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 decrease their net short sold position within the market by 30.11% over the week of trade leading up to Tuesday 24th. November; to register a net short sold position of 19,565 Lots. Meanwhile the longer term in nature Index Fund sector of this market decreased their net long position within the market by 3.15%, to register a net long position of 26,470 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 27.17%, to register a net short position of 26,297 Lots. This net short sold position which is the equivalent of 7,455,083 bags has most likely been since increased, following the mixed but overall more negative trade that has since followed and likewise, that of the net short sold position of the Managed Money Funds. The Trade Ministry in Brazil has reported their provisional coffee export figure for the month of November to have been 252,026 bags or 8.8% higher than the same month last year, at a total of 3,116,107 bags. One must assume in terms of recent reports that the greater part of these exports were related to fulfilment of forward contract commitments, rather than spot prompt business, as internal market selling activity has slowed in the recent weeks. Meanwhile yesterday’s first of the state auctions of aged government arabica coffee retention stocks of approximately 1.56 million bags which offered up 100,263 bags for sale, proved to be a failure. This related to a complete lack of bids, as it appears that there were no buyers prepared to pay up to match or better the minimum reserve prices set for these coffees. The lack of support despite the relatively low reserve prices which reflects the quality of these aged coffees, indicating that there presently is not too much tightness in supply to the countries domestic roasters. Despite the many reliable trade and industry forecasts with the new crop harvest starting to head towards its peak in Vietnam for a new crop that is well in excess of 28 million bags and with some talking numbers in excess of 29 million bags, the Vietnam Coffee and Cocoa Association have come forth with a forecast for a much more dismal figure of 18 million bags. This official body is however traditionally very conservative and has likewise traditionally been proved wrong by the evidence of the year on year export figures and therefore, this somewhat market manipulative forecast has been largely ignored by the international market players. Meanwhile with forward contract commitments in hand the exporters in Vietnam are talking of potential exports of mostly robusta coffees for the month of December of between 1.67 million to 2 million bags, but they are still struggling to purchase coffees from the internal market at price levels to support their export commitments. Thus one might suggest that unless there is some short term support coming forth for the reference prices of the London market that the December exports might be close to the lower end of the forecasts for the month. The Colombian Coffee Growers Federation and against the presently soft price levels of the New York market, has reported that they might need to consider a new coffee stabilisation fund for the coming months, so as to support their farmers. This that shall probably be based on the model of the 500 million U.S. dollars that the Colombian government provided for similar support in 2013, is to be brought to the fore during their annual congress in Bogota, which is taking place this week. One might suggest that if the stabilisation fund does come back into play and by nature removing the negative influences of the soft international market prices from farm gate prices to the farmers, that it would assist Colombia to remain an aggressive sellers and exporters of coffees for the short to medium term and would by nature, be negative for international market sentiment. The March on March contracts arbitrage between the markets narrowed yesterday, to register this at 50.91 usc/Lb., while this equates to a 42.46% 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 in more volume upon the fortunes of the London market. The Certified washed Arabica coffee stocks held against the New York exchange were seen to decrease by 5,418 bags yesterday; to register these stocks at 1,830,518 bags. There was meanwhile no change to the number of bags pending grading for this exchange; to register these pending grading stocks at 3,405 bags. The Certified Robusta coffee stocks held against the London exchange were seen to remain unchanged as at Monday 30th. December; to see these stocks registered at 3,338,833 bags on the day. The commodity markets were mixed in trade yesterday but with the U.S. dollar tending a little softer for the day, the overall macro commodity index showed a degree of buoyancy for the day. The Sugar, Coffee, Cotton, Copper, Soybean and Silver markets had a day of buoyancy and the Cocoa market was steady, while the Oil, Natural Gas, Orange Juice, Wheat, Corn, Gold and Platinum markets tended softer for the day. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.00% higher to see this Index registered at 383.81. The day starts with the U.S. Dollar steady in early trade and trading at 1.506 to Sterling and 1.061 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 42.75 per barrel. The London and New York markets started the day with hesitant buoyancy yesterday and with improved value, but while the London market retained its modest recovery into the afternoon trade, the New York market once again started to come under pressure and fell back below par and followed by a softening of the London market, but there was soon some renewed support coming to the fore and with the London market returning to positive territory and with the New York market following suit. The London market continued to end the day on a positive note and with 66.7% of the earlier gains of the day intact, while the New York market ended the day on a modestly positive note and with 55.6% of the earlier gains of the day intact. The ability of the markets to bounce back from the negative pressure during yesterday’s trade one might think shall inspire some hesitantly cautious buoyancy for early trade today against the prices set yesterday, as follows: LONDON ROBUSTA US$/MT NEW YORK ARABICA USc/Lb. JAN 1490 + 12 DEC 117.15 + 0.25 |
