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 increase their net short sold position within the market by 82.16% during the week of trade leading up to Tuesday 7th. July; to register a net short sold position of 26,486 Lots. This net short sold position which is the equivalent of 7,508,664 bags has most likely been slightly decreased again, over the period of mixed but overall marginally positive trade which has since followed.
This significant increase in the net short sold position by the speculative sector of the New York market has taken the size of the short to a level that was last seen in December 2013 and does likewise mirror the one and half year lows for the market, which were experienced during mid last week. This relatively bearish sentiment coming to the fore, with the general perception that there is now no fear over medium term Brazil coffee supply and with rising production levels seemingly due from Colombia, Central America, Vietnam and India for the end of the year and followed by increase production from Brazil next year, which is likely to fuel longer term surplus supply. One can however question what the longer term effects of this soft market shall be, as for many producers the related physical market prices are becoming critically low and are threatening losses for many farmers and within many leading producer countries. But any such reaction is unlikely to soon impact and for the present the increasing supply for the coming year is very much already on the trees, but might perhaps start to become an issue for the follow on October 2016 to September 2017 coffee year. Meanwhile and adding to the bearish nature of the coffee markets is the total lack of any fundamental weather or disease scare stories emanating from any of the main producer blocs, which in terms of good production levels supports the old adage that no news is good news. Especially so as with the prevailing soft trading range of the markets one has to be certain that if there was any such news to bring to support the markets, that it would most certainly be very loudly voiced. Perhaps the largest short term question remains with the fortunes of the London robusta coffee market, where players guess the timing of the potential for the farmers and internal market traders in Vietnam to finally bite the bullet and start more aggressively selling their substantial past crop stocks. Such negative for the market activity potentially due to be inspired by the second half of next month, as they look to start clearing the way for the impact of the new crop coffees that shall start coming in to the stores during the second half of October. The arbitrage between the markets has broadened on Friday to register this at 48.10 usc/Lb., while this equates to a 38.10% price discount for the London robusta coffee market. This arbitrage remaining relatively to roasters in comparison to arabica coffee prices, but is perhaps due to widen further in time and when Vietnam stocks start to impact upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 1,345 bags on Friday; to register these stocks at 2,156,640 bags. There was meanwhile a smaller in volume 600 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 11,470 bags. The commodity markets were mixed on Friday and with many economic uncertainties that come with the Greek question within the Euro zone and the erratic nature of the Chinese stock exchange, tending to limit direction. The somewhat lacklustre trade within many markets one would suggest, is also being influenced by the prevailing summer holiday season that is being experienced within the main northern hemisphere markets. The Natural Gas, Sugar, Cocoa, New York arabica Coffee, Soybean and Silver markets had a day of buoyancy and the Brent Oil, Orange Juice, Wheat and Platinum markets were relatively steady, while the London robusta Coffee, Cotton, Copper, Corn and Gold markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.43% higher: to see this Index registered at 424.21. The day starts with the U.S. Dollar relatively steady and trading at 1.550 to Sterling and 1.113 to the Euro, while North Sea Oil is tending softer in early trade and is selling at 57.00 per barrel. The London and New York markets started the day on Friday with a degree of buoyancy, but with the London market soon coming under some degree of negative pressure and starting to take a softer track, while the New York market continued to hold on to its thinly traded buoyancy. The London market did however recover during the afternoon’s trade while the New York market experienced a short dip to below par but to soon move back into positive territory. The London market continued to shed its gains near to the end of the day’s trade and end the day on marginally softer note and with 71.4% of the modest losses of the day intact, while the New York market continued to end the day on a positive note and with 52.6% of the earlier in the day’s gains intact. This close does little to inspire but perhaps with the news of the extensive new speculative short position for the New York market and the relatively steady end to the week for this the more speculative and volatile of the markets, it might contribute towards some degree of cautions support for early trade today, against the prices set on Friday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JUL 1850 – 5 JUL 122.95 + 0.20 |
