Coffee Market Report
| 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 reduce their net short sold position within the market by 33.25% over the week of trade leading up to Tuesday 6th. October; to register a net short sold position of 13,427 Lots. Meanwhile the longer term in nature Index Fund sector of this market increased their net long position within the market by 1.46%, to register a net long position of 26,064 Lots on the day.
Over the same week the Non Commercial Speculative sector of this market decreased their net short sold position within the market by 27.23%, register a net short position of 21,131 Lots. This net short sold position which is the equivalent of 5,990,545 bags has most likely been further reduced, following the period of mixed but overall more positive trade which has since followed and likewise, that of the short position of the Managed Money Funds. The latest Commitment of Traders report from the London robusta coffee market has seen the Speculative sector of this market reduce their net short sold position within the market by 10.34% over the week of trade leading up to Tuesday 6th. October; to register a net short sold position of 10,825 Lots on the day. This net long that is the equivalent of 1,804,167 bags has most likely been further reduced, over the period of mixed but overall modestly more positive trade that has since followed. The latest medium term weather forecasts for south east Brazil are indicating only very modest and scattered rainfall due for at least the coming two weeks, which is a factor that has started to buoy speculative spirits within the New York market. This period of relatively dry weather and its indication of a late start to the main October to March rain season have not yet become critical, as there is some degree of ground water retention remaining post the well above average September rains to assist to support the coffee trees. But fair rains shall be needed for the end of the month, if these hot and dry conditions are not to cause significant abortion of the flowerings that had been triggered by the September rains. So far in terms of weather the spells of dry weather experienced within Central America have not been seen to have been damaging to the prospects for the now maturing new crop, with some of the lower grown regions in Central American now close to harvest. Thus aside from the forecasts for an approximate 9% to 10% larger new crop out of Honduras for this new October to March regional harvest, all the regional producers with the exception of El Salvador are indicating modestly larger new crops. In this respect the latest reports from Costa Rica and Nicaragua are indicating the potential for a new crop from these countries, which might actually be in excess of 5% larger than the past crop. These reports along with a good performance being forecasted for the presently in progress new main crop in Colombia, indicating a good short to medium term supply of fine washed arabica coffees. However with the advent of new found buoyancy within the reference prices of the New York market that are being inspired by the combination of dry weather fears in Brazil and the buoyancy of the overall macro commodity index, there is a degree of internal market price resistance that is slowing forward sales for these new crop coffees out of the Central American region. The second month arbitrage between the markets broadened yesterday, to register this at 63.60 usc/Lb., while this equates to a 46.14% price discount for the London robusta coffee market. This arbitrage remaining relatively attractive 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 9,120 bags yesterday; to register these stocks at 1,921,937 bags. There was meanwhile a smaller in volume 4,445 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 64,975 bags. The commodity markets were mixed but were close to retention of their overall macro commodity index buoyancy yesterday, with support coming to the fore in line with the lacklustre performance of the U.S. dollar, which is reacting to the general view that there is little chance of an interest rate hike before next year. However with many within the U.S.A. on their Columbus Day holiday, the markets lacked the full impact of active trading activity. The Cocoa, Sugar, Coffee, Orange Juice, Soybean, Gold, Silver and Platinum markets had a day of buoyancy and the Natural Gas and Cotton markets were steady, while the Oil, Copper, Wheat and Corn markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.12% higher to see this Index registered at 405.44. The day starts with the U.S. Dollar steady and trading at 1.536 to Sterling and 1.138 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 49.45 per barrel. The London market started the day yesterday marginally below par and under some pressure form light origin price fixation pressure, while the New York market started the day with modest buoyancy. This positive start within the New York market added to confidence and the market started to extend its gains into the afternoon’s trade and with the London market following suit and moving back into more modest positive territory. As the afternoon progressed and with the Brazilians side lined from selling by their Lady of Aparecida (Holy Mary) holiday, the New York market started to trigger short covering and industry buy stops to extend the gains and with the London market likewise adding a little more value, but with both markets coming under a little pressure later in the day to shed some of their gains by the close. The London market ended the day on a modestly positive note and with only 16.7% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with 49.6% of the earlier gains of the day intact. This relatively hesitant close and with both markets coming well back from their earlier highs of the day might inspire a degree of caution and one might look to only a hesitantly steady close for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. NOV 1623 unch DEC 134.50 + 2.90 |
