Coffee Market Report December 17 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 109.11% over the week of trade leading up to Tuesday 10th December; to register a new net long position of 29,083 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.13%, to register a net long position of 62,209 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market turned their net short position within this market to a net long position; to register a new net long position of 14,492 Lots which is the equivalent of 543,458 bags.  This position has most likely been further increased, following the period of mixed but overall firmer trade that has since followed. 

The Green Coffee Association of the U.S.A. have announced that the countries port warehouse stocks decreased by 254,041 bags or 3.54% during the month of November, to register these stocks at 6,923,837 bags at the end of the month.   The overall Green Coffee stocks reported, do not include the in-transit bulk container coffees or the onsite roaster inventories, which with an approximate combined U.S.A. and Canadian weekly consumption that is supported by these stocks of approximately 595,000 bags per week, would conservatively have been at least 1.2 million bags. 

Weather forecasts coming out of the main coffee growing districts in south east Brazil including the largest Arabica coffee growing region Minas Gerais, indicate good levels of rain for the next six to ten days, coming from 74.5 mm over the past week which is 46% higher than the historical average, this may aid in boosting Brazil’s coffee yields, contributing to some degree of bearish sentiment in the market. 

The March to March contracts arbitrage between the London and New York markets broadened yesterday; to register this at 73.18 usc/Lb.  This equates to 52.67% 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 10,400 bags yesterday; to register these stocks at 2,021,577 bags, with 88.37% of these certified stocks being held in Europe at a total 1,786,533 bags and the remaining 11.63 being held in USA certified warehouses, at a total 235,044 bags.  There was meanwhile 5,229 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 32,937 bags. 

The commodity markets were mixed in trade yesterday, to see the overall macro commodity index taking a firm sideways track for the day. The Oil, Natural Gas, Coffee, Cotton, Copper, Orange Juice, Wheat, Corn, Soybean and Silver markets ended the day on a positive note, while the Sugar, Cocoa and Gold markets ended the day on a softer note. The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 1.3446% higher; to see this index registered at 417.8352.  The day starts with the U.S. Dollar steady, trading at 1.329 to Sterling, at 1.115 to the Euro and with the US Dollar buying 4.063 Brazilian Real. 

The London market started the day yesterday trading in modest negative territory, while the New York market started the day yesterday trading on a modest positive note. The London market moved into modest positive territory for the early afternoon trade while the New York market started to attract buying support to accentuate the gains for the early afternoon trade. As the afternoon progressed the London market on the back of the support in New York started to attract support to trade further into positive territory until the close. The New York market continued on its positive track to close near the highs of the day. 

The London market ended the day on a positive note, and with 66% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note, and with 75.94% of the earlier gains of the day intact. This close and with the Brazil Real showing some degree of buoyancy, one might expect a near to steady start for early trade today, against the prices set yesterday, as follows:   

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

JAN    1426 + 24                                                          MAR   138.95 + 8.05

MAR   1450 + 33                                                          MAY   141.00 + 8.00

MAY   1466 + 32                                                          JUL    142.65 + 7.90

JUL    1483 + 32                                                          SEP    144.05 + 7.70

SEP    1501 + 31                                                          DEC   145.85 + 7.65

NOV   1520 + 31                                                          MAR   147.65 + 7.50

JAN    1540 + 29                                                          MAY   148.80 + 7.30

MAR   1565 + 29                                                          JUL    150.00 + 7.20

MAY   1587 + 29                                                          SEP    151.25 + 7.10