Coffee Market Report

The latest Commitment of Traders report from the New York arabica coffee market has seen the Non-Commercial Speculative sector of this market decrease their net short sold position within the market by 3.26% during the week of trade leading up to Tuesday 29th May; to register a net short sold position of 45,231 Lots on the day. This net short-sold position which is the equivalent of 12,822,788 bags has most likely been trimmed again, following the period of mixed but mostly buoyant trade, which has since followed.

The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative Non-Commercial sector of this market increase their net short sold position within this market by 31.58% during the week of trade leading up to Tuesday 29th. May; to register a net short sold position of 14,114 Lots on the day. This net short sold position which is the equivalent of 2,352,333 bags is likely to nominally reduced, following the period of mixed trade that has has since followed.

With the month of May over the Trade Ministry in Brazil have reported that the countries coffee exports for the month were 882,306 bags or 38.42% lower than the same month last year, at a total of 1,413,717 bags. This relatively sharp dip in exports and with past crop stocks dwindling is most likely also related to the internal market price resistance to the low-price dictates of the soft New York market. The repercussions of the ten-day truckers strike action that blockaded major transit routes and ports, is likely to have had an effect. There are reports meanwhile that the main port of Santos has resumed operations, with a degree of export catch up to be expected. With many roasters within the mainstream consumer markets still relatively well covered for their nearby coffee requirements, there is time ahead and the new crop coffees to start to come to the markets in increasing volume in August.

The International Coffee Organisation have reported that the global coffee exports for the month of April were 7.10% higher than the same month last year, to total 10.18 million bags. This they report has contributed to the cumulative global coffee exports for the first seven months of the present October 2017 to September 2018 coffee year to be 1.2% higher than the same period in the previous coffee year, at a total of 70.65 million bags.

The July 2018 to July 2018 contracts arbitrage between the London and New York markets widened on Friday, to register this at 44.32 usc/Lb., while this equates to 35.83% 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 195 bags on Friday; to register these stocks at 2,018,951 bags. There was an increase by 2,338 bags to the number of bags pending grading for this exchange; to register these pending grading stocks at 50,990 bags.

It was a mixed day for the commodity markets on Friday, the latest round of monthly economic data released and in the USA., positive jobs data reported for the month of May, has seen the unemployment rate registered at a relatively low 3.80%, indicative of financial targets being met and consequent speculation that the US Federal Reserve Bank may look to further interest rate hikes. The US Dollar recovered a degree of lost ground during the day. It was a softer day for the Oil markets, Gold, Wheat, Corn, Coffee, Sugar, a mixed day for Cocoa and a positive result for Copper, Soybean, Cotton, Wheat, Silver, Platinum and Palladium. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets settled 0.0092% higher; to see this index registered at 438.67. The day starts with the US Dollar trading at 1.336 to Sterling, at 1.169 to the Euro, and buying 3.765 Brazilian Real, while North Sea Oil is steady, selling at US$ 74.75 per barrel.

The coffee markets opened the day on a mildly positive note with volumes muted at the start of the day and within a narrow range at the outset. After a positive morning in London, this market moved back toward par where to trade either side of par moving into the afternoon. The New York arabica market posted a similarly sideways track for the early morning but tracking lower just ahead of the business day opening in North America. The mid-morning session in this market posted a resurgence in good volume, turning positive and testing the days’ high, ahead of hefty seller momentum returning to the floor and the market lost ground, to break below par around midsession. The afternoon in London turned similarly south and both markets touched the low of the day as the latter half of the session progressed. The strengthening US Dollar and unsteady sentiment across the macro seemed to spill into the markets, although a return to the positive was briefly noted in London in modest volume as the session closed, the New York market settled on the lower side of the trading range, after a good volume day. It was an overall mixed result on the day with a recovery in London on the last lap of the day, to see the markets register a negative finish but off of the days’ lows for both markets, as follows:

London Robusta US$/MT New York Arabica Usc/Lb.

JULY 1,750 – 2                 JULY 122.75 – 0.95
SEPT 1,738 – 6                 SEPT 124.95 – 1.00
NOV  1,742 – 6                 DEC  128.45 – 1.00
JAN   1,748 – 5                 MAR 131.90 – 1.00
MAR 1,760 – 4                 MAY  134.15 – 1.00
MAY 1,770 – 4                 JULY 136.15 – 0.95
JULY 1,782 – 2                 SEPT 137.95 – 0.95
SEPT 1,796 – 2                 DEC  140.45 – 0.95
NOV 1,810 – 2                  MAR 143.00 – 1.00

Source : http://www.iandmsmith.com