maintained its soft track for the remainder of the afternoon trade to close on a modest negative  note. 

The London market ended the day on a modest negative note, and with 73.3% of the earlier losses of the day intact, while the New York market ended the day on very positive note, and with 50% of the earlier gains of the day intact. This close albeit that the New York market did hit a ceiling and came off its highs for the day, might nevertheless inspire some degree of confidence, to possibly set the markets for another hesitant follow-through steady start for early trade today, against the prices set yesterday, as follows:

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

JAN    1409 + 7                                                              MAR   128.40 + 3.60

MAR   1401 – 11                                                            MAY   130.55 + 3.60

MAY   1414 – 12                                                            JUL    132.30 + 3.60

JUL    1429 – 14                                                            SEP    133.90 + 3.55

SEP    1448 – 14                                                            DEC   135.75 + 3.45

NOV   1467 – 15                                                            MAR   137.65 + 3.50

JAN    1489 – 15                                                            MAY   138.85 + 3.45

MAR   1514 – 14                                                            JUL    140.05 + 3.40

MAY   1536 – 16                                                            SEP    141.30 + 3.40