Coffee Market Report January 14 2020

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 long position within the market by 4.38% over the week of trade leading up to Tuesday 7th. January; to register a new net long position of 39,307 Lots.  Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 0.41%, to register a net long position of 64,007 Lots on the day. 

Over the same week, the Non-Commercial Speculative sector of this market decreased their net long position within the market by 3.34%; to register a new net long position of 20,907 Lots which is the equivalent of 5,927,042 bags.  This position has most likely been further decreased, following the period of mixed but overall softer trade that has since followed. 

Reuters have reported that Vietnam’s coffee exports for the month of December are up by 66.8% from the previous month, to total 3,137,433 bags. This number proving to be well above the 2.5 million bags that had been initially forecast for the month’s coffee exports. 

These exports contributing to the country’s cumulative exports for the 2019 calendar year of to be 11.9% lower than the same period in the previous year, at a total of approximately 27.5 million bags. While the report well illustrates the negative effects of the prevailing soft coffee terminal markets, in that the value of Vietnam coffee exports for the 2019 calendar year is 19.3% lower than the same period last year, at a total of approximately 2.85 billion US dollars. 

There are now only nine trading days within the London market for the Vietnamese trade, prior to the Eve of the Tet New Year holiday on Saturday 25th. January.  This starting the week of celebrations to bring in the new Year of the Rat, which shall culminate on Wednesday 29th. January. There won’t be much activity expected out of Vietnam due to this, as the country winds down in preparation for their Lunar New Year. 

The March to March contracts arbitrage between the London and New York markets narrowed yesterday; to register this at 55.04 usc/Lb.  This equates to 48.04% 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 2,984 bags yesterday; to register these stocks at 2,068,299 bags, with 88.4% of these certified stocks being held in Europe at a total of 1,828,834 bags and the remaining 11.6% being held in the USA at a total of 239,465 bags.  There was meanwhile a larger in number decrease by 11,517 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 160,778 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, Cotton, Copper and Corn markets ended the day on a positive note, while the Oil, Natural Gas, Cocoa, Coffee, Orange Juice, Wheat, Soybean, Gold and Silver markets ended the day on a softer note.    The Reuters Equal Weight Continuous Commodity Index that is related to 17 markets is 0.5193% lower; to see this index registered at 418.7584   The day starts with the U.S. Dollar steady, trading at 1.299 to Sterling, at 1.114 to the Euro and with the US Dollar buying 4.147 Brazilian Real. 

The London and New York markets started the day yesterday trading on a very negative note, both markets maintained this negative stance into the early afternoon trade. As the afternoon progressed both the London and the New York markets attracted selling pressure to accentuate the losses for the day’s trade. 

The London market ended the day on a negative note, and with 82.5% of the earlier losses of the day intact, while the New York market ended the day on likewise negative note, and with 91.6% of the earlier losses of the day intact. This soft and lacklustre close does little to inspire confidence and one might think the markets are due a hesitant steady start for early trade today, against the prices set yesterday, as follows:   

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

MAR   1312 – 33                                                                MAR   114.55 – 4.40

MAY   1329 – 33                                                                 MAY   116.90 – 4.40

JUL    1348 – 32                                                                 JUL     119.25 – 4.35

SEP    1368 – 32                                                                SEP     121.35 – 4.35

NOV   1387 – 32                                                                 DEC    124.00 – 4.30

JAN    1404 – 32                                                                 MAR   126.40 – 4.30

MAR   1426 – 31                                                                 MAY   127.45 – 4.30

MAY   1449 – 30                                                                 JUL    128.25 – 4.35

JUL    1472 – 29                                                                 SEP    129.05 – 4.35