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 long position within the market by 34.66% during the week of trade leading up to Tuesday 3rd. January; to register a net long position of 5,104 Lots on the day. This net long position which is the equivalent of 1,446,961 bags has most likely been increased again, following the period of mixed but overall more positive trade, which has since followed.
The International Coffee Organisation have reported that global coffee exports for the month of November 2016 were 13.6% higher than the same month in the previous year, at a total of 9.94 million bags. This they report has resulted in the cumulative global coffee exports for the first two months of the new October 2016 to September 2017 coffee year to be 8.5% higher than the same period in the previous coffee year, at a total of 19.52 million bags.
These increased volumes of exports for the first two months of the new coffee year are on top of already relatively healthy consumer market stock levels that for the main consumer markets were around the equivalent of 13 to 14 weeks of roasting demand, which provides some indication of the prevailing complacency on the part of the consumer industry buyers. A factor that has perhaps contributed towards to the softer nature of the coffee terminal markets, for the end of last year and into the start of this new year.
In terms of the global coffee export figures quoted by the International Coffee Organisation for the first two months of the new coffee year, there was a 36.1% share that was appropriated to the robusta coffees. This share might well with the advent of the new Vietnam crop that is now coming to the market post a marginal increase on the short term, but with the relatively tight medium term supply of robusta coffees as against the small surplus supply of arabica coffees, one might expect that one shall see the arabica coffees increase their share of global coffee exports in the coming months.
The March to March contracts arbitrage between the London and New York markets narrowed on Friday, to register this at 45.78 usc/Lb., while this equates to a 32.05% price discount for the London robusta coffee market. This narrowing arbitrage is now becoming less of an attractive factor for the roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends.
The Certified washed Arabica coffee stocks held against the New York exchange were seen to increase by 5,609 bags on Friday; to register these stocks at 1,257,811 bags. There was meanwhile a smaller in number 982 bags decrease to the number of bags pending grading for this exchange; to register these pending grading stocks at 60,835 bags.
The commodity markets were mixed in trade on Friday but with the renewed muscle of the U.S. dollar in play, there were many markets coming under pressure and thus, the overall macro commodity index took a modestly softer track for the day. The Oil, Natural Gas, Cocoa and Copper markets nevertheless had a day of buoyancy and the Cotton market was steady, while the Sugar, Coffee, Orange Juice, Wheat, Corn, Soybean, Gold and Silver markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.41% lower; to see this Index registered at 427.38. The day starts with the relatively robust U.S. dollar steady and trading at 1.219 to Sterling and 1.052 to the Euro, while North Sea Oil is tending softer and is selling at $ 55.85 per barrel.
The London market started the day on a marginally softer note on Friday, while the New York market soon recovered from an unsteady start to post a degree of modest buoyancy for early thin trade. The London market soon recovered to par and to see the markets head into early afternoon trade with the London market on par and the New York market, maintaining its hesitant buoyancy. This remained the track for most of what was a lacklustre day and with only thin volumes of industry fixation buying and producer fixations selling under and above the market, but with the markets coming under some pressure for late in the day’s trade and both markets moving back into negative territory. The London market ended the day on a soft note and with 82.4% of the earlier losses of the day intact, while the New York market ended the day on a likewise soft note and with 52.9% of the earlier losses of the day intact. This close does little to inspire confidence but with the modest losses on Friday not being related to any significant volume one might expect that there shall be a degree of uncertainty and caution to perhaps see the markets due for a hesitant near to steady start for early trade today against the prices set on Friday, as follows:
LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb.
JAN 2159 – 7
MAR 2140 – 14 MAR 142.85 – 0.90
MAY 2143 – 15 MAY 145.15 – 0.90
JUL 2146 – 18 JUL 147.45 – 0.85
SEP 2150 – 18 SEP 149.50 – 0.85
NOV 2152 – 18 DEC 152.45 – 0.85
JAN 2154 – 18 MAR 155.25 – 0.85
MAR 2154 – 18 MAY 156.95 – 0.80
MAY 2159 – 18 JUL 158.55 – 0.80
JUL 2169 – 18 SEP 161.15 – 0.85