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 decrease their net short sold position within the market by 43.5% during the week of trade leading up to Tuesday 8th. December; to register a net short sold position of 14,784 Lots. This net short sold position which is the equivalent of 4,191,198 bags has most likely been increased again, following the relatively sharp selloff that was experienced on Friday.
There was nothing in the way of supportive news coming to the fore for the coffee markets on Friday, but with a weakening Brazil Real coming into play in line with the countries internal political problems, the perspective of prospects for increased Brazil selling activity started to impact as the day progressed. This negative sentiment accompanied by a lack of follow through confidence on the part of the funds and speculative sectors of the market, which had recently been buying into the New York coffee market in particular and taking it to a seven week high. To see the New York market falter on Friday and attract selling activity and against only thin buying interest from the consumer industries, to take the market sharply south for the day. The question is with good volumes of new crop coffees still coming to the market from the new Colombian main crop and with potentially good volumes of new crop coffees from the new Mexican, Central American, Vietnam and Indian crops hanging over the markets, where one might think to find support for the coffee markets on the short term. The news so far and despite the prevailing El Nino phenomenon brining into question the longer term Indonesian and Colombian coffee production potential for later on in the coming year, seemingly does little to inspire speculative support for the coffee markets. Especially so, as the negative nature of the macro commodity index also is having its impact, upon sentiment within the coffee markets. The March on March contracts arbitrage between the markets narrowed on Friday, to register this at 51.89 usc/Lb., while this equates to a 42.81% 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 4,891 bags on Friday; to register these stocks at 1,798,107 bags. There was meanwhile a smaller in volume 3,250 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 15,250 bags. The Certified Robusta coffee stocks held against the London market were seen to decline by 667 bags on Thursday 10th. December; to see these stocks registered at 3,321,333 bags. The commodity markets were mixed in trade on Friday but with most of the markets on something of a back foot and with the overall macro commodity index, once again taking a negative track for the day. There might be some degree of support due with the news of better than expected economic figures from China for the month of November, but there remains the distraction of the expectations for the U.S. Federal Reserve Bank to increase interest rates on Wednesday. Albeit that the reality is that this potential rate hike has already been long factored into market sentiment and that the fact if it should be the case, might not actually be supportive for further muscle for the U.S. dollar. The Sugar, Cocoa, Copper, Orange Juice and Gold markets had a day of buoyancy, while the Oil, Natural Gas, Coffee, Cotton, Wheat, Corn, Soybean, Silver and Platinum markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 0.85% lower to see this Index registered at 375.60. The day starts with the U.S. Dollar showing a degree of buoyancy in early trade and trading at 1.519 to Sterling and 1.097 to the Euro, while North Sea Oil is near to steady in early trade and is selling at 36.65 per barrel. The London and New York markets had a near to steady start for early trade on Friday, but with both markets soon coming under pressure and taking a somewhat softer track into the afternoon trade. The New York market once again took the lead in the afternoon and with further losses bringing sell stops into play and to accelerate the losses, while the London market followed suit in a more modest fashion. The New York market did however stabilise at its lows and take a sideways track through to the end of the day, while the London market bounced back from its lows and limit its losses for the day. The London market nevertheless ended the day on a softer note and with 73.3% of the earlier losses of the day intact, while the New York market ended the day on a very soft note and with 93.6% of the earlier losses of the day intact. This close does little to inspire and with the continued follow through softness for the Brazil Real that is trading at 3.87 to the dollar, one might expect to sell little better that a cautious 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 1499 – 23 DEC 118.10 – 4.55 |
