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 3.7% during the week of trade leading up to Tuesday 26th. July; to register a net long position of 35,137 Lots on the day. This net long position which is the equivalent of 9,961,184 bags has most likely been since increased, following the period of mixed but overall more positive trade which has since followed.

With the month of July past, the Indonesia government trade data from Sumatra which is the leading coffee producing island within Indonesia, has reported that the islands robusta coffee exports for the month were 402,902 bags or 66.3% lower than the same month last year, at a total of 205,828 bags. This dip in exports has contributed to the islands cumulative robusta coffee exports for the first ten months of the present October 2015 to September 2016 coffee year to be 1,973,517 bags or 50.73% lower than the same period in the previous coffee year, at a total of 1,916,339 bags.

This sharp dip in robusta coffee exports for the coffee year so far from Sumatra is very much in line with the expectations of a lower new crop that was due, as a result of the relatively dry conditions that were experienced over the last quarter of last year and the first quarter of this year, as a result of the El Nino phenomenon that occurred. But it is perhaps excessive to think that the damage was as dramatic as might be indicated by the close to 50% dip in exports for the first nine months of the present coffee year, as there is evidence that the new crop is now starting to peak and that good volumes of new crop robusta coffees are coming to the mills for grading.

The Brazil Crop Supply Agency CONAB have announced that the first of the bi monthly auctions of aged state owned arabica coffee stocks was a resounding success on Friday, with all 67,000 bags on offer having been sold. These auctions are targeting to sell a corrected number of 686,000 bags or approximately 50% of these stocks by the end of the year, with the sales targeting the price sensitive domestic roasting industry.

The prices paid for these coffees were between 102.89 usc/Lb. and 105.99 usc/Lb., which in terms of the prevailing reference prices of the New York exchange, could be seen to be attractive price levels for the Brazilian roasting industry and would by nature, indicate that the authorities have not been too ambitious in terms of their reserve prices for these aged coffees.

The International Coffee Organisation ICO have announced that the global coffee exports for the month of June were 11% lower than the same month in the previous year, at a total of 9.03 million bags. This dip does not however indicate any degree of tightening of consumer market supply as the ICO data for the twelve months from July 2015 to June 2016 indicates that coffee exports for this period were in excess of consumer market roaster demand, at a total of 112.85 million bags and is by nature, an indication that the consumer markets are presently holding more than adequate coffee stocks. Albeit that over this period the exports of robusta coffees were 7.5% lower, while arabica coffee exports were 2.74% higher for the period and with a 36.94 to 63.06 ratio of robusta to arabica coffees having been exported, to indicate that the stocks would be weighted towards the arabica coffees, rather than to the hand to mouth nature of robusta coffee supply.

The November to December contracts arbitrage between the London and New York markets broadened yesterday, to register this at 64.63 usc/Lb., while this equates to a 43.23% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive to roasters in comparison to arabica coffee prices, continues to inspire support for the robusta coffee sector of the industry.

The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 3,459 bags on Friday; to register these stocks at 1,289,540 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 13,815 bags.

The commodity markets were mostly mixed in trade on Friday but with most markets taking a month end positive track in line with the reversal in the fortunes for the U.S. dollar, which assisted to support a positive track for the overall macro commodity index for the day. The Oil, Natural Gas, Sugar, Coffee, Cotton, Copper, Corn, Soybean, Gold and Silver markets had a positive day, while the Cocoa, Orange Juice and Wheat markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.63% higher; to see this Index registered at 420.47. The day starts with the U.S. dollar near to steady and trading at 1.325 to Sterling and 1.116 to the Euro, while North Sea Oil is steady in early trade and trading at 41.35 per barrel.

The London market started the day on Friday on a steady note, while the New York market started the day on a softer note and while the London market started to show a degree of positive buoyancy into the early afternoon trade, the New York market continued to remain in negative territory. This was however short lived and with the dollar weakness having an influence in dampening producer selling pressure and assisting to bring to the fore some degree of speculative confidence, the New York market recovered and with buy stops being triggered moved up into relatively strong positive territory. The London market followed suit to a lesser degree, but with both markets taking a steady upside track for the rest of the day’s trade. The London market ended the day on a positive note and with 87.2% of the earlier gains of the day intact, while the New York market ended the day on a very positive note and with 96.5% of the earlier gains of the day intact. This close might be expected to inspire a degree of confidence and to support a steady start for early trade today against the prices set yesterday, as follows:

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

SEP 1848 + 35                                       SEP  146.20 + 4.05
NOV 1871 + 34                                     DEC 149.50 + 4.15
JAN 1888 + 34                                     MAR 152.40 + 4.10
MAR 1899 + 33                                   MAY 154.10 + 4.05
MAY 1912 + 33                                     JUL 155.50 + 4.10
JUL 1924 + 33                                       SEP 156.80 + 4.10
SEP 1936 + 33                                      DEC 158.55 + 4.10
NOV 1955 + 33                                   MAR 160.20 + 4.00
JAN 1964 + 33                                     MAY 161.15 + 4.00
MAR 1964 + 33                                      JUL 162.00 + 4.05