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 this market by 9.20% over the week of trade leading up to Tuesday 16th. March; to register a new net long position of 27,567 lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 2.98%, to register a net long position of 73,917 Lots on the day.
Over the same week, the Non-Commercial Speculative sector of this market cut their net long position within the market by 4.22% to register a new net long position of 28,224 Lots which is the equivalent of 8,001,379 bags. This net long position has most likely been decreased, following the period of mixed but overall firmer trade that has since followed.
The rains over the Brazil coffee districts continue to support forecasts on average for an overall 25% smaller crop due from Brazil this year, which indicate a median of local and international surveys forecast a total Brazil arabica and robusta 2021 crop to be around 52 million bags. The consensus is that this new crop is due to see an approximate 11% increase in Conilon robusta coffee production against an approximate 35% dip in arabica coffee production.
These new crop coffees are most likely to be supplemented by a reasonable volume of carry over arabica coffee stocks, from last year’s record bumper arabica coffee harvest, thus for the present, it would seem that there shall be no shortage of Brazil arabica coffees available to fuel consumer markets. These carryover stocks, to contribute toward an estimate of an overall 10.50 million bags of surplus coffee in the current year, and bolster the approaching lower crop to come from Brazil in the new July 2021 to June 2022 coffee year.
The question therefore, with this years’ carryover coffee stocks that are anticipated to supplement any foreseeable shortfall in supply of coffee from the July 2021 to June 2022 crop to come, is what the foreseeable potential for the following year July 2022 to June 2023 Brazil crop potential is likely to be. This, with many months ahead, should bring forth a Brazil arabica production year that is a biennial higher bearing year, though the circumstances surrounding production potential leading up to this crop cycle, will play out within the context of the realised smaller arabica crop from Brazil that is due to start harvesting by the middle of this year. One might anticipate that this next crop biennial higher yielding crop potential to come from Brazil in 2022/23 will be met with some degree of speculative interest within the futures markets, and the onset of the flowering that is to a vast extent determined by the arrival of the spring and summer rainfall in the expansive coffee growing regions in Brazil, toward the latter part of this year.
The May-to-May contract arbitrage between the London and New York markets widened yesterday: to register this at 66.69 usc/Lb. This equates to 51.26% price discount for the London Robusta coffee market.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to remain unchanged yesterday, to register these stocks at 1,840,604 bags, with 94.9% of these certified stocks being held in Europe at a total of 1,746,058 bags and the remaining 5.1% being held in the USA at a total 94,546 bags. There was meanwhile a larger in number 5,120 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 36,921 bags.
It was a softer day overall on the commodity markets yesterday, to see the overall macro commodity index taking something of a soft sideways track for the day. The Coffee markets ended the day on a positive note, while the Sugar, Cocoa, Palladium, Gold and Silver markets ended the day on a softer note. The day starts with the U.S. Dollar, trading at 1.383 Sterling, at 1.192 the Euro and with the US Dollar buying 5.507 Real.
The New York arabica market started the day yesterday trading on a modest softer note, while the London robusta market started the day yesterday trading a on a modest firmer note, both markets gained a slight degree of momentum in the early morning session. As the afternoon progressed the New York and London markets came under some selling pressure to see both markets set on a softer track for the early afternoon session. The New York and London markets soon hit a floor limiting the losses for the day and to see the markets bounce back and recover with both markets gaining momentum late in the day to see the New York and London markets settle near to the highs of the day on a firmer note.
The London market ended the day on a positive note with 90% of the earlier gains of the day intact, while the New York market ended the day on a likewise positive note with 75.86% of the earlier gains of the day intact. The firmer close might inspire some degree of confidence, with both markets retaining the earlier in the day gain, one might think the markets are due for a steady start to early trade today, against the prices set yesterday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
MAY 1398 + 18 MAY 130.10 + 1.10
JUL 1420 + 16 JUL 132.10 + 1.05
SEP 1439 + 15 SEP 134.00 + 1.05
NOV 1455 + 15 DEC 136.10 + 1.05
JAN 1469 + 14 MAR 137.90 + 1.00
MAR 1485 + 15 MAY 138.65 + 0.90
MAY 1503 + 15 JUL 139.15 + 0.90
JUL 1519 + 15 SEP 139.80 + 0.80