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 7.31% during the week of trade leading up to Tuesday 15th. December; to register a net short sold position of 15,864 Lots. This net short sold position which is the equivalent of 4,497,374 bags has most likely been little changed, following the period of mixed but mostly sideways trade, which has since followed.
The National Export Centre in Nicaragua has reported that the countries coffee exports for the month of November was 2,508 bags or 7.92% below the same month last year, at a total of 29,160 bags. This more modest performance and following a modest number the previous month has contributed to the countries cumulative coffee exports for the first two months of this new October 2015 to September 2016 coffee year to being 63,699 bags or 48.82% lower than the same period in the previous coffee year, at a total of 66,765 bags. This slow start to the exports for this new coffee year from Nicaragua is however of little significance, as it is more related to the internal market price resistance and to the fact that the new crop is still in its early days of harvest, rather than to any longer term tightness of new crop coffee supply. In fact the forecasts so far, are indicating that Nicaragua is due a 5% to 6% larger new crop of approximately 2 million bags. The leading West African robusta coffee producer the Ivory Coast has reported that the countries coffee crop for the October 2014 to September 2015 coffee year fell 3.08% below target, to produce 2.1 million bags during this just completed coffee year. There is of course always some question as to the size of the Ivory Coast coffee crop, as there is always a percentage of unofficial coffee production that is smuggled over the borders to fly under the flags of their neighbouring countries. The well-respected Global Agricultural Information Network of the U.S. Department of Agriculture has revised some of its earlier figures and reduced its June 2015 assessment of global coffee supply for this new October 2015 to September 2016 coffee year by 2.55 million bags, to now forecast the global coffee supply for this present coffee year at a still significant 150.1 million bags. This forecast is against their assessment that world coffee demand for the same period, which they have raised since their June assessment by 0.6 million bags, is a more modest 148.3 million bags. This report contradicts many other respected trade and industry forecasts for the present October 2015 to September 2016 coffee year being a modest deficit supply year, while even with such deficits being forecasted the prospects so far for a much larger 2016 crop from Brazil, has not seen such forecasts to have been positive for the coffee markets. Thus the issue of this report from the USDA that indicates a surplus supply and rising global stocks that they pegged at 31.54 million bags at the start of this coffee year, does little to buoy market sentiment. The March on March contracts arbitrage between the markets broadened on Friday, to register this at 50.37 usc/Lb., while this equates to a 42.33% 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 6,573 bags on Friday; to register these stocks at 1,755,831 bags. There was meanwhile a smaller in volume 753 bags increase to the number of bags pending grading for this exchange; to register these pending grading stocks at 43,876 bags. The Certified Robusta coffee stocks held against the London market were seen to decline by 3,500 bags on Thursday 17th. December; to see these stocks registered at 3,316,333 bags. The commodity markets had a generally positive day on Friday and with the overall macro commodity index showing a degree of buoyancy, to assist to buoy spirits within many markets. The Natural Gas, Sugar, Coffee, Cotton, Copper, Wheat, Corn, Soybean, Gold, Silver and Platinum markets had a day of buoyancy, while the Oil, Cocoa and Orange Juice markets had a softer day’s trade. The Reuters Equal Weight Continuous Commodity Index that is made up from 17 markets is 1.05% higher to see this Index registered at 372.18. The day starts with the U.S. Dollar near to steady in early trade and trading at 1.491 to Sterling and 1.087 to the Euro, while North Sea Oil is tending softer in early trade and is selling at 35.80 per barrel. The London and New York markets had a relatively steady start for early trade on Friday and with both markets adding modest value into the afternoon trade, to see the markets taking something of an erratic but modest positive track through most of the afternoon. There was however an inability for the markets to build on their gains and both markets tended to encounter a nearby ceiling that is within an environment of relatively thin trade created by the pressures of producer price fixation hedge selling, to see the markets lose some of their gains in late trade. The London market continued to end the day on a modestly positive note and with only 26.3% of the earlier gains of the day intact, while the New York market ended the day on a positive note and with only 33.3% of the earlier gains of the day intact. This close while positive and with the markets struggling to maintain their gains is not conclusive and especially so against the news that the speculative sector of the New York market had not aggressively extended its net short sold position by Tuesday last week and one might expect to see a cautious and possibly only 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 1487 + 5 DEC 118.45 + 0.65 |
